Medicare Implements $2,000 Annual Cap on Prescription Drug Costs

Starting January 1, Medicare enrollees will see reduced out-of-pocket expenses for medications under a key provision of the Inflation Reduction Act.

The $2,000 annual cap applies to Medicare Part D enrollees, covering most prescription drugs obtained at pharmacies or through mail order.
This measure, part of the 2022 Inflation Reduction Act, is expected to benefit over 3 million enrollees in 2025, with projected savings averaging $400 per person annually.
The cap does not include premiums or medications administered in doctors’ offices, such as certain chemotherapy treatments covered by Medicare Part B.
Enrollees can opt to spread out their medication payments over the year, providing added financial flexibility for high upfront costs.
The new cap builds on prior changes, including a $35 monthly insulin cap and expanded access to free vaccines, aimed at reducing healthcare costs for seniors.