Standard prescription drug coverage

(A) In general Subject to paragraphs (8) and (9), the coverage has an annual deductible— (i) for 2006, that is equal to $250; or (ii) for a subsequent year, that is equal to the amount specified under this paragraph for the previous year increased by the percentage specified in paragraph (6) for the year involved.

(B) Rounding Any amount determined under subparagraph (A)(ii) that is not a multiple of $5 shall be rounded to the nearest multiple of $5.

(A) 25 percent coinsurance Subject to subparagraphs (C), (D), and (E) and paragraphs (8) and (9), the coverage has coinsurance (for costs above the annual deductible specified in paragraph (1) and up to the initial coverage limit under paragraph (3) for a year preceding 2025 and for costs above the annual deductible specified in paragraph (1) and up to the annual out-of-pocket threshold specified in paragraph (4)(B) for 2025 and each subsequent year) that is— (i) equal to 25 percent; or (ii) actuarially equivalent (using processes and methods established under section 1395w–111(c) of this title ) to an average expected payment of 25 percent of such costs.

(B) Use of tiers Nothing in this part shall be construed as preventing a PDP sponsor or an MA organization from applying tiered copayments under a plan, so long as such tiered copayments are consistent with subparagraphs (A)(ii), (C), and (D).

(C) Coverage for generic drugs in coverage gap (i) In general Except as provided in paragraphs (4), (8), and (9), for a year preceding 2025, the coverage for an applicable beneficiary (as defined in section 1395w–114a(g)(1) of this title ) has coinsurance (for costs above the initial coverage limit under paragraph (3) and below the out-of-pocket threshold) for covered part D drugs that are not applicable drugs under section 1395w–114a(g)(2) of this title that is— (I) equal to the generic-gap coinsurance percentage (specified in clause (ii)) for the year; or (II) actuarially equivalent (using processes and methods established under section 1395w–111(c) of this title ) to an average expected payment of such percentage of such costs for covered part D drugs that are not applicable drugs under section 1395w–114a(g)(2) of this title . (ii) Generic-gap coinsurance percentage The generic-gap coinsurance percentage specified in this clause for— (I) 2011 is 93 percent; (II) 2012 and each succeeding year before 2020 is the generic-gap coinsurance percentage under this clause for the previous year decreased by 7 percentage points; and (III) 2020 through 2024 is 25 percent.

(D) Coverage for applicable drugs in coverage gap (i) In general Except as provided in paragraphs (4), (8), and (9), for a year preceding 2025, the coverage for an applicable beneficiary (as defined in section 1395w–114a(g)(1) of this title ) has coinsurance (for costs above the initial coverage limit under paragraph (3) and below the out-of-pocket threshold) for the negotiated price (as defined in section 1395w–114a(g)(6) of this title ) of covered part D drugs that are applicable drugs under section 1395w–114a(g)(2) of this title that is— (I) equal to the difference between— (aa) the applicable gap percentage (specified in clause (ii) for the year); and (bb) the discount percentage specified in section 1395w–114a(g)(4)(A) of this title for such applicable drugs (or, in the case of each of years 2019 through 2024, 50 percent); or (II) actuarially equivalent (using processes and methods established under section 1395w–111(c) of this title ) to an average expected payment of such percentage of such costs, for covered part D drugs that are applicable drugs under section 1395w–114a(g)(2) of this title . (ii) Applicable gap percentage The applicable gap percentage specified in this clause for— (I) 2013 and 2014 is 97.5 percent; (II) 2015 and 2016 is 95 percent; (III) 2017 is 90 percent; (IV) 2018 is 85 percent; and (V) each of years 2019 through 2024 is 75 percent.

(E) Maximum monthly cap on cost-sharing payments (i) In general For plan years beginning on or after January 1, 2025 , each PDP sponsor offering a prescription drug plan and each MA organization offering an MA–PD plan shall provide to any enrollee of such plan, including an enrollee who is a subsidy eligible individual (as defined in paragraph (3) of section 1395w–114(a) of this title ), the option to elect with respect to a plan year to pay cost-sharing under the plan in monthly amounts that are capped in accordance with this subparagraph. (ii) Determination of maximum monthly cap For each month in the plan year for which an enrollee in a prescription drug plan or an MA–PD plan has made an election pursuant to clause (i), the PDP sponsor or MA organization shall determine a maximum monthly cap (as defined in clause (iv)) for such enrollee. (iii) Beneficiary monthly payments With respect to an enrollee who has made an election pursuant to clause (i), for each month described in clause (ii), the PDP sponsor or MA organization shall bill such enrollee an amount (not to exceed the maximum monthly cap) for the out-of-pocket costs of such enrollee in such month. (iv) Maximum monthly cap defined In this subparagraph, the term “maximum monthly cap” means, with respect to an enrollee— (I) for the first month for which the enrollee has made an election pursuant to clause (i), an amount determined by calculating— (aa) the annual out-of-pocket threshold specified in paragraph (4)(B) minus the incurred costs of the enrollee as described in paragraph (4)(C); divided by (bb) the number of months remaining in the plan year; and (II) for a subsequent month, an amount determined by calculating— (aa) the sum of any remaining out-of-pocket costs owed by the enrollee from a previous month that have not yet been billed to the enrollee and any additional out-of-pocket costs incurred by the enrollee; divided by (bb) the number of months remaining in the plan year. (v) Additional requirements The following requirements shall apply with respect to the option to make an election pursuant to clause (i) under this subparagraph: (I) Secretarial responsibilities The Secretary shall provide information to part D eligible individuals on the option to make such election through educational materials, including through the notices provided under section 1395b–2(a) of this title . (II) Timing of election An enrollee in a prescription drug plan or an MA–PD plan may make such an election— (aa) prior to the beginning of the plan year; or (bb) in any month during the plan year. (III) PDP sponsor and MA organization responsibilities Each PDP sponsor offering a prescription drug plan or MA organization offering an MA–PD plan— (aa) may not limit the option for an enrollee to make such an election to certain covered part D drugs; (bb) shall, prior to the plan year, notify prospective enrollees of the option to make such an election in promotional materials; (cc) shall include information on such option in enrollee educational materials; (dd) shall have in place a mechanism to notify a pharmacy during the plan year when an enrollee incurs out-of-pocket costs with respect to covered part D drugs that make it likely the enrollee may benefit from making such an election; (ee) shall provide that a pharmacy, after receiving a notification described in item (dd) with respect to an enrollee, informs the enrollee of such notification; (ff) shall ensure that such an election by an enrollee has no effect on the amount paid to pharmacies (or the timing of such payments) with respect to covered part D drugs dispensed to the enrollee; and (gg) shall have in place a financial reconciliation process to correct inaccuracies in payments made by an enrollee under this subparagraph with respect to covered part D drugs during the plan year. (IV) Failure to pay amount billed If an enrollee fails to pay the amount billed for a month as required under this subparagraph— (aa) the election of the enrollee pursuant to clause (i) shall be terminated and the enrollee shall pay the cost-sharing otherwise applicable for any covered part D drugs subsequently dispensed to the enrollee up to the annual out-of-pocket threshold specified in paragraph (4)(B); and (bb) the PDP sponsor or MA organization may preclude the enrollee from making an election pursuant to clause (i) in a subsequent plan year. (V) Clarification regarding past due amounts Nothing in this subparagraph shall be construed as prohibiting a PDP sponsor or an MA organization from billing an enrollee for an amount owed under this subparagraph. (VI) Treatment of unsettled balances Any unsettled balances with respect to amounts owed under this subparagraph shall be treated as plan losses and the Secretary shall not be liable for any such balances outside of those assumed as losses estimated in plan bids.

(A) In general Except as provided in paragraphs (2)(C), (2)(D), (4), (8), and (9), for a year preceding 2025, the coverage has an initial coverage limit on the maximum costs that may be recognized for payment purposes (including the annual deductible)— (i) for 2006, that is equal to $2,250; or (ii) for each of years 2007 through 2024, that is equal to the amount specified in this paragraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved.

(B) Rounding Any amount determined under subparagraph (A)(ii) that is not a multiple of $10 shall be rounded to the nearest multiple of $10.

(A) In general (i) In general Subject to paragraphs (8) and (9), the coverage provides benefits, after the part D eligible individual has incurred costs (as described in subparagraph (C)) for covered part D drugs in a year equal to the annual out-of-pocket threshold specified in subparagraph (B), with cost-sharing that is equal to— (I) for a year preceding 2024, the greater of— (aa) a copayment of $2 for a generic drug or a preferred drug that is a multiple source drug (as defined in section 1396r–8(k)(7)(A)(i) of this title ) and $5 for any other drug; or (bb) coinsurance that is equal to 5 percent; and (II) for 2024 and each succeeding year, $0. (ii) Adjustment of amount For a year after 2006, the dollar amounts specified in clause (i)(I)(aa) shall be equal to the dollar amounts specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved. Any amount established under this clause that is not a multiple of a 5 cents shall be rounded to the nearest multiple of 5 cents. The Secretary shall continue to calculate the dollar amounts specified in clause (i)(I)(aa), including with the adjustment under this clause, after 2023 for purposes of section 1395w–114(a)(1)(D)(iii) of this title .

(B) Annual out-of-pocket threshold (i) In general For purposes of this part, the “annual out-of-pocket threshold” specified in this subparagraph— (I) for 2006, is equal to $3,600; (II) for each of years 2007 through 2013, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved; (III) for 2014 and 2015, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved, minus 0.25 percentage point; (IV) for each of years 2016 through 2019, is equal to the amount specified in this subparagraph for the previous year, increased by the lesser of— (aa) the annual percentage increase described in paragraph (7) for the year involved, plus 2 percentage points; or (bb) the annual percentage increase described in paragraph (6) for the year; (V) for 2020, is equal to the amount that would have been applied under this subparagraph for 2020 if the amendments made by section 1101(d)(1) of the Health Care and Education Reconciliation Act of 2010 had not been enacted; (VI) for each of years 2021 through 2024, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved; (VII) for 2025, is equal to $2,000; or (VIII) for a subsequent year, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved. (ii) Rounding Any amount determined under clause (i) that is not a multiple of $50 shall be rounded to the nearest multiple of $50.

(C) Application Except as provided in subparagraph (E) or subparagraph (F), in applying subparagraph (A)— (i) incurred costs shall only include costs incurred with respect to covered part D drugs for the annual deductible described in paragraph (1), for cost-sharing described in paragraph (2), and, for a year preceding 2025, for amounts for which benefits are not provided because of the application of the initial coverage limit described in paragraph (3), but does not include any costs incurred for covered part D drugs which are not included (or treated as being included) in the plan’s formulary; (ii) subject to clause (iii), such costs shall be treated as incurred only if they are paid by the part D eligible individual (or by another person, such as a family member, on behalf of the individual) and the part D eligible individual (or other person) is not reimbursed through insurance or otherwise, a group health plan, or other third-party payment arrangement (other than under such section or such a Program) for such costs; and (iii) such costs shall be treated as incurred and shall not be considered to be reimbursed under clause (ii) if such costs— (I) are borne or paid—— 1 1 So in original. (aa) under section 1395w–114 of this title ; (bb) under a State Pharmaceutical Assistance Program; (cc) by the Indian Health Service, an Indian tribe or tribal organization, or an urban Indian organization (as defined in section 1603 of title 25 ); (dd) 2 2 So in original. There are two items (dd). under an AIDS Drug Assistance Program under part B of title XXVI of the Public Health Service Act [ 42 U.S.C. 300ff–21 et seq.]; or (dd) 2 under section 1395w–115(h) of this title ; or (II) for 2025 and subsequent years, are reimbursed through insurance, a group health plan, or certain other third party payment arrangements, but not including the coverage provided by a prescription drug plan or an MA–PD plan that is basic prescription drug coverage (as defined in subsection (a)(3)) or any payments by a manufacturer under the manufacturer discount program under section 1395w–114c of this title .

(D) Information regarding third-party reimbursement (i) Procedures for exchanging information In order to accurately apply the requirements of subparagraph (C)(ii), the Secretary is authorized to establish procedures, in coordination with the Secretary of the Treasury and the Secretary of Labor— (I) for determining whether costs for part D eligible individuals are being reimbursed through insurance or otherwise, a group health plan, or other third-party payment arrangement; and (II) for alerting the PDP sponsors and MA organizations that offer the prescription drug plans and MA–PD plans in which such individuals are enrolled about such reimbursement arrangements. (ii) Authority to request information from enrollees A PDP sponsor or an MA organization may periodically ask part D eligible individuals enrolled in a prescription drug plan or an MA–PD plan offered by the sponsor or organization whether such individuals have or expect to receive such third-party reimbursement. A material misrepresentation of the information described in the preceding sentence by an individual (as defined in standards set by the Secretary and determined through a process established by the Secretary) shall constitute grounds for termination of enrollment in any plan under section 1395w–21(g)(3)(B) of this title (and as applied under this part under section 1395w–101(b)(1)(B)(v) of this title ) for a period specified by the Secretary.

(E) Inclusion of costs of applicable drugs under medicare coverage gap discount program For each of years 2011 through 2024, in applying subparagraph (A), incurred costs shall include the negotiated price (as defined in paragraph (6) of section 1395w–114a(g) of this title ) of an applicable drug (as defined in paragraph (2) of such section) of a manufacturer that is furnished to an applicable beneficiary (as defined in paragraph (1) of such section) under the Medicare coverage gap discount program under section 1395w–114a of this title , regardless of whether part of such costs were paid by a manufacturer under such program, except that incurred costs shall not include the portion of the negotiated price that represents the reduction in coinsurance resulting from the application of paragraph (2)(D).

(F) Inclusion of costs paid under maximum monthly cap option In applying subparagraph (A), with respect to an enrollee who has made an election pursuant to clause (i) of paragraph (2)(E), costs shall be treated as incurred if such costs are paid by a PDP sponsor or an MA organization under the option provided under such paragraph.

Nothing in this part shall be construed as preventing a PDP sponsor or an MA organization offering an MA–PD plan from reducing to zero the cost-sharing otherwise applicable to preferred or generic drugs.

The annual percentage increase specified in this paragraph for a year is equal to the annual percentage increase in average per capita aggregate expenditures for covered part D drugs in the United States for part D eligible individuals, as determined by the Secretary for the 12-month period ending in July of the previous year using such methods as the Secretary shall specify.

(A) In general For plan years beginning on or after January 1, 2023 , with respect to an adult vaccine recommended by the Advisory Committee on Immunization Practices (as defined in subparagraph (B))— (i) the deductible under paragraph (1) shall not apply; and (ii) there shall be no coinsurance or other cost-sharing under this part with respect to such vaccine.

(B) Adult vaccines recommended by the Advisory Committee on Immunization Practices For purposes of this paragraph, the term “adult vaccine recommended by the Advisory Committee on Immunization Practices” means a covered part D drug that is a vaccine licensed under section 351 of the Public Health Service Act [ 42 U.S.C. 262 ] for use by adult populations and administered in accordance with recommendations of the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention.

(A) No application of deductible For plan year 2023 and subsequent plan years, the deductible under paragraph (1) shall not apply with respect to any covered insulin product.

(B) Application of cost-sharing (i) Plan years 2023 and 2024 For plan years 2023 and 2024, the coverage provides benefits for any covered insulin product, regardless of whether an individual has reached the initial coverage limit under paragraph (3) or the out-of-pocket threshold under paragraph (4), with cost-sharing for a month’s supply that does not exceed the applicable copayment amount. (ii) Plan year 2025 and subsequent plan years For a plan year beginning on or after January 1, 2025 , the coverage provides benefits for any covered insulin product, prior to an individual reaching the out-of-pocket threshold under paragraph (4), with cost-sharing for a month’s supply that does not exceed the applicable copayment amount.

(C) Covered insulin product In this paragraph, the term “covered insulin product” means an insulin product that is a covered part D drug covered under the prescription drug plan or MA–PD plan that is approved under section 355 of title 21 or licensed under section 351 of the Public Health Service Act [ 42 U.S.C. 262 ] and marketed pursuant to such approval or licensure, including any covered insulin product that has been deemed to be licensed under section 351 of the Public Health Service Act pursuant to section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009 and marketed pursuant to such section.

(D) Applicable copayment amount In this paragraph, the term “applicable copayment amount” means, with respect to a covered insulin product under a prescription drug plan or an MA–PD plan dispensed— (i) during plan years 2023, 2024, and 2025, $35; and (ii) during plan year 2026 and each subsequent plan year, the lesser of— (I) $35; (II) an amount equal to 25 percent of the maximum fair price established for the covered insulin product in accordance with part E of subchapter XI; or (III) an amount equal to 25 percent of the negotiated price of the covered insulin product under the prescription drug plan or MA–PD plan.

(E) Special rule for first 3 months of 2023 With respect to a month’s supply of a covered insulin product dispensed during the period beginning on January 1, 2023 , and ending on March 31, 2023 , a PDP sponsor offering a prescription drug plan or an MA organization offering an MA–PD plan shall reimburse an enrollee within 30 days for any cost-sharing paid by such enrollee that exceeds the cost-sharing applied by the prescription drug plan or MA–PD plan under subparagraph (B)(i) at the point-of-sale for such month’s supply.