Changes to the Suspension of Sequestration for the Retiree Drug Subsidy Program Take Effect on July 1, 2022

Enacted on December 10, 2021, S.610 - Protecting Medicare and American Farmers from Sequester Cuts Act extended the ending date of the sequestration suspension period to provide full relief from the two percent payment reduction from December 31, 2021 through March 31, 2022. 

This is a reminder that the sequestration suspension period ended on March 31, 2022. A one percent (1%) mandatory payment reduction is being applied to the calculated Subsidy Amounts for final costs incurred in all plan months between April 1, 2022, and June 30, 2022.

The two percent (2%) mandatory payment reduction will continue to be applied in all plan months prior to May 1, 2020, and in all plan months after June 30, 2022, through the first day of Fiscal Year 2030. A two and one-quarter percent (2.25%) mandatory payment reduction will be applied in all plan months occurring in the first six months of Fiscal Year 2030. A three percent (3%) mandatory payment reduction will be applied in all plan months occurring in the final six months of Fiscal Year 2030.

For additional details, please refer to the original announcement from December 21, 2021.