Potential Savings for Medicare Part D Enrollees Under Proposals to Add a Hard Cap on Out-of-Pocket Spending

(By Juliette Cubanski, Tricia Neuman, and Anthony Damico for Kaiser Family Foundation published September 10, 2021)

Medicare Part D, the outpatient prescription drug benefit for Medicare beneficiaries, provides coverage above a catastrophic threshold for high out-of-pocket drug costs, but there is no cap on total out-of-pocket drug costs that beneficiaries pay each year. Part D enrollees are required to pay 5% of their total drug costs in the catastrophic phase unless they qualify for Part D Low-Income Subsidies (LIS). In 2021, the catastrophic threshold is set at $6,550 in out-of-pocket drug costs, which includes what beneficiaries themselves pay and the value of the manufacturer discount on the price of brand-name drugs in the coverage gap (sometimes called the “donut hole”), which counts towards this amount. This lack of a hard out-of-pocket spending cap can expose Part D enrollees to thousands of dollars in out-of-pocket costs if they take several costly medications or even just one expensive drug.  Continue reading the issue brief here…

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