Prescription Costs on the Rise: How to Help Clients Save With the IRA

Jul 10, 2024

As an independent insurance agent, you’ve likely noticed the increasing burden of prescription drug costs on your clients. With prices continuing to rise and the Annual Enrollment Period (AEP) just around the corner, the pressure is on to help your clients find ways to save money. But what if we told you that the key to successfully navigating the rise in prescription drug cost lies in the Inflation Reduction Act (IRA)? That’s right – the IRA is key to not only helping your clients save big on their prescription medications but also to set yourself apart as a trusted advisor during this critical sales period.

Keep reading to discover how you can leverage the IRA’s cost-saving provisions to better serve your Medicare clients, boost your sales, and make this your most successful AEP yet!

Understanding the Inflation Reduction Act (IRA)

Before we dive into how the IRA can help you better serve your clients and boost your AEP sales, let’s first take a closer look at what the IRA is and what it means for you as an independent insurance agent.

The IRA is a comprehensive piece of legislation that aims to address various economic issues, including healthcare costs. For Medicare beneficiaries, the act introduces several key provisions to help reduce prescription drug expenses like:

  • Allowing Medicare to negotiate drug prices directly with pharmaceutical companies
  • Capping out-of-pocket expenses for prescription drugs at $2,000 annually (starting in 2025)
  • Reducing insulin costs to $35 per month (effective in 2023)
  • Expanding subsidies for low-income beneficiaries
  • Allowing individuals the opportunity to pay out-of-pocket prescription drug costs in monthly payments (starting in 2025)

It’s important to note that 2025 will be the first year of the $2,000 out-of-pocket cap on drug costs, effectively eliminating the Part D coverage gap. Once a beneficiary reaches the $2,000 threshold, they will no longer be responsible for any additional out-of-pocket costs for covered prescription drugs for the remainder of the year.

With the implementation of the $2,000 cap on out-of-pocket costs and the increased cost share on carriers, we are likely to see significant changes to drug formularies in 2025 plans. Combined with a decrease in funding for 2025, benefits could be reduced by approximately 25%.

As a result, it is anticipated that 90% of consumers may be shopping for new plans this year, compared to the usual 25% shopping rate. It is estimated that 27 million consumers will be shopping for plans in 2025, marking the highest shopping rate in AEP history.

Communicating IRA Savings to your Clients

As a licensed independent insurance agent, it’s important to explain the cost saving benefits of the IRA to your clients so they are well equipped to navigate their options during AEP.  By effectively communicating these advantages, you not only help your clients navigate the complexities of Medicare but also demonstrate your value as a trusted advisor.  Here are some strategies to help you communicate the potential savings effectively:

➡️Plan Reviews for 2025 are a MUST:

The IRA’s elimination of the Part D coverage gap, combined with the expected changes in drug formularies, makes it essential for you to connect with your entire book of clients this AEP. Emphasize the importance of reviewing plans for 2025, as this year is projected to have the highest shopping rate in history.

➡️Highlight Specific Cost Savings

Highlight the $35 monthly cap on insulin and the $2,000 annual limit on out-of-pocket prescription drug costs. This is especially beneficial for clients who are struggling with high prescription drug costs.

➡️Compare Costs Before and After IRA Implementation

Show clients how much they could save on their prescription drugs by comparing their current costs to the projected costs under the IRA.

➡️Provide Personalized Examples

Use your clients’ specific medication needs to create customized examples of how the IRA can help them save money.

➡️Utilize MedicareCENTER:

To streamline the quoting and enrollment process during AEP, consider getting all your clients entered into MedicareCENTER and invite them to create a client portal. They can enter their updated drug list and doctors, making it easier for you to find the best plan for their needs.

The Annual Enrollment Period is an ideal time to discuss the IRA’s cost-saving provisions with your clients. As they review their Medicare plan options, make sure to highlight how the IRA can help reduce their prescription drug expenses, particularly with the elimination of the Part D coverage gap in 2025.

Additional Ways to Help Clients Save

In addition to the IRA, there are other strategies you can use to help your clients save on prescription costs:

  • Encourage the use of generic drugs: When appropriate, recommend generic alternatives to brand-name medications to help clients save money.
  • Help with assistance programs: Help eligible clients apply for programs like Extra Help, which can provide additional financial support for prescription drugs.

Final Takeaway

The Inflation Reduction Act represents a significant step forward in addressing the rising cost of prescription drugs for Medicare beneficiaries. As an independent insurance agent, you play an important role in helping your clients navigate these changes and take advantage of the potential savings.

Keep in mind that due to the anticipated changes in drug formularies and potential service area reductions, especially in rural areas, it’s more important than ever to meet with your entire book of clients to ensure their continued satisfaction and retention.

By educating and supporting your clients, you can help ensure they have access to affordable medications and enjoy better health outcomes. During this AEP, make it a priority to discuss the IRA’s cost-saving provisions with your clients, particularly the elimination of the Part D coverage gap in 2025, and help them make informed decisions about their Medicare coverage.

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