A significant portion of the Inflation Reduction Act focuses on energy and includes incentives for going green. NewsdayTV’s Cecilia Dowd reports. Credit: Howard Schnapp

The $739 billion climate, health care and tax reform plan passed by the U.S. Senate aims to reduce consumer costs for clean energy, prescription drug prices for those on Medicare and overall health coverage costs. But not all of those savings will be felt immediately as the massive program rolls out.

The Inflation Reduction Act of 2022, shepherded through Senate passage by Senate Majority Leader Chuck Schumer (D-N.Y.), is still awaiting a final vote by the Democratic-controlled U.S. House on Friday, but the massive 755-page bill is expected to pass and be signed shortly after by President Joe Biden.

Biden, speaking to reporters on Monday morning, acknowledged that once signed into law, “some of it is not going to kick in for a little bit,” but he said Americans would gradually start to feel the impact of the bill.

“When you sit down at that kitchen table at the end of the month, you’re going to be able to pay a whole hell of a lot more bills because you’re paying less in medical bills,” Biden said.

Schumer, speaking at a news conference near his Manhattan office on Monday, asserted that the bill would help drive down energy costs for local property owners who take advantage of the tax rebates meant to encourage the purchase of electronic vehicles, solar energy panels for homes, and other energy-efficient appliances.

“It is going to have huge benefits for Americans and huge benefits for New Yorkers,” Schumer said, adding that “generally, it is reducing costs.”

Here are some potential impacts of the bill on consumers:

Energy prices for Long Islanders

The package includes up to $14,000 in tax rebates for property owners who invest in installing energy-efficient heat pumps and water heaters.

Homeowners who install solar energy panels also would be eligible for a 30% tax credit until 2032, which would then fall to 26% through 2034.

The bill also provides up to $9,100 in tax credits for clean-energy home upgrades including for green-friendly home insulation, wiring and electric fixtures.

“A lot of people on Long Island want to have solar panels on their roofs, and get, you know, quicker, better, cleaner ways of heating,” Schumer said. “There will be help to do that — and make it affordable to average, middle-income Long Islanders.”

Schumer added that “Long Islanders suffer some of the highest electric prices, some of the highest natural gas prices, in the country. The average Long Islander will save about $1,000 by 2030 on that.”

The annual savings cited by Schumer are based on those property owners who choose to spend the money to upgrade their homes using the equipment and appliances eligible for a tax rebate.

A study by the Rhodium Group, a Manhattan-based research firm, found that the “clean energy investments in the package, combined with improving energy market conditions,” will help save household an average of $1,025 per year in energy costs by 2030.

The bill also provides tax incentives to those who purchase electric vehicles, including a $7,500 tax credit for newly purchased vehicles, and a $4,000 tax credit for those who purchase a used EV. The credits would apply to couples who earn less than $300,000 a year, or individuals who earn less than $150,000.

Auto industry groups have raised concerns that the $7,500 rebate will not be available to all electric vehicles because of language in the bill that requires at least half of the car battery’s components be manufactured in North America, and at least 40% of the minerals used in the car to come from North America or a country where the United States has a free-trade agreement.

Sen. Joe Manchin (D-W. Va.), who fought for the provisions, told reporters it was meant to reduce reliance on China and overseas production chains. Some U.S. car manufacturers, including General Motors have said “some of the provisions are challenging and cannot be achieved overnight.”

Drug costs for Medicare recipients

The bill authorizes the federal government to negotiate the price of a yet-to-be determined subset of 10 widely used prescription drugs used by Medicare recipients, and caps the out-of-pocket drug costs for seniors enrolled in the program at $2,000 per year.

The bill also caps the cost of insulin to $35 for Medicare recipients. Democrats initially pushed for extending the cap to privately insured individuals, but the move was blocked by Senate Republicans.

Democrats also had initially sought to protect privately insured Americans from increasing prescription drug costs, by imposing a penalty on pharmaceutical companies who raised their prices beyond the rate of inflation, but the nonpartisan Senate parliamentarian ruled that such a move was not allowed under the budgetary rules for passing the bill. Instead, Democrats were forced to narrow their prescription drug measures to the federally run Medicare program.

Schumer said “there are probably over 100,000 people on Long Island who have Medicare,” who stand to benefit from the cost savings.

Health insurance subsidies

The measure provides a three-year extension of tax subsidies that were set to expire for nearly 13 million Americans who pay for private health insurance via the Affordable Care Act’s insurance marketplace.

The tax credits were set to expire at the end of the year and would have resulted in insurance premiums increasing for the majority of those currently eligible for the tax rebate.

A study by the Kaiser Family Foundation published in July found that if the credits expired, insurance premium costs would have increased an average of 53% for those enrolled through the ACA marketplace.

No changes to SALT deduction cap

Despite a long-standing bipartisan push by a group of lawmakers dubbed the SALT caucus — including Reps. Tom Suozzi (D-Glen Cove) and Andrew Garbarino (R-Bayport) — the sweeping bill did not include any provisions to repeal the $10,000 cap on state and local tax deductions that was implemented under former President Donald Trump’s 2017 tax plan.

Schumer said the SALT cap expires in two years, adding that Senate Democrats beat back a Republican attempt to extend the cap longer in this bill via the amendment process.

He said this bill didn’t address the SALT cap because of Arizona Democratic Sen. Kyrsten Sinema’s aversion to addressing certain tax issues in this bill.

“We will still have to go after SALT,” Schumer said.

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