A New Era for Senior Healthcare: How Medicare's $2,000 Cap Will Change Lives

Starting in 2025, over 1 million people in the U.S. will save more than $1,000 annually due to a $2,000 cap on prescription drug out-of-pocket costs under Medicare's Part D program. Introduced by President Biden's Inflation Reduction Act, this change will particularly benefit those who rely on high-priced, branded medications.

More than 1 million Americans stand to save over $1,000 annually beginning in 2025, courtesy of a new $2,000 cap on prescription drug out-of-pocket expenses, announced by the leading older Americans advocacy group, AARP, on Wednesday.

This cap, part of President Joe Biden's Inflation Reduction Act, is specific to Medicare's Part D program which covers around 56 million individuals aged 65 and older or those with disabilities. AARP, which was instrumental in lobbying for the law, revealed these findings based on a study conducted by health consultancy Avalere in a report published Wednesday.

AARP's report highlights that the $2,000 cap will benefit over 3.2 million people, approximately 8.4% of Part D beneficiaries who receive no other subsidies, by significantly reducing their annual drug costs. By 2029, this cap will aid 4.1 million beneficiaries, about 9.6% of the total, with the most pronounced effects for those using costly branded medications.

Nearly 40% of those who hit the cap, around 1.4 million people, will save more than $1,000 annually over five years. This includes 420,000 people who will save over $3,000 each year, drastically reducing the financial burden for patients who currently spend upwards of $10,000 annually. The study excluded from its analysis Part D beneficiaries benefiting from low-income subsidies.

"The money seniors will no longer have to spend out-of-pocket is money they can invest in their families, broader health needs, or simply save to achieve greater financial stability," said AARP CEO Jo Ann Jenkins.

(With inputs from agencies.)