The Inflation Reduction Act is a measure designed to help individuals and families save money on their health insurance premiums. With the cost of healthcare continuing to rise, the Inflation Reduction Act is intended to provide relief to those who are struggling to keep up with the rising costs of health insurance. This act works by tying premium increases to inflation, ensuring that health insurance premiums don’t outpace the cost of living.
In this article, we will explore what the Inflation Reduction Act is, how it works, and how you can benefit from this cost-saving measure. Whether you’re on a tight budget or just looking for ways to reduce your healthcare costs, the Inflation Reduction Act is worth considering.
But first, what is the Inflation Reduction Act?
Sen. Joe Manchin (D-W.Va.), and Kristen Sinema (D-Ariz.), along with Senate Majority Leader Chuck Schumer (D-N.Y.), reached an agreement on the bill, which was scaled back from the reconciliation bill known as Build Back Better and passed by the House in November. The bill passed the Senate on July 31 and the House on August 12.
By offering much-needed financial assistance for the medical care and pharmaceuticals people require to survive and thrive, the Inflation Reduction Act will act as a lifeline for those struggling to pay for their healthcare. The bill increases access to affordable healthcare by:
Enabling Medicare to negotiate with pharmaceutical companies to reduce costs
Preventing medication manufacturers from increasing Medicare costs over inflation
Imposing a new yearly limit on prescription out-of-pocket expenses for Medicare enrollees and a $35 monthly limit on insulin cost sharing
More substantial health insurance marketplace subsidies that would benefit middle-class families paying high premiums. It ensures that lower-income individuals have access to $0 premium plans.
Along with these adjustments to health care, the Inflation Reduction Act also ensures companies pay their fair share of taxes and makes historic expenditures to combat climate change.
What are the Benefits of Inflation Reduction Act?
Lower Drug Costs for Seniors
Drug costs are a barrier to care and treatment like never before. Due to the cost of medication, one in four people in the United States has not taken their prescription as directed. Congress has taken decisive steps to lower prescription prices after examples of deadly insulin rationing due to cost in the media and survey data showing how cost affects taking medication as directed.
The prescription medicine provisions of the Inflation Reduction Act will save seniors hundreds of dollars annually on pharmaceutical expenses and lower costs across the entire health system.
The Inflation Reduction Act limits the amount that Medicare and families can be charged for essential medications, lowering the cost of prescription drugs for families. The Inflation Reduction Act, among other things, allows Medicare to haggle over the cost of some prescription medications and imposes fines on pharmaceutical companies whose costs to Medicare increase more quickly than the inflation rate.
Older individuals now have increased financial security against high prescription drug expenses thanks to the Inflation Reduction Act. Medicare Part D does not cap the amount of out-of-pocket spending for seniors, unlike most commercial insurance plans. The Inflation Reduction Act limits out-of-pocket expenditure to $2,000 annually and smooths out spending by capping out-of-pocket payments at a certain amount every month.
The Inflation Reduction Act also ensures that Medicare recipients spend no more than $35 monthly out-of-pocket expenses for insulin. Without low-income subsidies, people might save an average of $19 per month, or 35% of their insulin expenditures.
The Inflation Reduction Act will also end cost sharing for vaccines for Medicare Part D patients starting in 2019, 4 million of whom will have gotten a vaccine covered by Part D in 2020. The Inflation Reduction Act mandates that states pay for adult Medicaid enrollees’ immunizations.
More Affordable Marketplace Plan
The extension of the American Rescue Plan’s (APR) expanded premium tax credits will lower expenses for the millions of Americans who rely on ACA health insurance policies.
The Inflation Reduction Act lowers prices for millions of Americans who purchase health coverage independently. The ARP assisted in raising marketplace enrollment to a record high of 14.5 million and lowering the U.S. uninsurance rate to an all-time low of just 8 percent. It expands the availability of premium tax credits to more middle-class families and increases the generosity of financial assistance for those who were previously eligible. The average marketplace enrollee saves $800 a year due to the ARP.
It is crucial to ensure the continuation of this financial assistance, not only for those currently covered by marketplace insurance. But also for those who might require it in the future due to life transitions like job loss, aging off of parental insurance coverage, moving changes in family structure, or changes in income. These transitions happen frequently; for example, in 2021, a special enrollment period saw about 3 million people sign up for marketplace coverage. The marketplace provides a lifeline for those without access to insurance through their employment or a government program.
What makes the Inflation Reduction Act significant?
The Inflation Reduction Act holds great significance as it addresses the issue of inflation and aims to reduce costs for families while simultaneously generating approximately 1.5 million high-quality job opportunities. It also endeavors to provide financial assistance for purchasing environmentally-friendly appliances and life-saving medications, thereby positively impacting the healthcare sector, the economy, and climate change.
What is the funding source for the Inflation Reduction Act?
The Inflation Reduction Act is fully funded through the closure of tax loopholes utilized by large corporations, the implementation of stricter measures against wealthy individuals who evade taxes, and the reduction of prescription drug costs.
In what way will the Inflation Reduction Act reduce inflation?
The Inflation Reduction Act is designed to combat inflation in several ways. Firstly, it will tackle the issue of wealthy tax evaders, which can reduce demand and contribute to the lowering of inflation. Secondly, the Act will enhance domestic supply through investments in clean energy and manufacturing. Additionally, it aims to reduce the cost of essential expenses such as healthcare, prescription drugs, and energy, which have already been quite expensive even before the current surge in inflation.
For seniors and families, reducing out-of-pocket medical expenses has long-term economic benefits.
In recent decades, household spending on healthcare has climbed, and it is exceptionally high among families receiving Medicare. More generally, many low- and middle-income families say their health care expense significantly impacts their financial security.
The Inflation Reduction Act will ensure that working families pay less for insurance premiums for plans purchased on the ACA marketplaces and immediately cut prescription medication costs for Medicare-eligible seniors. By enacting the Inflation Reduction Act’s health provisions and enhancing access to care and pharmaceuticals, Congress will lay the groundwork for future measures that will further enhance health and wellbeing. These measures collectively will stabilize millions of people’s finances while lowering inflation and the deficit.
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