Today, the According to a recent report from the U.S. Department of Health and Human Services (HHS), $234 million in out-of-pocket expenses were incurred by 3.4 million Medicare beneficiaries in 2021 for recommended vaccines covered by Medicare Part D. The Inflation Reduction Act, President Biden’s new law to reduce the cost of prescription drugs and healthcare, will make these vaccines, including those for shingles, which can cost some seniors nearly $200, and Tdap, free as of January 1, 2023.
According to a report from HHS’s Office of the Assistant Secretary for Planning and Evaluation (ASPE), the average cost of a vaccine for the 3.4 million Medicare Part D enrollees who received a Part D-covered shot in 2021 was about $70. HHS expects that even more Medicare enrollees will save money in 2023 and in future years because more people with Medicare are expected to get vaccinated when they don’t have to pay any out-of-pocket costs.
These cost savings are in addition to the provisions in the Inflation Reduction Act that limit seniors’ out-of-pocket costs for insulin to $35 for a month’s supply. According to a recent ASPE report, the new law will likely result in $500 annual savings on insulin for about 1.5 million seniors and other Medicare beneficiaries. President Biden is delivering on his pledges to cut prescription drug costs, make health insurance more affordable, and make the economy work for working families through the Inflation Reduction Act, the most significant health care law since the Affordable Care Act.
“The Biden-Harris Administration is committed to lowering health care costs and increasing access to high-quality, affordable health care, and President Biden’s new lower-cost prescription drug law is helping us deliver,” said Xavier Becerra, the HHS secretary. “Many vaccines that can shield Medicare recipients from disease and serious illness won’t cost them anything out of pocket as a result of this historic law.”
The following vaccinations are covered by Medicare Part D: shingles, tetanus/diphtheria (Td), tetanus, diphtheria, and pertussis (Tdap), hepatitis A, and hepatitis B. The report looks at vaccination use, overall vaccine spending, and out-of-pocket expenditures. Flu, pneumococcal, COVID-19, and a few other vaccines are already covered without a copay for Medicare beneficiaries under Medicare Part B.
The majority of vaccinations administered and covered by Medicare Part D are for the prevention of shingles, and the shingles vaccine accounted for about 92 percent of total vaccine cost for Medicare Part D enrollees. In 2021, enrollees will pay an average of $77 out-of-pocket for the shingles vaccine, $51 out-of-pocket for the hepatitis B vaccine, and $28 out-of-pocket for the Tdap vaccine for some seniors. For those who did not qualify for the Part D Low-Income Subsidy, out-of-pocket expenses were even higher: $95 for shingles, $81 for hepatitis B, and $73 for other vaccinations. With effect from this past January, the Inflation Reduction Act completely eliminated these expensive out-of-pocket costs for Medicare enrollees.
Additionally, the new report offers data on savings by state and demographic factors like age, gender, and race and ethnicity.
According to the researchers, removing the affordability barrier is likely to encourage even more people to get the covered vaccines in the future, even though the report estimates the potential savings based on the most recent data on vaccine use in Medicare (from 2021). Increased vaccination rates may aid in reducing downstream health care use and costs as well as serious complications from diseases that can be prevented by vaccination. Making the vaccines free could also aid in addressing racial and ethnic disparities in vaccine uptake.
Key points from today’s ASPE report include the following:
- As of January 1, 2023, the Inflation Reduction Act does away with out-of-pocket expenses for advised vaccinations covered by Medicare Part D. At the moment, a Part D plan is active for about 51 million Medicare beneficiaries.
- For vaccines covered by Part D, such as those for shingles (zoster), tetanus/diphtheria (Td), tetanus/diphtheria and pertussis (Tdap), hepatitis A, and hepatitis B, researchers looked at vaccine use, total costs, and out-of-pocket expenses.
- A total of $234 million, or about $70 per beneficiary, in out-of-pocket expenses were incurred by the 3.4 million Medicare Part D enrollees (7%) who received a Part D covered vaccine in 2021. The most common vaccination given to enrollees was the shingles vaccine (82%) with an average out-of-pocket cost of $77 for each patient, followed by the Tdap vaccine (21%). Before the free vaccine provision in the Inflation Reduction Act took effect, some Medicare beneficiaries had to pay nearly $200 for the shingles vaccine.
- Those enrollees who do not qualify for the Part D low-income subsidy (LIS) face higher prescription drug costs, including those for vaccines. In 2021, non-LIS enrollees paid an average of $86 per enrollee for Part D vaccinations, primarily due to out-of-pocket expenses for the shingles vaccine.
- According to state-level estimates, the highest beneficiary out-of-pocket costs for all Part D vaccinations were in California ($20,000,000), Florida ($18,000,000), and Texas ($14,000,000), with an average enrollee savings of $51 in California, $79 in Florida, and $69 in Texas. According to the Inflation Reduction Act, out-of-pocket expenses for advised Part D vaccinations will be $0 in these and all other states starting in 2023.
Below includes a state-by-state breakdown of how many seniors and people with disabilities would have saved in 2021 on recommended vaccines had the Inflation Reduction Act been in effect:
Out-of-Pocket Costs for Medicare Part D Enrollees on Part D Covered Vaccines in 2021, by State
| State | Number of Enrollees | Total OOP ($) | Average OOP ($) |
|---|---|---|---|
| Alabama | 46,572 | $2,608,021 | $56.00 |
| Alaska | 4,668 | $219,176 | $46.95 |
| Arizona | 69,793 | $5,458,900 | $78.22 |
| Arkansas | 23,029 | $1,993,391 | $86.56 |
| California | 403,144 | $20,485,565 | $50.81 |
| Colorado | 56,425 | $4,443,029 | $78.74 |
| Connecticut | 48,313 | $2,953,012 | $61.12 |
| Delaware | 12,224 | $934,702 | $76.46 |
| District of Columbia | 5,038 | $164,954 | $32.74 |
| Florida | 227,344 | $17,871,526 | $78.61 |
| Georgia | 93,651 | $6,946,928 | $74.18 |
| Hawaii | 21,995 | $1,010,558 | $45.94 |
| Idaho | 17,156 | $1,863,104 | $108.60 |
| Illinois | 109,816 | $9,910,342 | $90.24 |
| Indiana | 77,232 | $6,123,585 | $79.29 |
| Iowa | 36,510 | $4,259,984 | $116.68 |
| Kansas | 28,166 | $3,030,515 | $107.59 |
| Kentucky | 37,289 | $2,566,639 | $68.83 |
| Louisiana | 37,982 | $2,448,642 | $64.47 |
| Maine | 24,520 | $1,660,212 | $67.71 |
| Maryland | 55,924 | $2,941,648 | $52.60 |
| Massachusetts | 97,115 | $4,990,803 | $51.39 |
| Michigan | 137,918 | $7,912,422 | $57.37 |
| Minnesota | 71,667 | $6,887,417 | $96.10 |
| Mississippi | 15,719 | $1,371,952 | $87.28 |
| Missouri | 62,795 | $4,728,828 | $75.31 |
| Montana | 10,920 | $1,354,807 | $124.07 |
| Nebraska | 20,708 | $2,435,991 | $117.64 |
| Nevada | 23,739 | $1,862,211 | $78.45 |
| New Hampshire | 16,111 | $1,459,622 | $90.60 |
| New Jersey | 75,358 | $5,585,343 | $74.12 |
| New Mexico | 24,729 | $1,473,385 | $59.58 |
| New York | 181,732 | $9,008,318 | $49.57 |
| North Carolina | 114,385 | $7,743,573 | $67.70 |
| North Dakota | 8,662 | $1,100,209 | $127.02 |
| Ohio | 135,253 | $10,091,367 | $74.61 |
| Oklahoma | 32,631 | $2,337,476 | $71.63 |
| Oregon | 53,531 | $4,404,782 | $82.28 |
| Pennsylvania | 177,459 | $10,723,347 | $60.43 |
| Rhode Island | 12,834 | $877,907 | $68.40 |
| South Carolina | 59,695 | $4,237,362 | $70.98 |
| South Dakota | 10,136 | $1,443,301 | $142.39 |
| Tennessee | 58,792 | $4,416,899 | $75.13 |
| Texas | 203,593 | $13,966,302 | $68.60 |
| Utah | 21,768 | $2,085,598 | $95.81 |
| Vermont | 9,224 | $869,667 | $94.28 |
| Virginia | 71,069 | $5,950,166 | $83.72 |
| Washington | 96,065 | $7,042,902 | $73.31 |
| West Virginia | 16,159 | $917,539 | $56.78 |
| Wisconsin | 81,269 | $6,467,545 | $79.58 |
| Wyoming | 4,413 | $570,703 | $129.32 |
| Total | 3,364,518 | $234,454,174 | $69.68 |
Source: ASPE analysis of the Medicare enrollment and Prescription Drug Event (PDE) data files from the CMS for 2021. For enrollees who received any vaccines covered by Part D, estimates are shown. Estimates take into account all doses given in 2021 for vaccines that require multiple doses to finish the vaccination series.
Totals include enrollees residing in U.S. territories or outside the United States.
OOP = Out-of-Pocket
