ICYMI: Key Inflation Reduction Act Provisions Will Be Implemented on January 1 to Help Virginians Cut Health and Energy Costs
WASHINGTON, D.C. – Today, U.S. Senators Mark R. Warner and Tim Kaine released the following statement regarding key health and climate provisions from the Inflation Reduction Act—legislation the senators helped pass in August to help Virginia lower drug and energy costs, improve access to health care, and tackle climate change—that will go into effect on January 1, 2023:
“This year, we were proud to have helped pass the Inflation Reduction Act, historic legislation that will lower costs for Virginians while also tackling climate change, which is wreaking havoc on Virginia communities. We are thrilled that essential pieces of this law will go into effect on January 1 to help bring down health and long-term energy bills for families across the Commonwealth, by increasing access to affordable health care and helping Virginians diversify their energy sources.”
Provisions in the Inflation Reduction Act to lower prescription drug costs, help more seniors and low-income Virginians get access to the vaccines they need to stay healthy, and help more Virginians get health care coverage:
On January 1, 2023:
- Penalties on drug manufacturers that increase prices: Starting in 2023, manufacturers will be required to keep the increase in the cost of their drugs at or below inflation.
- Free vaccines for Medicare recipients: Starting in 2023, people with Medicare will not have to pay to receive vaccines under Medicare Part D, which includes vaccines for shingles, HPV, MMR, diphtheria, and pertussis. 4.1 million people with Medicare received a vaccine under Medicare Part D in 2020, including 85,000 Virginians.
- A $35 cap on the cost of insulin: Starting in 2023, out-of-pocket costs for insulin—regardless of how much a patient needs—will be capped at $35 per month under Medicare. As of 2020, over 74,000 Virginians with Medicare Part D used insulin and paid, on average, approximately $51 per month out-of-pocket to purchase the drug. Some people are currently paying up to $900 a month for the insulin they need to stay alive.
- Extension of ACA subsidies: During the pandemic, Congress enhanced subsidies under the Affordable Care Act (ACA) to help lower health care premiums for millions of Americans. Beginning on January 1, the Inflation Reduction Act will extend these enhanced subsidies through 2025 to help make Virginians’ health insurance more affordable. Over 300,000 Virginians were covered by the ACA in 2022.
On April 1, 2023:
- Limits to inflation effects on certain drugs: Starting April 1, 2023, people with Medicare may pay a lower coinsurance for some Part B drugs if the drug’s price increased faster than the rate of inflation.
On October 1, 2023:
- Free vaccines for Medicaid recipients: Medicaid and CHIP will cover vaccines for all Medicaid-covered adults. Currently, vaccine coverage is optional for states.
Provisions in the Inflation Reduction Act that kick in on January 1, 2023 to address climate change by helping cut dangerous pollution across Virginia:
- Boosts to clean energy investments: An expanded tax credit for clean energy manufacturers will incentivize investment in and production of renewable energy technologies like solar power and offshore wind. $4 billion of these investments have been reserved exclusively for use in coal communities. All clean energy tax credits include a bonus for meeting domestic manufacturing requirements related to steel, iron, or other manufactured components.
- Improvements to Home Energy Efficiency: Homeowners will be able to receive up to 30 percent back through tax credits for making energy efficiency improvements to their home—generally up to a maximum of $1,200 per year but potentially up to $3,200 if improvements include heat pumps, heat pump water heaters, or biomass stoves.
- Increased Access to Electric Vehicles: Qualified individuals will get up to a $7,500 consumer credit for the purchase of new electric vehicles. Incentives will also go into place to help ensure those vehicles are produced in North America. Qualified individuals will also be able to receive a tax credit of up to $4,000 for certain used electric vehicles and plug-in hybrids purchased through a dealership. In order to qualify for the full value of the credit, the vehicle must: have a battery capacity of at least 7kW hours; generally be a model at least two years old; and be sold by a participating dealer that is licensed in the jurisdiction. For new vehicles, eligible taxpayers include single filers with incomes under $150,000 annually and households with joint incomes under $300,000 annually if the head of household earns under $225,000 annually. The vehicle’s price is limited to $55,000 for compact vehicles and $80,000 for SUVs, vans, and pick-ups. For used EVs, single filers must have an income under $75,000 annually or $150,000 as a household, as long as the head of household makes under $112,500 annually. The used vehicle’s price is limited to $25,000.