Tag Archives for Out of Pocket Costs

Cap on out— of-pocket costs for Medicare drug plan enrollees coming soon

Published in RINewsToday on September 2, 2024 

Back on Aug. 16th in 2022, President Joe Biden signed into law the Inflation Reduction Act of 2022 (IRA), it’s enactment lowering the health cost for millions of older Americans by lowering the high cost of prescription drugs by granting Medicare the power to directly negotiate drug prices with drug companies.  Rising drug costs were forcing some Medicare beneficiaries to cut their expenses by not filling a prescription or even skipping doses. This could lead to complications and side effects resulting in hospitalization, even death.

“AARP was instrumental in Congress passing the prescription drug law of 2022 to lower prices and out-of-pocket costs for Medicare enrollees,” said Jo Ann Jenkins, CEO of AARP in an Aug. 28 statement announcing the release of AARP’s new report. “As we approach January 2025, we want every senior in America to know that, thanks to the new annual cap which limits their out-of-pocket costs, they will have more money to invest in their families, spend on their broader health needs or simply save to achieve greater financial stability.”

Virtual Media Briefing Details Impact on IRA law

Last week, the Washington, DC-based AARP briefed the media on the state-level impact of the historic new federal protection for 56 million Medicare drug plan enrollees. The new law caps out-of-pocket prescription drug costs every year, beginning at $2,000 in January 2025. 

The nine-page Public Policy Institute report, released at the virtual media briefing, analyzes the number of enrollees (not receiving the Medicare low-income subsidy) that will benefit from the new cap by state, age, gender, and race between 2025 and 2029.

Nancy LeaMond, the chief advocacy and engagement officer for AARP, say putting the brakes to spiraling drug cost by enacting the IRA put money back into the pockets of millions of America’s retirees purchasing pharmaceuticals for their medical conditions. “Upwards of 95% of Americans, age 65 and older, have at least one chronic condition and close to 80% are dealing with 2 or more chronic conditions,” says LeaMond, like diabetes and heart disease, to debilitating neurological diseases like Parkinson’s and Ms.

“Prescription drugs are a lifeline, said LeaMond, stressing that medicine is only effective if you have the money to pay for it. The passage of IRA two years ago is already having a significant and positive impact on millions of Medicare beneficiaries who now don’t pay more than $35 a month for insulin and get free vaccines for things like shingles,” she noted. 

“There are even bigger savings coming down the pike, starting in January 2025. The total amount that folks enrolled in Medicare drug plans pay out of pocket for their prescriptions will be capped at $2,000 a year,” reports LeaMond.  

During the media briefing, Leigh Purvis, Prescription Drug Policy Principal, AARP Public Policy Institute, stated “one of the biggest challenges in the original Medicare Part D benefit was the lack of a cap on out-of-pocket spending.”  Even after reaching a certain limit, Medicare beneficiaries were still required to pay 5% of their drug costs, with no limit for those on expensive Medications, she said.

According to Purvis, out of pocket expenses could exceed $10,000 per year, “an unmanageable amount for anyone, but especially for a population with a Median annual income of $36,000. Because of this, AARP pushed for the inclusion of a cap on out-of-pocket spending for Medicare Part D, to be included in the IRA, she said.  And it was…

Purvis noted that 3 million Part D beneficiaries (who don’t receive the Medicare Part D low-income subsidy are expected to benefit from the $2,000 cap in 2025.  This number is expected to grow to over 4 million by 2029.  These Medicare drug plan enrollees would see average savings of roughly $1,100, or 56%, in 2025 for their prescription drugs. 

Purvis also gave a few other takeaways from the report.  On average,  approximately 1.4 million (40 percent) Medicare drug plan enrollees who reach the new out-of-pocket cap between 2025 and 2029 are estimated to see annual savings of $1,000 or more, and just over 420,000 (12 percent) will see savings of more than $3,000.  In addition, more than three-quarters of Medicare drug plan enrollees who will benefit in 2025 are between the ages of 65 and 84.

Finally, Paula Cunningham, AARP Michigan State Director (discussing  results of a state survey) and Diana Devito , who has lived with chronic lymphocytic leukemia for over 19 years, participated in the media briefing. Both reinforced  how the report’s numbers aren’t just statistics, they represent real people “who are being forced to make impossible choices.” 

Cunningham told a “heartbreak” story about a woman who had lost her husband, and she had to sell her wedding ring in order to pay for her prescription drugs. “She’s now deceased, but I will never forget her story, or the stories of people across this great state that we met who had to make difficult choices between paying rent or buying groceries to pay for their medications,” she said.

After experiencing the high prescription costs for treating life-threatening chronic disorder, Devito came to share how important a $2,000 cap can be “for people like me.”  She said, “It’s a real-life changer,” noting that everyone doesn’t understand that. “If you’re not taking one of these expensive drugs, you don’t realize the impact that it has on your life,” she added.

On Another Note…

U.S. Senator Jack Reed brings to my attention another Congressional report that details the Rhode Island specific data as to the impact of IRA on older Rhode Islanders.

According to the Congressional Joint Economic Committee (CJEC), this year, about 57,000 Rhode Island Medicare beneficiaries will save an average of roughly $200 each year because of IRA’s improvement to the Medicare Part D drug coverage. By 2025 this number would increase to 68,000 retirees, saving them an annual average of $340 on prescription drugs.

By allowing Medicare to negotiate with drug companies to bargain down the high cost of many lifesaving drugs, 29,000 retirees use drugs that are with the new negotiated prices, says the CJEC report.

For a copy of AARP Public Policy Institute’s Medicare Part D Out-of-Pocket Spending Cap, go to https://www.aarp.org/pri/topics/health/prescription-drugs/medicare-part-d-out-of-pocket-spending-cap-prescription-drug-costs/.

To learn more about AARP’s work to lower prescription drug prices, visit https://www.aarp.org/politics-society/advocacy/prescription-drugs/.

For a copy of CJEC’s report, go to https://www.jec.senate.gov/public/_cache/files/356ae3d2-af5e-4d32-bd42-fafc548173c5/ri-cost-savings-fact-sheet.pdf

For details how the IRA impacts older Rhode Island retirees, go to https://www.whitehouse.gov/wp-content/uploads/2022/08/Rhode-Island-Health-Care.pdf

Report Hones in on Caregiving Costs

Published in Woonsocket Call on November 20, 2016

On the last day of October, a 537 word proclamation issued by President Barack Obama proclaimed November 2016 as National Family Caregiver (NFC) month. In this official decree the president encouraged the nation to pay tribute to 90 million caregivers who work tirelessly care for family members, friends, and even neighbors.

Obama recognizing the nation’s caregivers came about through the lobbying efforts of Caregiver Action Network (the National Family Caregivers Association). The Washington, DC-based group began its efforts to nationally recognize family caregivers in 1994. Three years later, President Clinton signed the first NFC Month Presidential Proclamation and every president since that time has followed suit by issuing an annual proclamation recognizing and honoring family caregivers each November.

On the heels of Obama’s signed proclamation comes the release of a new AARP report that details the out-of-pocket cost of caregiving. According to researchers, family caregivers spend an average of nearly 20 percent of their income providing care for a family member or other loved one. Along with increased out-of-pocket (OOP) expense, the study also explores other financial and personal strains that family caregivers may experience as result of their caregiving activities.

The Financial Strain of Caregiving

AARP’s 56 page research report “Family Caregiving and Out-of-Pocket Costs: 2016 Report,” noted that caregivers spend an average of $6,954 in OOP costs related to caregiving, with Hispanic/Latino and low-income family caregivers spending an average of 44 percent of their total annual income.

“This study spotlights the financial toll on family caregivers – particularly those with modest incomes,” said AARP Executive Vice President and Chief Advocacy and Engagement Officer Nancy LeaMond. “Whether helping to pay for services or make home modifications, the costs can be enormous and may put their own economic and retirement security at risk. As a nation, we need to do more to support America’s greatest support system. Passing the bipartisan Credit for Caring Act that provides a federal tax credit of up to $3,000 would give some sorely needed financial relief to eligible family caregivers.”

AARP’s report, released November 14, 2016, determined the amount of money that family caregivers spent over the last year providing help or assistance to a loved one. Certain groups of family caregivers spend disproportionately more in OOP expenses, said the researchers.

AARP’s report, prepared by Chuck Rainville, Laura Skufca and Laura Mehegan, noted that family caregivers of all ages spend $6,954 in OOP costs related to caregiving on average. They are earning less than $32,500 are under significant financial strain, spending an average of 44 percent of their annual income on caregiving.

Family caregivers caring for adults with dementia spend nearly twice the OOP costs ($10,697) than those caring for adults without dementia ($5,758), the AARP report found.

Cultural Diversity and Caregiver Costs

Researchers looked at cultural diversity as it related to OOP expenses of family caregivers. According to their findings, Hispanic/Latino family caregivers spend an average of $9,022 representing 44 percent of their total income per year. By comparison, African American family caregivers spend $6,616 or 34 percent, white family caregivers spend $6,964 or 14 percent, and Asian Americans/Pacific Islanders spend $2,935 or 9 percent.

As expected, long-distance family caregivers had the highest OOP costs at $11,923 compared with family caregivers living with or nearby their care recipients.

The AARP report notes that increased OOP forces family caregivers to dip into savings, cut back on personal their spending, and they save less for retirement. Some must take out loans to make financial ends meet. Additionally, more than half of family caregivers are cutting back on leisure spending and also reported a report a work-related strain such as having to take unpaid time off.

“Many family caregivers experience a great deal of physical, emotional, and financial strain,” added Susan Reinhard, RN, PhD, Senior Vice President and Director, AARP Public Policy Institute. “This report highlights why AARP supports the bipartisan Recognize, Assist, Include, Support, and Engage (RAISE) Family Caregivers Act that would require the development of a national strategy to support family caregivers.”

AARP Rhode Island State Director Kathleen Connell says that AARP’s recently released report verifies what most family caregivers know all too well: Providing for a loved one challenges caregivers in many ways and out-of-pocket expenses certainly is one of them, she says.

“In conversations I’ve had with caregivers over the years, I have found most all consider their efforts a responsibility as well as a labor of love. They rarely complain about cost because, I suspect, they try never to characterize caregiving as a burden,” says Connell..

Connell says, “With passage of the CARE Act and its implementation coming in 2017, Rhode Island is among the states leading the way in caregiver support. We cannot rest. You may be a caregiver. You may know a caregiver. You may someday rely on a caregiver. Any way you look at it, you need to be in the conversation about future needs.”

This study of a nationally representative sample of 1,864 family caregivers was conducted by GfK from July 18–August 28, 2016. All study respondents were currently providing unpaid care to a relative or friend age 18 or older to help them take care of themselves.

The full results of AARP’s caregiver report can be found here: http://www.aarp.org/caregivercosts