Between 1946 and 1964, there were 76 million births in the United States. Of those 76 million babies, we have 65.2 million surviving seniors today. As of today, this population of “Baby Boomers” are two-thirds the way into Medicare. The promise of good health care in their golden year is a constant challenge for law makers to make good on. It’s a massive undertaking delivering good health outcomes and medical cost relief for these boomers.

This year, Washington has taken some steps to bring the care that Medicare promised these Americans during their working lives. The passing of the Inflation Reduction Act of 2022 is the latest in spending bills that at least partially targets help for these citizens. So how does the inflation reduction benefit us? When can we expect from the relief and how does it improve health outcomes?

First of all, The Inflation Reduction Act of 2022, sponsored by Senators Chuck Schumer (NY) and Joe Manchin (WV), was originally part of the “Build Back Better” bill. After the bill failed to pass in Congress, the two senators met to negotiate the Inflation Reduction Act with some Medicare fixes, as well as spending for energy, climate change, tax provisions, and the expansion of the Internal Revenue Service.

Here are some of the health care highlights of the legislation:

• $2,000 limit out-of-pocket cost for prescription drugs for all Americans on Medicare
• Caps the cost of insulin at $35
• Zero cost for most vaccinations
• Continued expansion of the Affordable Care Act’s (ACA) subsidies for three more years
• Direct drug price negotiations with drug manufacturers

Sounds pretty good right? However, the devil is in the details.

Some help is coming right away or at least very soon. If you’re a diabetic, you won’t have to choose between paying the mortgage or buying your insulin. This is some overdue relief and that program starts next year. Also, beginning in January, most vaccines will be free through Medicare. Furthermore, for people who buy their health insurance through the ACA Marketplace, the bill extends through 2025 the expanded federal premium subsidy. For those 50 to 64 years of age, these subsidies provide an average savings of over $950 annually, and all consumers will continue to pay no more than 8.5 percent of their income for ACA health insurance premiums.

Now for the goodies that we must wait on:

• The $2,000 cap on drug costs is great, but Medicare beneficiaries will have to wait until 2025 to see the benefit.
• The new law authorizes the Health and Human Services secretary to begin negotiating the prices of 10 high-cost prescription drugs in 2023. Unfortunately, the negotiated prices will not go into effect until 2026 for Part D medications and in 2028 for drugs covered under Medicare Part B.
• More drugs will be negotiated on behalf of Medicare in subsequent years and by 2029 a total of 60 drugs will be subject to negotiated prices.

According to the Congressional Budget Office, Medicare will save hundreds of billions of dollars over 10 years as a result of the new law with the majority of the savings resulting from drug cost negotiations. And good news: The savings involves no cuts to Medicare.

If you are a Medicare eligible or beneficiary, we want to help you learn about the rules of Medicare and how they apply to you. Contact your Client Care Advisor today to learn more.