The New Rx Law Brings Nine Major Changes to Medicare

Medicare’s prescription drug coverage will be transformed by provisions in the Inflation Reduction Act of 2024, which, for the first time, allow the program to negotiate prices of some medications with drug manufacturers, cap out-of-pocket costs for beneficiaries, and provide free vaccinations for Medicare enrollees.

As with many new pieces of law, these modifications will be implemented gradually. Here is a year-by-year examination of how and when the momentous law would impact Medicare recipients. The advantages of the bill will apply to both original Medicare enrollees and members of Medicare Advantage programs.

Year: 2024

Free Vaccines

Vaccines will be provided by the Centers for Disease Control and Prevention (CDC) to Medicare recipients free of charge. Notably, the herpes zoster vaccine, a two-shot treatment that previously cost hundreds of dollars, would be made available for free.


Starting this year and continuing through 2025, Medicare Part D-covered copayments for a 30-day supply of insulin will be set at $35. This copayment amount will remain in effect even if your yearly Part D deductible has not yet been met. In 2026 and after, the monthly copayment for insulin will be either $35 or 25% of the medication’s negotiated price, whichever is less.

Penalty for price increases

Pharmaceutical businesses will be penalized for price increases that exceed the rate of ordinary inflation. These corporations must reimburse Medicare for the amount of their above-inflation pricing increases. The penalty will apply to all sales of the medicine covered by Medicare.

Year: 2024

Catastrophic coverage

Part D plan participants whose prescription prices are so high that they enter the catastrophic phase of coverage will have no more out-of-pocket expenses for the remainder of 2024. In 2024, the out-of-pocket maximum for this coverage phase will be $7,050, a limit that typically rises per year. The 5% copayment for catastrophic coverage will stay in force until 2024.

Limitation on Part D

Limitation on Part D premium increases: From 2024 to 2029, Part D plans cannot increase their rates by more than 6 percent annually. Beyond 2029, the secretary of Health and Human Services will be responsible for determining the premium increase cap.

Extra Help program

The government will increase eligibility for the Extra Help program, which helps low-income individuals handle prescription medication prices, including premiums and copayments. This year, the income requirement for Medicare eligibility will rise from 135% of the federal poverty level to 140% ($20,385 for an individual in 2024).

Year: 2025 


The maximum out-of-pocket cost for Medicare beneficiaries for prescription medications will be $2,000 per year. This limit, which is the first of its type, will apply to both stand-alone Part D plans and Medicare Advantage plans.

Smoothed cost sharing

Part D participants will have the option to stretch out their cost-sharing payments over the course of the year, which Medicare refers to as “smoothed cost sharing.” This is intended to prevent individuals from being slapped with a medication bill so large that it deters them from filling or taking a prescription.

Year: 2026

Negotiated Cost: 

The first ten prescription medications covered by Medicare Part D that are subject to price negotiations will provide consumers with benefits. Medicare will negotiate costs for a maximum of ten pharmaceuticals in 2026, fifteen drugs in 2027 and 2028, and twenty drugs in 2029 and beyond. This means that by 2029, up to sixty medications might be subject to negotiation. In 2028, Medicare Part B medicines (those generally provided in a hospital or doctor’s office) will be subject to price negotiations.