Medicare's $2,000 cap on out-of-pocket drug expenses will actually cost most members more money

By Alessandra Malito

Companies will be looking for ways to offset the cost of the drug cap, says author Philip Moeller, so look for other changes in Part D plans

Medicare Part D beneficiaries will have a $2,000 cap on out-of-pocket costs for covered drugs beginning in 2025 - but where some people will save, others will inadvertently pay, one author and Medicare expert says.

Philip Moeller, author of "Get What's Yours for Medicare," said the cap will affect maybe 10% of Medicare beneficiaries, "if even that much." While having a limit on how much you can spend on out-of-pocket drug costs may be welcome, a majority of beneficiaries don't reach that cap to begin with, he noted, and only patients with very expensive medications will benefit.

"For them, it's a great deal because many pay several times that much," he said. "The drug companies that have to absorb that are looking for ways to compensate for that extra spending. So for the 90% who are not directly affected, they should look for other changes in Part D plans."

Moeller's revised edition of his Medicare book will be available beginning Oct. 8, and includes updates to Medicare coverage including drug plans, private Medicare Advantage options and additional changes to the system. The $2,000 drug cap, for example, was one of the provisions introduced under the Inflation Reduction Act, passed in 2022.

As open enrollment looms closer, beneficiaries should pay close attention to the changes to their Part D plans, as well as look at the details for any new plans they're considering. Open enrollment begins Oct. 15 and ends on Dec. 7.

Along with capping drug costs at $2,000, the law changed who pays above the cap, Moeller said. Part D enrollees with expenses over $2,000 will be considered in a "catastrophic coverage" phase. Currently, Medicare pays for 80% of total drug costs for anyone in that category, but in 2025, it will only pay 20%, while Part D pays 60% and the drug manufacturers pay the remaining 20%. As a result, plans will look for ways to recapture the money.

Those who may not benefit quite as much from the cap should look at the details of a plan. They can do that on Medicare's website, which was recently updated with 2025 plan options. The site provides information on the plans available in the user's area, and also allow users to input the specific doses and prescriptions they need.

Medicare Advantage options may seem more attractive for the coming year because of the Part D plan changes, Moeller said, since these plans receive subsidies they can use to offset consumers' costs. At the same time, some Medicare Advantage plans are pulling out of markets or reducing coverage in areas such as dental, vision and hearing, Moeller added. Regardless of the choices, enrollees should pay attention to every detail, he said.

Some things to look out for this season: whether deductibles or copays are higher, what categories the medications they need fall under (because many plans have multiple tiers of drugs) and the prices for generics and brand-name prescriptions.

"I would urge them to pay attention when shopping," Moeller said. "Don't just look at low premiums - look at the other costs."

Even enrollees with plans they like should review whether their coverage is changing at all for next year, which they can do by reading the Annual Notice of Change documents that their insurance companies send to them every year. They then can at least compare their current coverage with other options.

More than half of Medicare beneficiaries never changed their plans, according to a recent eHealth report, but sticking with the same plan can cost patients thousands of dollars if they aren't careful.

"Do not assume next year to be like this year," Moeller said.

-Alessandra Malito

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10-05-24 0530ET

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