Medicare prescription drug costs capped at $2,000 annually

SEATTLE - Seniors on Medicare Part D will never pay more than $2,000 out-of-pocket for prescription drugs annually, thanks to a provision in the 2022 Inflation Reduction Act which takes effect this year.

The new benefit for seniors on Medicare Part D will cap out-of-pocket prescription drug costs at $2,000 per year. Once they reach this dollar amount, they will automatically receive "catastrophic coverage," which means all out-of-pocket costs for Part D drugs will be covered through the rest of the year.

"One of the biggest expenses for seniors and their families is prescription costs and Democrats are lowering the price they pay at the pharmacy counter. The new annual out-of-pocket drug price cap will save seniors hundreds of dollars a year," said U.S. Rep. Suzan DelBene. "This new benefit builds on other cost-saving aspects of the Inflation Reduction Act, and I will continue to find ways to make life more affordable for everyday Americans."

No Medicare drug plan will have a deductible of more than $590 in 2025, and some plans have no deductible. In Washington state alone, 70,000 enrollees will save nearly $1,900 in 2025, with the number of beneficiaries growing over time.

"[It's] a change that will save millions of people, hundreds or thousands of dollars on their prescription medications, every year from now on," said U.S. Senator Patty Murray, who is a senior member of the Senate Health, Education, Labor and Pensions Committee. "There is more to this story than just numbers—because as everyone knows, high drug prices come with other painful costs. Like stress over how to make ends meet, or what bills to skip, in order to fill a prescription, or whether to take the risk of rationing medication."

U.S. Representative Dr. Kim Schrier, a primary care doctor and diabetes patient, calls the measure "life-changing" for those struggling with high drug costs.

"As a doctor and as someone who relies on insulin, I know firsthand the stress high drug prices cause. This is a huge step forward, but there’s more work to be done to make medications affordable for everyone," said Schrier.

The Inflation Reduction Act also introduced additional cost-saving measures, including a $35 monthly cap on insulin for Medicare recipients and free vaccines for seniors. For the first time, the law allows Medicare to negotiate drug prices, with the first set of reduced costs for 10 common medications set to take effect in 2026.

The Centers for Medicare & Medicaid Services projects these negotiations will save American taxpayers $6 billion and reduce out-of-pocket expenses for Medicare enrollees by $1.5 billion in 2026 alone.

"This cap means I can afford my medications without having to cut back on essentials like food or utilities," said Katherine O'Hara, a local senior who is on Medicare.

Stephan Gerhardt, who lives with dystonia and degenerative disc disease, also praised the change.

"One of my anti-inflammatory medications isn’t covered by my insurance, but luckily, it only costs $45 a bottle and lasts six months," Gerhardt said. "I’m fortunate compared to others."

Gerhardt, who has been on Medicare for over a decade due to his disabilities, said the new law will help many seniors in his community avoid tough choices between essential needs.

"People I know often have to decide: ‘Do I eat, pay rent, or take my meds?’" said Gerhardt. "Almost everybody will choose to pay rent because they can't survive being homeless; and then it's, ‘How do I figure out food?’"

"This is life-changing for folks who can’t afford their medications," said Gerhardt. "It reduces the strain on individuals and the healthcare system. If people can afford their medications, they’re less likely to end up in emergency rooms, which costs everyone more in the long run."

Despite the bipartisan benefits, every Republican in Congress voted against the Inflation Reduction Act, a point highlighted by Murray. She warned of potential future efforts to repeal the law.

"This is about making life more affordable and ensuring no one has to risk their health because they can’t afford medication," Murray said. "The President-Elect has talked about cutting everything, so he’s got everything in front of him, and we’re going to make sure this is not one he goes after."

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