For Medicare-Eligible: Huge News -- Thank You Mr Biden -- January 16, 2024

Locator: 46556BIGPHARM.

Disclaimer: I'm doing some of this from memory so some of my numbers / data points could be wrong. If this is important for you, go to the source.

This never would have happened under Bush I, Bush II, or Trump. How can I say that? Because it didn't.

I have no idea when this all happened; maybe someone else deserves the credit. I don't know. But it is taking effect under the Biden administration.

The graphic below doesn't even begin to tell the whole story.

Bottom line:

Those with Part D Medicare insurance will have out-of-pocket pharmacy costs capped at $2,000 next year, and $3,500 this year, compare to "no cap" previously. With "no cap" folks could literally see their life savings wiped out in one year; now? Not gonna happen. 

And not only is there a $3,300 cap this year (and $2,000 cap next year), if you get hit with a $3,300 / $2,000 "co-pay" now, one can spread it out across the entire year.

The lede of the linked article:

For the first time, there is a ceiling on how much they will pay in 2024 for their Part D drugs.

Changes brought about by the 2022 Inflation Reduction Act mean that people on Part D plans now pay no more than roughly $3,300 on drugs annually—a number that could shift a bit based on whether they take brand or generic medications. In 2025, that cap will change again to a flat $2,000.

“It will let me take a deep breath,” said Judy Aiken, a 69-year-old retired nurse in Portland, Maine, who last year paid more than $9,000 out of pocket for a drug to treat her psoriatic arthritis, Amgen ’s Enbrel. “Frankly, I was delighted.”

Here’s how it works:

People who buy drugs through Medicare Part D, the government-funded insurance program that covers most prescription drugs, pay thousands of dollars for their drugs until they reach the so-called catastrophic zone of spending.

After that, they had to continue paying 5% of their drugs’ cost for the rest of the year, sometimes adding up to thousands more. This year, that 5% coinsurance was eliminated.

Once Medicare patients spend roughly $3,300—the “catastrophic zone” threshold for 2024—they won’t have to pay any more out of pocket for Part D drugs.

For example, consider a hypothetical 69-year-old man who had a plan with a $505 deductible. If he visited the pharmacy last year to fill his first prescription for a $200,000-per-year blood-cancer drug, costing roughly $16,600 a month, he paid his full deductible, plus 25% coinsurance until he hit the $3,100 catastrophic threshold for 2023, plus 5% coinsurance after that—in total around $3,800. On his next refill, since he remained in the catastrophic zone, he paid the 5% coinsurance, roughly $830. He continued paying roughly $830 every time he filled his prescription, in total spending more than $12,000 out of pocket for the year.

Thank you, Mr Biden.

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But It Doesn't Come Cheap For Some

Link here.

Your Medicare premium for a given year is based on your income from two years prior—typically from the last tax return on file. Since you know that in advance, there could well be opportunities to head off some income-based surcharges down the line.

A little hyperbole?

For the ultra-rich, missing the "gap" by 5 cents will mean your monthly premium will go from $559 / month to $594 / month. Hardly "sunk."

And, if you're earning that kind of money, certainly you can find another "loss" of five cents from somewhere.

But, as usual, the super-rich get off easy; look at that first jump, at $129K -- hardly rich. Any more.