Every year from October 15th to December 7th, more than 66 million Americans have the chance to determine which Medicare plan(s) will meet their needs and budget the following year. In this year’s Open Enrollment Period, it’s especially critical for recipients to evaluate their existing coverage, as the Medicare landscape will change significantly on January 1st.
First and foremost, the Inflation Reduction Act will improve the Medicare program by helping recipients save money on prescription drugs. Enhancements include the following:
A $2,000 annual cap will be placed on recipients’ out-of-pocket costs. To illustrate how meaningful this is, the Centers for Medicare and Medicaid Services reported that “more than 1.7 million people had already reached $2,000 in out-of-pocket costs”… by April 1st this year!
A new program – called the Medicare Prescription Payment Plan – will let recipients spread their out-of-pocket costs over the calendar year. So, for example, if you need a specialty drug – in January – with an out-of-pocket cost of $1,800, you could pay either the full amount up front or $150 per month over the next 12 months.
While the program changes above will provide financial relief to millions of Americans, the insurance companies sponsoring Medicare plans will bear an increased share of prescription drug costs. So, to offset this added expense, some insurers have chosen to amend their plans for 2025. Among the changes recipients may experience are:
Higher deductibles in Part D (i.e., stand-alone prescription drug) plans. Insurance companies do not pay their share of the costs until a recipient meets the deductible, so a higher deductible prolongs the start of their obligation.
Higher premiums for Part D plans. Effectively, insurance companies electing to do this are passing their added expense back to the recipients.
Plan terminations. In other words, a recipient’s plan may cease to exist on January 1st. An industry expert believes that a staggering two million plans will terminate this year.
Reduced benefits in Medicare Advantage (“MA”) plans. Typical changes include higher copays for hospital stays, removal of pricy medications from the plan formularies (i.e., the lists of covered prescription drugs), and fewer benefits for dental and hearing services.
Medicare recipients should have received an Annual Notice of Change, which compares the benefits they’re getting now to the benefits they’ll receive next year. If they find the changes unacceptable, the best thing to do is to speak with a licensed Medicare broker. He/she can review a recipient’s coverage, understand their needs and budget, and find more suitable plans in the (vast) marketplace. There’s no charge for the consultation and no obligation to enroll in a new plan.
In summary, important changes are coming to Medicare in 2025. The program itself will improve by helping recipients save money on prescription drugs, and some insurers have increased the premiums and/or reduced the benefits in their plans to offset added expenses. Recipients who are dissatisfied with their plan changes should consult a Medicare broker to find more suitable options.
For more information, my email address is insuritystreet@gmail.com. The consultation is free with no obligations.
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