The price of healthcare can be a challenge for many Americans. According to some polls, it ranks as a top financial worry for many families. One in four Americans say they have gone without care because they could not afford it. Four in ten adults say they have some sort of debt due to a medical or dental procedure. Some of these concerns are thought to be addressed in recent legislation called the Inflation Reduction Act of 2022.
What is the Inflation Reduction Act of 2022?
In August, President Joe Biden signed the Inflation Reduction Act of 2022 into law. This legislation primarily addresses issues within healthcare, climate change, and taxing large companies. The bill is meant to reduce the impact of high inflation, hence the name. However, there is some debate as to whether the measures listed below will lead to such a relief. Here’s what the law includes:
- An Extension to the Affordable Care Act – Subsidies were going to end in a few months, but the new law extends the ACA through 2025. It’s estimated that 3 million Americans would be without adequate health insurance without this ACA extension.
- IRS Funds – The law provides $80 billion to the IRS to help them operate more efficiently. The 80 billion dollar payout will be allocated to the government agency over 10 years.
- Cost of Prescription Drugs – Medicare will have the authority to negotiate the prices of certain prescription drugs under the guidelines of the Inflation Reduction Act. This is expected to lower the cost that people will have to pay out of pocket for their medications.
- Climate and Energy – People will be able to receive tax credits for lowering their energy consumption and reducing carbon emissions.
- Corporate Taxes – Companies will have a new 15% tax rate if their income is at least $1 billion.
Healthcare Benefits that Hit Home
The Inflation Reduction Act of 2022 is believed to greatly reduce the cost of healthcare for many Americans. Millions of people rely on the Affordable Care Act for healthcare coverage. Although the Inflation Reduction Act of 2022 extends the ACA for another three years. There are some concerns as to what will happen after 2025 and whether a permanent fix will be possible.
Affording prescription drugs has been a financial issue for many Americans. It makes up 20% of Medicare patients’ out-of-pocket costs. Before the IRA, the government couldn’t negotiate prices in Medicare. Now, the government will be able to negotiate the prices of certain drugs beginning in 2026.
Inflation caps are also part of the new law. This means it will limit how much a drug manufacturer can increase prices each year. If a drug company failed to adhere to this, the company would face tax penalties.
Another part of the law creates a $2,000 yearly cap for Medicare beneficiaries’ Part D spending (starting in 2025). Once patients reach the limit, they would have no cost-sharing requirement. This is designed to lessen the financial burden on Medicare patients that have to spend more than $2,000 a year on medications. This will specifically impact people who use expensive drugs to treat cancer and other illnesses.
Alltrust’s Promise to Helping with Healthcare Benefits
Our team at Alltrust is always up-to-date with the latest news impacting the healthcare industry. It’s our job to remain well informed so that we can better assist our clients. We offer group benefits including vision, dental, and more. Alltrust can help your business with employee benefits and other HR needs. Find out more about the services we can offer you by clicking here.