The Inflation Reduction Act of 2022
establishes a maximum out-of-pocket limit - or RxMOOP -
that a person will pay each year for Medicare Part D prescription drugs covered by their Part D drug plan (either a stand-alone Medicare
Part D prescription drug plan, PDP
or Medicare Advantage plan that includes drug coverage, MAPD
The Part D RxMOOP will begin first in 2024 and be equivalent to the 2024 Medicare Part D total out-of-pocket spending threshold (TrOOP
Then in 2025, the annual RxMOOP will be reduced to $2,000 - and each year thereafter the RxMOOP will be adjusted (increase) based on inflation. After reaching the RxMOOP, a person will not have additional costs for Part D drugs covered by their Medicare Part D plan.
In summary: 2024 RxMOOP = $7,750 = 2024 TrOOP
For 2024, a Medicare Part D beneficiary will not have any costs after reaching the annual total annual out-of-pocket threshold (TrOOP
) (estimated to be around $7,750 in 2024). In other words, after a person reaches TrOOP and enters the Catastrophic Coverage phase
, the 5% coinsurance will be eliminated and the person's 2024 maximum out-of-pocket drug cost (RxMOOP) will be capped at
TrOOP.2025 RxMOOP = $2,000
Beginning in 2025, a new Medicare Part D plan design will be established where Medicare Part D plans will have no more than two phases: (1) the initial deductible (if the plan includes a deductible) and (2) an Initial Coverage Phase that will continue until the end of the plan year (December 31st) or until the Medicare Part D beneficiary reaches the $2,000 maximum cap on out-of-pocket prescription drug spending (RxMOOP).2026 and beyond RxMOOP > $2,000
Like other Medicare Part D plan parameters, the 2025 annual $2,000 RxMOOP can (and probably will) increase every year*.Question: What would be the retail value of the formulary prescriptions needed to reach the 2025 RxMOOP?(1) About $6,335 when the plan has a standard deductible.
The 2025 Medicare Part D deductible is estimated at $555 and a Medicare Part D plan member would need to purchase medication with a retail value of around $6,335 before reaching the $2,000 RxMOOP (assuming a standard 25% co-insurance cost-sharing
for all formulary drugs). So a person with a $555 deductible using Part D formulary medications with a retail value of over $528 per month
would reach the RxMOOP at some time during 2025 and not have any additional costs for Part D formulary drugs for the remainder of 2025. (2) About $8,000 for drug plans with a $0 deductible.
If a 2025 Medicare Part D plan (PDP or MAPD) has a $0 deductible and standard 25% co-insurance, a Medicare Part D plan member would need to purchase
medication with a retail value of around $8,000 before reaching the annual $2,000 RxMOOP. So a person with a $0 Rx deductible using Part D formulary medications with a
retail value of over $667 per month
would reach the annual RxMOOP at
some time during 2025 and not have any additional costs for Part D
formulary drugs for the remainder of 2025.
*Section 1860D-2(b)(6) (of the Social Security Act) - Annual percentage increase - The annual percentage
increase [for Medicare Part D plan parameters] specified in this paragraph for a year is equal to the annual
percentage increase in average per capita aggregate expenditures for
covered part D drugs in the United States for part D eligible
individuals, as determined by the Secretary for the 12-month period
ending in July of the previous year using such methods as the [HHS]
Secretary shall specify.