As the pandemic melds into an endemic scenario worldwide, the economy is shifting as well. As a result, for much of 2022, the word inflation has been on the lips of every economist and shopper across the globe.
The changing price tags in the stores make it easy to see why. From June 2021 to June 2022, consumer prices increased by an astounding 9.1%, the most significant increase in 40 years.
Not a moment too soon, Congress mobilized and passed the Inflation Reduction Act in August 2022.
What do I need to know about the new Inflation Reduction Act?
No matter what the subject, new laws can be challenging to demystify. And if you haven’t already been on the receiving end of questions from your clients about the bill and how the changes impact their healthcare and Medicare costs, you will.
Asking yourself key questions like:
- What do I need to know about how the Inflation Reduction Act affects seniors?
- How does the Act change Medicare?
- How can these Medicare changes help me sell more plans?
will position you to help with your client’s concerns about the new law. Answering these critical questions should be a top priority for all Medicare insurance agents right now. So to help you understand the Inflation Reduction Act and how the bill affects your clients, we’ll answer a few of the leading questions seniors have about this new legislation.
1. Does the Inflation Reduction Act shrink the donut hole?
Shrink? How about eliminating it?
The Part D donut hole has always been a pain point for agents and beneficiaries. Of course, no one wants to pay exorbitant costs for healthcare. But some prescription drug costs that go beyond regular copays don’t quite qualify clients for catastrophic care.
And, as you know, the wait for this catastrophic coverage is often devastating to low-income seniors or those on a fixed income. Fortunately, the Inflation Reduction Act removes the perilous donut hole by capping Medicare beneficiaries’ Part D out-of-pocket spending. This was accomplished by eliminating coinsurance above the catastrophic threshold. The donut hole closes for good in 2024.
The Inflation Reduction Act also adds a $2,000 spending cap on beneficiaries’ prescription drug costs starting in 2025. This cap will help lower the up-front costs for 1.4 million seniors annually.
2. How does the Inflation Reduction Act affect prescription drug costs?
The great news is that out-of-pocket prescription costs will go down for most seniors.
Although not entirely in effect until 2025, the changes to Part D coverage will help Medicare beneficiaries save money on prescription drugs.
These changes passed by Congress are long overdue. Research shows Americans generally pay two to three times more for prescriptions than citizens of other countries.
The Inflation Reduction Act will reduce prescription drug costs for five to seven million Medicare beneficiaries. The bill includes much-needed price controls—especially on insulin for seniors with diabetes.
3. Does the Inflation Reduction Act reduce insulin costs?
Insulin is one of the many drugs that will have a lower out-of-pocket cost in the near future.
Nearly one in three Americans over 65 have diabetes. And most seniors use insulin to control their diabetes and remain as healthy as possible. But insulin, however necessary, comes at a high cost. In 2020, the average diabetic patient spent $54 per month out-of-pocket for insulin injections.
This Act changes that. Beginning in 2023, Part D beneficiaries’ insulin costs will be capped at $35 out of pocket per month. These cost savings will amount to several hundred dollars annually for the 3.3 million seniors who use insulin products to control their diabetes.
4. Does the Inflation Reduction Act expand vaccine coverage?
Absolutely. More vaccines than ever before will be offered with no copay.
Beginning in 2023, Medicare beneficiaries covered by Part D plans will enjoy $0 copays for vaccines. Making vaccines more affordable is a smart move in preventive care for seniors. Especially since vaccines save lives and reduce the effects of many harmful viruses, including shingles, pneumonia and COVID-19.
How can the Inflation Reduction Act increase Medicare insurance plan sales?
With the Inflation Reduction Act and its effect on Medicare-eligible seniors, your prospects of future Medicare plan sales are excellent. When talking to your clients, highlight the cost-saving benefits realized by this bill.
Most seniors are highly motivated to save money and are always looking for new ways to lower their healthcare costs. If you’re working with a senior who has diabetes, or a client at high risk for COVID-19 or other viruses, highlight the insulin and vaccine benefits.
But there’s a caveat. Most, if not all, of these changes are to Medicare Part D. This means your clients need to enroll in a Part D plan to enjoy the benefits. Fortunately, these added protections at low or no cost are fantastic selling points for Part D plans.
The Inflation Reduction Act has ushered in some exciting changes to Medicare. Many of these long-awaited protections will affect beneficiaries’ lives for the better. If you have questions about the Inflation Reduction Act or want to learn more about how to sell your clients better Part D plans, call us today.
image credit: shutterstock/BERK CAN