Last updated on October 11th, 2022
When the Inflation Reduction Act (IRA) was signed into law in August, there was a huge rush to figure out what the law meant and what it would do. Now that we’ve had a little time to reflect on it, one striking characteristic is that the health care provisions roll out over a decade, with the majority taking effect over the next four years.
Since we’re accountants – not lawyers, we consulted a multitude of sources to compile the following effective dates for many (but not all) IRA health care provisions – you’ll find a list of those sources at the end of this article. With that, here’s the timeline we came up with…
December 31, 2022
A plan continues to qualify as high deductible even if it does not apply a deductible to insulin-related products.
2023
ACA premium tax credits enhanced in 2021 under the American Rescue Plan Act and due to expire at the end of 2022 and are extended through 2025.
Adult vaccines recommended by the Advisory Committee on Immunization Practices are covered 100% under Medicare Part D with no cost share. (Certain vaccines will be covered 100% under state Medicaid and Children’s Health Insurance Programs as well.)
Annual price increases for certain Part B and Part D drugs are capped at the rate of inflation; otherwise, manufacturers must pay rebates to the Center for Medicare and Medicaid Services (CMS) or face penalties. Rebates for Part B drugs must be paid quarterly (within 30 days of notice). Rebates for Part D drugs must be paid annually (within 30 days of notice). If rebates aren’t paid, penalties equal to at least 125% of the rebate amount apply.
Insulin out-of-pocket costs are capped at $35 per month for Medicare beneficiaries through 2025.
2024
For Medicare Part D, once costs reach the catastrophic phase (above $7,000), the 5% cost-share no longer applies.
Medicare Part D subsidies are available to beneficiaries at or below 150% (up from 135%) of the federal poverty line.
Part D premium is capped at 6% growth annually through 2029.
2025
Medicare beneficiaries’ annual out-of-pocket costs for Part D spending are capped at $2,000.
Medicare Part D sponsors and Medicare Advantage organizations must offer beneficiaries payment plans, subject to a monthly cap, to pay off Part D prescription drug cost-share amounts.
2026
ACA premium tax credits extended under the IRA expire.
Medicare beneficiaries’ insulin costs are capped at the lesser of $35, 25% of the maximum fair price (MFP) for insulin, or 25% of the negotiated price for insulin. Also, coinsurance amounts and adjustments to supplier payments under Medicare Part B for insulin furnished via durable medical equipment are limited.
Under Medicare Part D, the first negotiated prices for 10 drugs with no generic or biosimilar counterpart that account for the greatest Medicare Part D spending take effect. Manufacturers that delay negotiations under the pretense a biosimilar or generic alternative will be available within 2 years but never materializes will be required to pay rebates to HHS. Manufacturers who fail to sell selected drugs at the MFP negotiated will be subject to severe penalties.
2027
Negotiated prices take effect for the 15 drugs on the negotiation list for Medicare Part D.
2028
Negotiated prices take effect for the 15 drugs on the negotiation list for both Medicare Parts B and D.
2029
Negotiated prices take effect for the 20 prescription drugs on the negotiation list for both Medicare Parts B and D.
2030
CMS will recalculate Part D base premiums using the original Part D premium formula.
2032
As reported by the National Law Review, “The IRA extends the moratorium on implementation of the final rule that relates to eliminating the anti-kickback statute Safe Harbor Protection for Prescription Drug Rebates, issued by the Office of the Inspector General on Nov. 30, 2020. The moratorium is extended until Jan. 1, 2032.”
Sources: National Law Review, PWC, JDSupra.com, Holland & Knight, HealthCareDive.com, BenefitNews, and Kaiser Family Foundation (KFF)
It’s important to note that I am not a lawyer; if you need confirmation of any IRA provisions please consult legal counsel. However, I am an accountant with RBT CPAs – one of the largest firms in the Hudson Valley and beyond. We’re known for our professionalism, ethics, and responsiveness. Should you need any accounting, tax, or auditing assistance, please don’t hesitate to give us a call.