Health Affairs February 3, 2023
The Inflation Reduction Act (IRA) of 2022 marks the first major overhaul of the Medicare Part D prescription drug benefit in over a decade. Media coverage has largely focused on one Medicare reform enacted through the IRA—a $2,000 limit on annual Part D out-of-pocket prescription costs starting in 2025. However, an equally important provision in the legislation has been overlooked: giving beneficiaries the option of “smoothing” their Part D out-of-pocket costs starting in 2025. In contrast to the current Part D benefit structure where out-of-pocket costs are typically frontloaded at the start of each calendar year, the “smoothing” option will allow Medicare beneficiaries to spread their out-of-pocket prescription costs more evenly with monthly installments. Smoothing has the potential to be...
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