Inflation Reduction Act: What Medicare Insurance Agents Need to Know
As a Medicare insurance agent, you know better than most just how drastically inflation, and subsequently, the Inflation Reduction Act of 2022 has impacted seniors. A substantial portion of this law was written to lower Medicare prescription drug costs by granting the federal government power to negotiate costs with big pharma, and many of the clients you serve with your Medicare consulting services will likely see their monthly medical expenses decrease as a result.
Since the Inflation Reduction Act passed, Medicare beneficiaries are still navigating how the new law impacts their coverage. Overall, the results have been positive. But there’s still much you need to know about the long-term effects of the act and prescription drug coverage changes before selling Medicare insurance to your senior clients.
Medicare insurance agents are closely watching drug price negotiations
For the first time in the history of Medicare, the U.S. government is negotiating prescription drug prices directly with insurance companies. The Inflation Reduction Act gave the government this unprecedented authority to control medication expenses for seniors.
There’s good reason for this change. Research shows that prescription drugs sold in the U.S. cost about three times more than in other countries with comparable economies. And insulin costs in the U.S. are ten times higher!
At this time, we don’t know how much prices will change. The government sent its price offer to drugmakers in February 2024, and pharmaceutical companies returned their counteroffer in early March. Negotiations will continue throughout the summer, and insiders expect prices to be finalized in the fall. The current plan is for new drug prices to take effect at the beginning of 2026.
When selling Medicare insurance, be mindful of your clients’ prescriptions, as some may be subject to a price decrease. The drug costs currently being debated include:
- Eliquis
- Jardiance
- Xarelto
- Januvia
- Farxiga
- Entresto
- Enbrel
- Imbruvica
- Stelara
- Fiasp
The results of the negotiations will almost certainly impact how you sell prescription coverage via a Medicare Advantage or Medicare Part D plan in the future. With that in mind, staying current with the latest developments and informing your clients should be an important part of your customer service plan.
Prescription drug rebates arrive to battle rising costs and inflation
Another interesting provision in the Inflation Reduction Act is the government’s new ability to impose rebates when drug costs rise faster than the inflation rate. Last year, lawmakers flagged 48 pharmaceuticals for unreasonable price hikes. As a result, seniors who were affected by these excessive charges saw their out-of-pocket expenses for 2024 decrease by as much as $2,786 per day.
And that’s not all. The law also drastically and instantly lowered insulin costs for almost every senior with a prescription. This is a huge benefit since nearly one out of three older Americans suffer from diabetes. Before 2023, the average out-of-pocket cost for insulin products on Medicare Part D was $54 per prescription. Now, the price seniors will pay is capped at $35 per month.
This change applies to all Medicare Part D plans, stand-alone drug plans and Medicare Advantage Plans. However, the plans can choose which products they’ll cover and aren’t required to cover all insulin prescriptions.
Medicare agent training remains essential
There’s no doubt The Inflation Reduction Act has ushered in changes that are beneficial to seniors and your Medicare consulting services. Hopefully, in the future, there will be additional legislation passed to support seniors dealing with cost-of-living increases while on a fixed income. For now, to make sure Medicare beneficiaries take advantage of the current changes, every Medicare insurance agent should understand the act inside and out. Education is the key to enhancing your Medicare insurance sales, and getting the right Medicare agent training matters.
To learn more about the Inflation Reduction Act and how it may affect your clients, contact us today.
image credit: shutterstock/Vitalii Vodolazskyi
