The Inflation Reduction Act
The Inflation Reduction Act (IRA) is a law that improves and expands benefits for Medicare members. The IRA lowers Part B and Part D drug costs, provides stable and predictable out-of-pocket costs for covered drugs, and more.
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Annual out-of-pocket (OOP) threshold
Medicare is setting a maximum out-of-pocket cap on prescription drug costs. In 2025 that amount will be $2,000. That means if your drug costs reach this amount, you won’t pay anything for your prescription drugs for the rest of 2025. Your monthly plan premium does not count toward this amount. This cap is specifically for Part D drugs. It does not apply to drugs covered under Medicare Part B. Payments for Part B drugs count towards your plan’s maximum out-of-pocket amount instead.
The Medicare Prescription Payment Plan
What is the Medicare Prescription Payment Plan?
The Medicare Prescription Payment Plan is a new payment option that works with your current prescription drug coverage to help you manage your out-of-pocket Part D drug costs by spreading them across the calendar year (January–December) instead of paying them in full at the pharmacy or through mail order. It can help you manage your monthly expenses, but it doesn’t save you money or lower your total drug costs.
Starting in 2025, anyone with Medicare prescription drug coverage can use this payment option to pay for covered Part D drugs. All plans offer this payment option. Participation is voluntary, and there is no cost to participate. There are no fees or interest charged under the program.
How it works
You must first opt into the program. When you fill a prescription for a covered Part D drug, you won’t pay your pharmacy (including mail order and specialty pharmacies). Instead, you’ll get a bill each month from your health or drug plan.
Even though you won’t pay for your drugs at the pharmacy or when receiving your mail order delivery, you’re still responsible for the costs. If you want to know what your drug will cost before you take it home, call your plan or ask the pharmacist.
How your bill is calculated
Your monthly bill is calculated specific to your drug costs. Your first month’s bill is calculated a little differently from the rest of your monthly payments. It is based on what Medicare calls your “maximum possible payment.” The rest of your monthly bills are based on what you would have paid for any prescriptions you get, divided by the number of months left in the year, plus your monthly amount from the previous month. Your bill may vary from month to month, as you fill more prescriptions and more out-of-pocket costs get added to your owed amount.
View information on the “maximum possible payment” and examples of bill calculations.
Who is likely to benefit
You’re most likely to benefit from participating in this payment option if you have high drug costs earlier in the year. “High drugs costs” can mean that you will spend more than $600 out of pocket on a single prescription at the pharmacy counter or through mail order, or you will reach the 2025 annual out-of-pocket threshold of $2,000. Although you can start participating in this payment option at any time, starting earlier in the year (January - September), gives you more months to spread out your payments. Go to Medicare.gov/prescription-payment-plan/will-this-help-me to answer a few questions and find out if you’re likely to benefit from this payment option. We may send you a letter letting you know that you’re likely to benefit.
This payment option may not be the best choice for you if:
- Your yearly drug costs are low.
- You are considering opting in later in the year (after September).
- You don’t want to change how you pay for your drugs.
- You get or are eligible for the Low-Income Subsidy, or “Extra Help,” from Medicare.
- You get or are eligible for a Medicare Savings Program.
- You get help paying for your drugs from other organizations, like a State Pharmaceutical Assistance Program (SPAP), a coupon program, or other prescription drug coverage.
How to opt in to the program
You must opt in to take advantage of the program, which you will be able to do beginning October 15, 2024.
Phone
You can call our Member Help Team.
- Keystone 65 HMO: 1-800-645-3965 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
- Personal Choice 65SM PPO: 1-888-718-3333 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
Online
By mail
Download our paper form and mail it to:
Keystone 65 Rx or Personal Choice 65 Rx
PO Box 7799
Philadelphia, PA 19101-7799
By fax
Download our paper form and fax it to 1-888-289-3029 or 215-238-7960.
How to opt out of the program
You can leave the Medicare Prescription Payment Plan at any time by contacting our Member Help Team. Opting out won’t affect your health or drug coverage and other Medicare benefits. Keep in mind:
- If you still owe a balance, you’re required to pay the amount you owe, even though you’re no longer participating in this payment option.
- You’ll start paying the pharmacy directly for new out-of-pocket drug costs after you opt out of the Medicare Prescription Payment Plan.
Making payments
How to pay your bill
After IBX approves your participation in the Medicare Prescription Payment Plan, you’ll get a letter with more information about how to pay your bill. You can pay online or by mail.
- Online: Pay your bill online.
- By mail: Send your payment to
Optum RX MPPP
PO Box 67
Minneapolis, MN 55480-0067
Please note: Only send checks for payment and the remittance coupon to this address. Do not send any correspondence.
What happens if you don't pay your bill?
You will get a reminder by mail if you miss a payment. If you don’t pay your bill by the date listed in that reminder, you’ll be removed from the Medicare Prescription Payment Plan, and you’ll start paying for your drugs when you pick them up at the pharmacy. You’re required to pay the amount you owe, but you won’t pay any interest or fees, even if your payment is late.
You can choose to pay that amount all at once or be billed monthly. If you are removed from the Medicare Prescription Payment Plan, you’ll still be enrolled in your Medicare drug plan or Medicare Advantage health plan with drug coverage.
How to file a grievance
You can contact our Member Help team if you think we made a mistake about your Medicare Prescription Payment Plan bill. You also have the right to follow our grievance process.
- Keystone 65 HMO: 1-800-645-3965 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
- Personal Choice 65SM PPO: 1-888-718-3333 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
Medicare Prescription Payment Plan election
IBX members are able to ask for retroactive election into in the Medicare Prescription Payment Plan if you have an urgent prescription fill(s) for which you have already paid and before your program election was received and processed.
Under this policy, a retroactive election must be processed if all the following conditions are met:
- You reasonably believe that any delay in filling the prescription(s) due to the 24-hour timeframe required to process your request to opt in in may seriously jeopardize your life, health, or ability to regain maximum function; and
- You request a retroactive election within 72 hours of the date and time your urgent claim(s) were determined.
Once your Medicare Prescription Payment Plan election has been effectuated, IBX must process the reimbursement for all cost sharing paid by you for the urgent prescription and any covered Part D prescription filled between the date of that fill and the date that your election is effectuated within 45 days of the election date.
If IBX determines that you failed to request retroactive election within the required timeframe or that a request for retroactive inclusion of an urgent prescription is unreasonable, it must promptly notify you of its determination and provide instructions on how the individual may file a grievance.
For additional information visit Medicare.gov/prescription-payment-plan, or call 1-800-MEDICARE (1-800-633-4227), 24 hours a day, 7 days a week. TTY users can call 1-877-486-2048.
Additional money-saving programs
The Low-Income Subsidy (LIS) Program
Eligible Medicare beneficiaries can get the Low-Income Subsidy (or "Extra Help") if they meet certain geographic, income, and resource requirements. Those that live in one of the 50 states or the District of Columbia meet the geographic requirements. The IRA expanded the income requirement to 150% of the federal poverty limit. This means that individuals who earn up to $22,590 per year and couples who earn up to $30,660 per year meet the income requirements. And individuals with resources of up to $17,220 and couples with resources of up to $34,360 meet the resource eligibility requirements.
Resources include money in a checking, savings, or retirement account, stocks, and bonds. They don’t include your home, personal items, one car, burial plots, up to $1,500 for burial expenses if you’ve put that money aside, furniture, and other household and personal items.
The IRA also ensures that "Extra Help" recipients have a $0 monthly Part D premium and a $0 plan deductible, and that they don’t need to pay a Part D late enrollment penalty if they receive one. Additionally, it caps your costs for a single prescription at up to $4.50 for generics and $11.20 for brand-name drugs.
To see if you may qualify for “Extra Help,” use our Tax Credit and Subsidy Calculator. You may also be eligible for one of these programs.
Other programs
- Medicare Savings Programs: State-run programs that might help pay some or all of your Medicare premiums, deductibles, copayments, and coinsurance. Visit Medicare.gov/medicare-savings-programs to learn more.
- State Pharmaceutical Assistance Programs (SPAPs): Programs that might include coverage for your Medicare drug plan premiums and/or cost sharing. SPAP contributions may count toward your Medicare drug coverage out-of-pocket limit. Visit go.medicare.gov/spap to learn more.
- Manufacturer Pharmaceutical Assistance Programs (sometimes called Patient Assistance Programs (PAPs)): Programs from drug manufacturers to help lower drugs costs for people with Medicare. Visit go.medicare.gov/pap to learn more.
Additional benefits under the IRA
Insulin cost-sharing capped at $35 a month
The IRA limits the cost of all Part B and Part D covered insulins to $35 or less per one-month supply, regardless of what drug tier the insulin is on or what Part D coverage phase a member is in. For Part B insulins that are administered through durable medical equipment like pumps, the $35 monthly limit applies only to the insulin, not the cost of the equipment.
$0 cost-share for recommended Part D vaccines
All Medicare plans with prescription drug coverage now cover the full cost of many Part D vaccines, including shingles, hepatitis A, and hepatitis B. That means people with Part D plans will not have to pay a deductible, coinsurance, or any other cost-sharing for vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), whether they are received in or out of network.
- If you receive a Part D ACIP-recommended adult vaccine at a pharmacy, no payment will be required.
- If you receive a Part D ACIP-recommended adult vaccine at a doctor's office, you may be asked to pay the cost for both the vaccine and administration up front. Reimbursement requests can be made by following the instructions outlined in your Evidence of Coverage (EOC). You will be reimbursed for the full amount.
$0 cost-share for Part D medications during the catastrophic coverage phase
The IRA limits the amount of money Part D plan members may spend out of pocket on their prescriptions per year. Once they reach the catastrophic coverage phase, which in 2024 begins when they have reached $8,000, and in 2025 begins when they have reached $2,000, in total out-of-pocket costs, they pay nothing for their medications until the beginning of the next calendar year.
- Prior to the IRA, people with Part D plans who reached the catastrophic coverage stage would continue to pay five percent of their drug costs for the rest of the year.
- Now, they will pay nothing after they reach this limit until the next year begins.
- Most people never reach the catastrophic coverage phase. However, those who do in 2024 and beyond will get significant savings.
Learn more about Catastrophic Coverage.
Resources
For more resources and information on the IRA:
- Learn more about the Low-Income Subsidy
- Learn more about the IRA benefit changes
- Learn more about the Medicare Prescription Payment Plan
- Read the Independence Blue Cross Introduction to the IRA blog
- Visit Medicare's IRA page
How can we help?
Call our Member Help Team
- Keystone 65 HMO: 1-800-645-3965 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
- Personal Choice 65SM PPO: 1-888-718-3333 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
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Website last updated: 8/13/2024