Inflation Reduction Act

The Inflation Reduction Act (IRA) was signed into law by President Biden in August 2022. Although the IRA’s most significant investments are related to climate change, the law also makes numerous important improvements to health coverage.

• This means the “subsidy cliff” continues to not be a problem, and subsidies continue to be larger than they would otherwise have been.
• It also means the year-round enrollment opportunity for subsidy-eligible low-income households will continue to be available through 2025.
• Some of the American Rescue Plan’s subsidy provisions had already expired by the end of 2021. They included a COBRA subsidy, unemployment-related subsidies, and a one-time amnesty from having to repay excess premium subsidies to the IRS. None of these provisions were revived by the IRA.

Read our overview of the IRA provisions that will affect ACA marketplace health plan buyers.

These IRA provisions that impact Medicare coverage will take effect in 2023:

• Recommended vaccines covered by Medicare Part D will no longer have any out-of-pocket costs.
• Copays for all covered insulin products will be capped at $35/month
• Drug manufacturers will have to pay rebates to Medicare if drug prices increase faster than inflation.

IRA provisions that will be phased in over the next several years include:

• No out-of-pocket costs once an enrollee reaches the Medicare Part D catastrophic coverage phase.
• Availability of full Part D Low-Income Subsidy (Extra Help) to more enrollees.
• A 6% cap on annual Part D premium increases.
• A cap on out-of-pocket costs under Part D.
• CMS negotiations with drug manufacturers over the price of certain high-cost prescription drugs.

Read a full overview of the IRA provisions that will affect Medicare enrollees.