Prescription Drug Savings for Seniors in 2025

By Ahmed Aboulenein and Amina Niasse

WASHINGTON (Reuters) – More than 1 million people in the U.S. will save over $1,000 a year starting in 2025, when a $2,000 cap on out-of-pocket prescription drug costs takes effect, according to AARP.

The cap, introduced in President Joe Biden’s Inflation Reduction Act, applies to the Medicare program for individuals aged 65 and older, including those with disabilities. The Medicare Part D prescription drug program covers around 56 million people in total.

AARP commissioned a study by Avalere and released findings on Wednesday. The $2,000 cap will benefit over 3.2 million individuals, approximately 8.4% of Part D beneficiaries without other subsidies.

Previously, beneficiaries who did not qualify for low-income subsidies had to pay 5% of drug costs regardless of expenses incurred. With the new cap, long-term savings are expected, especially for those in greatest need, despite anticipated premium increases next year, per AARP expert Leigh Purvis.

By 2029, the cap could assist 4.1 million people, around 9.6% of beneficiaries. The largest benefits will accrue to those reliant on high-priced, branded medications.

One beneficiary, Diana DiVito, aged 82, shared her experience with chronic leukemia medications costing an average of $858 monthly over five years. She previously paid a co-insurance rate of 33% until hitting Part D’s high cap, which was still followed by a 5% payment. However, from 2024, this additional fee is eliminated. DiVito expressed relief, stating, “It’s a tremendous weight off my shoulders.”

Nearly 40% of individuals reaching the cap between 2025-2029, roughly 1.4 million, will save over $1,000 a year, including 420,000 (roughly 12%) who could save more than $3,000 annually. Currently, some patients incur costs exceeding $10,000 yearly, as noted in the report.

The study did not include Part D beneficiaries receiving low-income subsidies and paying minimal amounts for drugs.

AARP CEO Jo Ann Jenkins highlighted that the funds saved will allow seniors to invest in their families or enhance financial stability.