New cap on Medicare Part D out-of-pocket prescription costs goes into effect

Millions of Americans enrolled in Medicare Part D will now pay no more than $2,000 annually out of pocket for their prescription drugs, thanks to a provision in the Inflation Reduction Act. The new cap went into effect on Jan. 1, 2025.

The health care and clean energy bill was signed by President Joe Biden in August 2022, after congressional Democrats passed it without a single Republican vote in favor. It also instituted a $35 monthly cap on insulin costs for about 4 million Medicare subscribers with diabetes and authorized the program to negotiate with pharmaceutical companies to lower prices on commonly used medications.

According to the Department of Health and Human Services’ model, the $2,000 cap will benefit almost 19 million Americans in 2025, saving them an average of $400 each. For those with the highest prescription drug costs, out-of-pocket costs will drop by an average of $2,500.

CBS News MoneyWatch reported on Jan. 2 that Ryan Ramsey, the associate director of health coverage and benefits for the National Council on Aging, said, “Having a cap where somebody can know, ‘Hey, this is what my maximum out of pocket will be for my medication,’ that will be an enormous deal.”

Republicans now hold narrow majorities in the U.S. House of Representatives and Senate. Some of them have indicated that they hope to repeal the entire Inflation Reduction Act once Donald Trump is back in the White House. The conservative Republican Study Committee, which includes the majority of House Republicans, called for “the full repeal of the disastrous Inflation Reduction Act” in its fiscal year 2025 budget proposal. The Heritage Foundation’s Project 2025, a wish list of right-wing priorities for the incoming Trump administration, also calls for repeal of the entire law.

“The new out-of-pocket cost cap is a game-changer for our nation’s seniors,” said Leslie Dach, chair of the nonprofit advocacy group Protect Our Care, in a Jan. 2 statement. “President Biden and Democrats in Congress stood up to big drug companies and won. Now, seniors are saving money, ensuring they can afford the care they need without sacrificing other basic needs like groceries, gas, and rent. Every Republican member of Congress sided with the drug companies and voted against lower prices for seniors and, now, Donald Trump and Republicans want to raise costs by repealing these lifesaving changes. Republicans want to allow drug companies to charge whatever they want at the expense of American seniors. The GOP plans have one goal in mind: slash the programs Americans rely on to fund more tax breaks for billionaires and let hard-working families suffer the consequences.”

Wisconsin Democratic Sen. Tammy Baldwin voted for the Inflation Reduction Act, as did Democratic Reps. Gwen Moore and Mark Pocan.

Wisconsin Republican Sen. Ron Johnson and Reps. Scott Fitzgerald, Glenn Grothman, Bryan Steil, and Tom Tiffany voted no.

1-8-25: This story has been updated to correct the amount of the cap on insulin costs.