Ask Teresa Smith how she feels about the hefty healthcare bills she and her husband pay each year, and her answer is simply: “Help!”

Smith takes Farxiga, a daily medication to control her Type 2 diabetes, and her husband does too. Plus he takes the blood thinner Eliquis for a heart condition.

The couple are enrolled in traditional Medicare and pay over $7,600 for a Part D drug plan and Medigap supplemental plan that pays some leftover costs. On top of that, Smith says they pay around $6,000 a year in out-of-pocket prescription drug costs.

Smith and her husband, 67, are retired, and nearly all of their retirement income is from their Social Security benefits, which add up to $45,500 this year. They also receive $250 a month from a small pension.

“That’s all we have,” Smith, 72, a former mortgage loan originator from Homer, Ga., told Yahoo Finance. “We rely on our Social Security check for our day-to-day needs, and it's unbelievable what we’re paying for our healthcare. It's ridiculous.”

At long last, help for the Smiths — and millions of Medicare beneficiaries like them — is coming.

This month, the Centers for Medicare and Medicaid Services (CMS) released its first-ever negotiated drug price list that includes medications that 8.8 million Medicare beneficiaries relied on in 2023 to treat conditions such as cancer, diabetes, blood clots, heart failure, autoimmune conditions, and chronic kidney disease.

Smith and her husband’s prescription drugs Eliquis and Farxiga made the list.

The list prices for the drugs will be reduced between 38% and 79%. Most are in the 60% range. The new prices will go into effect for people with Medicare Part D prescription drug coverage beginning Jan. 1, 2026, and include Medicare Advantage plans.

“This is a great step forward in helping older adults who are squeezed by high healthcare costs while living on limited incomes,” Ramsey Alwin, president and CEO of the National Council on Aging (NCOA), told Yahoo Finance.

“Millions of older adults need to manage multiple prescriptions for multiple chronic conditions, and for too many, that means making difficult choices about whether to pay for medicine or other daily expenses,” Alwin said.

Nearly 3 in 10 Americans, like Smith, struggle to find ways to pay for the medications they need, according to a poll last year by KFF, a nonprofit health policy research organization.

“This is going to lead to some really significant savings for people who've really been struggling with prescription drug prices,” said Leigh Purvis, AARP’s prescription drug policy expert. “A lot of patients who I’ve spoken to have had to make some really hard decisions about whether to pay for their prescription drugs or to pay for their rent.”

Savings will depend on plan

The exact savings will vary widely from senior to senior.

“To some extent the savings will depend on the plan that individuals are enrolled in and the type of cost sharing that they currently pay,” Juliette Cubanski, deputy director of the program on Medicare policy at KFF, told Yahoo Finance.

“For some of these drugs, what plans typically charge is a flat co-payment amount that doesn't depend on the underlying price of the medication,” she said. “But when you’re a patient who faces a coinsurance or a percentage of the drug’s list price, you stand to save money if there's a lower negotiated price that's being used to calculate your coinsurance amount.”

If you pay, for example, 25% of the price of a medication and the government has negotiated a lower price, then you're going to be paying 25% of a lower amount.

“The new drug prices will help stretch retirement incomes that have not kept up with the higher cost of living for older adults, Alwin said.

It’s not yet clear how Medicare plan providers are going to respond to the latest changes in drug pricing. “There is a possibility that they could limit the number of drugs that they cover,” Purvis said. “Right now they cover about 75% of drugs that are on the market.”

The new Medicare drug prices will help stretch retirement incomes that have not kept up with the higher cost of living for older adults. (Getty Creative) (Mindful Media via Getty Images)

But that’s still more than a year away. There is, however, relief arriving much sooner.

Under the Inflation Reduction Act, starting in 2025, Medicare beneficiaries won’t have to pay more than $2,000 a year in co-pays or coinsurance for the prescription drugs their plan covers. That’s down from $3,500 this year.

The spending cap will apply to original Medicare enrollees who have a Part D prescription drug plan and beneficiaries with a Medicare Advantage plan that includes prescription drug coverage. Part D premiums do not count toward the spending caps.

For the really expensive drugs on this list, such as the blood cancer medication Imbruvica, that $2,000 cap is going to have a meaningful impact on what patients have to spend out of pocket, Cubanski said.

“People have been spending thousands of dollars a year on this medication,” she said.

How to lower your healthcare costs now

Until the newly negotiated drug prices land, here’s what you can do in the interim to lower your healthcare costs.

Renew or change plans during open enrollment

In mid-to-late September, your current Medicare prescription drug or Advantage plan provider will send you an Annual Notice of Change (ANOC), which lays out any changes in your coverage, costs, and specific drug or medication coverages that will be effective in January.

Pore over that new coverage and consider making changes during Medicare’s fall open enrollment period. It’s just around the corner, starting Oct. 15 and running until Dec. 7.

This is your chance to sign up, switch, or exit a plan, with new coverage beginning Jan. 1, 2025.

Every year, plans can make changes to not only the drugs they cover, but also to costs like premiums, deductibles, and copays. Make sure the plan covers your doctors and other providers in its network, and that the plan covers all your medications and that your pharmacy is preferred and in-network.

“I know it can be difficult,” Cubanski said. “There are a lot of plans out there and especially if you take a lot of medications, doing that sort of comparison can seem pretty overwhelming.”

But the payoff can come in the form of lower out-of-pocket costs especially for older adults who may live on relatively low incomes. “Even saving a little bit can translate into meaningful savings overall,” she said.

Get advice if you’re overwhelmed

The vast number of Medicare and Medicare Advantage plan choices can be formidable. The average Medicare beneficiary has a choice of close to 60 Medicare plans with Part D drug coverage in 2024, including 21 Medicare standalone drug plans and 36 Medicare Advantage drug plans, according to KFF.

The State Health Insurance Assistance Program network (SHIP) provides one-on-one counseling in every state. You can find your local SHIP here.

Medicare’s online searchable Plan Finder on the Medicare.gov site allows you to review Medicare plan options.

If your medication is shockingly expensive, ask your doctor if there’s an alternative drug covered by your plan. (Getty Creative) (MoMo Productions via Getty Images)

Talk to your healthcare providers

There could be less expensive alternatives for the drugs you're taking, so it's always good to have those conversations with your physician to see if there is an alternative covered by your plan, Purvis said.

Check out Medicare’s Extra Help

If you have a limited income, you might be eligible for Medicare’s Extra Help, which covers Part D premiums and deductibles and caps drug costs.

“My brother, who is 74, was started on Eliquis after a diagnosis of a failing heart valve and cardiac arrest,” Mary Johnson, a Social Security and Medicare policy analyst, told me. “He qualifies for Extra Help, and receives Eliquis for about $11 co-pay for 90 days when filled by a retail pharmacy.”

He’s fortunate. “His primary care doctor told us that he has had to prescribe for patients older, less effective blood thinners because their drug plan did not cover Eliquis due to cost.”

Research rebates from the manufacturers

The drug companies themselves sometimes offer reduced-cost drugs if you can qualify. Smith, for example, also takes Ozempic to treat her diabetes, but that’s paid for through a patient assistant program subsidy by the drug manufacturer.

Consider discount sites or retailer programs

There are discount cards from sites such as GoodRx that can sometimes reduce costs if you require a drug not covered by your drug plan, or you otherwise would have to pay a big deductible, Johnson said. You may need to compare, however, the lowest-cost pharmacy and get a prescription sent to that pharmacy to use the Good Rx card, she said.

Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including "In Control at 50+: How to Succeed in The New World of Work" and "Never Too Old To Get Rich." Follow her on X @kerryhannon.