How does the Inflation Reduction Act affect your Health Coverage?
How the Inflation Reduction Act Affects Your Health Coverage
The Inflation Reduction Act (IRA) reshapes how Americans pay for health coverage. If you’re self-employed, between jobs, or comparing Marketplace plans with Private PPO options, these changes can directly affect your premiums, subsidies, and prescription costs. Here’s what it actually does and what to review before you renew.
What the Inflation Reduction Act Actually Does
Lower Marketplace Premiums
- Extends enhanced ACA subsidies that reduce monthly premiums for many households.
- More middle-income families qualify for assistance than before.
- Helps keep Marketplace plans competitive versus employer coverage.
No Sudden “Subsidy Cliff”
- Premium tax credits phase out gradually instead of cutting off at one income number.
- Savings scale with income, which helps freelancers and self-employed families.
- Gives more flexibility if your income fluctuates year to year.
Help With Prescription Costs
- Caps some out-of-pocket prescription costs in Medicare over time.
- Limits how fast certain drug prices can increase each year.
- Can ease pressure on overall family health budgets, especially for seniors.
Stronger Consumer Protections
- Makes it harder for plans tied to the ACA to shift large costs back onto families overnight.
- Encourages carriers to keep preventive and chronic-care benefits affordable.
- Supports more predictable pricing from year to year.
How It Affects Marketplace vs. Private PPO Plans
Marketplace (ACA) Plans
- Premiums are heavily influenced by IRA-extended subsidies and your household income.
- Great fits when tax credits keep monthly premiums low.
- Networks may be narrower (HMO/EPO), and referrals are common in many areas.
Private PPO (Non-Marketplace)
- Do not receive IRA subsidies—pricing is based on age, ZIP, benefits, and network size.
- Can offer nationwide PPO access with no referrals when medically underwritten.
- Often a better fit when keeping specific doctors, hospitals, or travel flexibility is the priority.
What To Do Before You Renew or Switch Plans
- Review income for next year. Estimate your 2026 household income as realistically as possible so subsidies are accurate.
- Compare Marketplace vs. Private PPO side by side. Look at doctors, prescriptions, deductibles, and total yearly cost—not just the premium.
- Check doctors and meds first. Confirm that your preferred providers and key prescriptions are covered under any new option.
- Avoid auto-renewing blindly. Plan designs and subsidies change; the plan that fit last year may not be the best fit now.
Want help sorting out IRA rules in your ZIP?
We’ll verify your doctors and prescriptions, compare Marketplace options with Private PPO plans, and show clear side-by-side costs—no pressure, just answers.
FAQ
Will the Inflation Reduction Act always keep my premiums low?
Not automatically. The IRA extends and adjusts subsidies, but your premium depends on income, age, ZIP code, and plan type. It’s important to review options each year.
Does the Inflation Reduction Act help with Private PPO plans?
No. IRA subsidies apply to ACA Marketplace coverage. Private PPO options are priced differently but can still be cost-effective when you need broader networks or no referrals.
Do I still need to report income changes?
Yes. If you use Marketplace coverage, you should update income and household changes so subsidies stay accurate and you avoid surprises at tax time.
Robert Adams
https://www.RKAInsuranceAdvisors.com
H.R.5376 - Inflation Reduction Act of 2022 was signed into law by Biden on 08/16/2022. Many argue whether this bill will help reduce inflation or not. That topic may be subjective to a degree, per each individual. We are here to discuss how this law directly affects your health coverage and the facts surrounding this bill's direct impact on Healthcare. Not to project our opinions or give a political spin.
Part 1-- Addresses prescription drug costs.
Lowering Prices Through Drug Price Negotiation. The bill requires the Centers for Medicare & Medicaid Services (CMS) to negotiate the prices of certain prescription drugs under Medicare beginning in 2026. Specifically, the CMS must negotiate maximum prices for brand-name drugs that do not have other generic equivalents and that account for the most significant Medicare spending. The CMS must negotiate the prices of 10 drugs in 2026, 15 in 2027 and 2028, 20 in 2029, and each year thereafter. Drug manufacturers that fail to comply with negotiation requirements are subject to civil penalties and excise taxes.
Part 2--Prescription Drug Inflation Rebates
In addition to negotiations, the bill requires drug manufacturers to issue rebates to the CMS for brand-name drugs without generic equivalents. Under Medicare, that costs $100 or more per year per individual, and for which prices increase faster than inflation. Manufacturers that fail to comply are subject to civil penalties. The bill provides funds through FY2031 for the CMS to implement the rebate programs.
Part 3--Part D Improvements and Maximum Out-of-Pocket Cap for Medicare Beneficiaries
The bill eliminates beneficiary cost-sharing above the annual out-of-pocket spending threshold under the Medicare prescription drug benefit beginning in 2024 and caps annual out-of-pocket spending at $2,000 in 2025 (with yearly adjustments thereafter). It also establishes a program under which drug manufacturers provide discounts to beneficiaries who have incurred costs above the annual deductible beginning in 2025. The bill provides funds through FY2031 for the CMS to implement these changes and requirements. The bill also establishes a process through which certain beneficiaries may have their monthly out-of-pocket costs capped and paid in monthly installments beginning in 2025. It provides funds for FY2023 for the CMS to implement this process.
Part 4--Continued Delay of Implementation of Prescription Drug Rebate Rule
The bill further delays until 2032 implementation of a Department of Health and Human Services rule relating to the treatment of certain Medicare prescription drug benefit rebates from drug manufacturers for federal anti-kickback laws.
Part 5--Miscellaneous
The bill establishes additional programs and requirements relating to coverage under the Medicare prescription drug benefit and other programs. For example, the bill eliminates cost-sharing under the Medicare prescription drug benefit for adult vaccines recommended by the Advisory Committee on Immunization Practices.
It also requires coverage, without cost-sharing, of such vaccines under Medicaid and the Children's Health Insurance Program (CHIP).
In addition, the bill caps cost-sharing under the Medicare prescription drug benefit for a month's supply of covered insulin products at (1) for 2023 through 2025 $35; and (2) beginning in 2026, $35, 25% of the government's negotiated price, or 25% of the plan's negotiated price, whichever is less. The bill provides funds for FY2022 for the CMS to implement these provisions.
Subtitle C--Affordable Care Act Subsidies
The bill extends 2025 certain adjustments and expansions of the premium tax credit, allowing taxpayers with income above 400% of the federal poverty line to qualify for the credit. Meaning the additional subsidies approved with the passage of the American Rescue plan were extended. Initially, there was an expectation that they would have expired.
Those are the facts of this bill that is now signed into law. We also know, and it's being reported, the expected price increase for 2023 marketplace plans. The analysis finds that the median proposed rate increase is 10% across 72 insurers in the markets reviewed. Insurers' rate requests are preliminary at this point. As a result, they may change during the review process before being finalized in early fall. Please be sure to reach out with any questions about this bill, rates, or general insurance. Our goal is to advise and educate.
