Posted on by

Enrollment in Medicare will begin in 2025. Why plans change fundamentally

Enrollment in Medicare will begin in 2025. Why plans change fundamentally

play

Annual enrollment in Medicare runs through Dec. 7, and millions of seniors are likely to find choosing a plan much more difficult this year than in the past, experts say.

For the first time, prescription drug costs will be capped at $2,000 annually, and all participants will have the option to pay these costs in limited monthly installments rather than all at once at the pharmacy. That’s a positive for consumers, especially those hitting the cap. AARP estimates that 3.2 million Americans, or 8.4% of all people with a Part D drug plan, will reach the cap in 2025.

But to finance the changes, insurers are tweaking their offerings, which could mean fewer benefits for many seniors but also cost them more money, experts say.

Some insurers are cutting rates, pulling out of certain “unprofitable” markets, cutting popular offerings like dental insurance, and increasing fees like deductibles, premiums or copays that all Medicare enrollees pay.

“The Medicare marketplace will be more chaotic than ever this year,” said Vijay Kotte, chief executive of Medicare marketplace GoHealth. “With fewer options, higher costs and fewer benefits, older adults will be forced to navigate one of the most turbulent enrollment seasons in recent memory.”

How many Americans are affected?

More than 80% of traditional Medicare users purchase a Part D plan. Many also purchase a supplemental plan called Medigap or Plan G, so that once the annual deductible is met, all out-of-pocket costs such as coinsurance and copayments are covered. Otherwise, Medicare will not cover 20% of medical costs or prescriptions, and there is no limit on out-of-pocket costs.

Is there a benefit to Medicare Advantage?

  • Medicare Advantage (MA), offered by private insurers, often advertises $0 or low monthly premiums, but that actually means “no additional premium,” said Cindy George, senior personal finance editor at GoodRx. “You still pay your original Medicare Part B premium and that is typically deducted from your monthly Social Security payment,” she said. MA typically includes all three parts and often additional benefits such as vision, dental and hearing protection or gym memberships. Almost all services require co-payments or co-insurance.
  • Because of the changes insurers are making this year, about 6 million MA enrollees are expected to see a reduction in their plan benefits, which would be the first time ever, according to Medicare marketplace GoHealth.
  • According to America’s Health Insurance Plans (AHIP), a national nonprofit trade organization for health care providers and solutions, approximately 1.3 million Americans with general MA enrollment plans will not have these plans in 2025, forcing them to add their Medicare coverage change . It is estimated that 243,000 beneficiaries will have general MA enrollment plans with a $0 premium in 2024 but will be required to pay a premium in 2025.
  • The number of standalone Part D plans will also drop 26% in 2025 compared to 2024, as insurers try to offset the $2,000 cap on drug out-of-pocket costs, according to nonprofit health researcher KFF.

Looking for a new plan

Mary Johnson, 73, is one who needs to find a new drug plan. She enrolled in a popular Aetna Part D plan this year with a $5 per month premium, and her three generic prescriptions are available before the deductible with no copay, she said. That plan, which cost them about $63.60 a year, will be discontinued in 2025.

“In 2025, my most cost-effective decision to replace this plan would result in an increase in my premiums and out-of-pocket costs by $476.00, a total jump of 750%,” based on the same three generic medications she is currently taking, Johnson said. Meanwhile, Social Security’s cost of living adjustment for 2025 is 2.5%, she noted.

What should Americans consider when choosing a plan?

To save money, experts recommend:

  • Create an account on Medicare.gov, then enter your medications, pharmacy and location to compare available plans, providers and drug costs. Mike Ramirez, associate director of financial planning at EP Wealth Advisors, suggests considering different pharmacies in your area when comparing drug costs. “If you walk two blocks to another pharmacy, you might pay a different price,” he said.
  • If drug costs are still too high for you, explore assistance programs like Extra Help and Medicare Savings Programs (MSPs) or free discount programs like GoodRx that can save you money compared to your prescription drug plan. Manufacturer savings cards are also an option. Prescriptions that use discount programs like GoodRx don’t count toward a deductible, but people who don’t expect to meet their deductible may be better off taking advantage of the discounts, George said. Others will weigh the benefits of using the discounts versus insurance and want to take the deductible to get cost sharing, she said.
  • Talk to a professional, such as “an insurance broker who represents all insurance companies, so they are not biased against anyone,” said Cynthia Pruemm, founder and CEO of SIS Financial Group. Free individual counseling is also available through the State Health Insurance Assistance Program (SHIP), which often works through local agencies on aging, senior centers and local family services departments, Johnson said.
  • Part D enrollees in 2025 can choose to pay for medications in monthly installments over the year, for free, and everyone should do so, said Brian Whorley, chief executive of health software company Paytient.

“You can keep your money longer,” Whorley said. “If you are a person who prefers to check bills at the end of the month and values ​​predictability and security, then this will be interesting for you.”

High costs are a key reason people don’t fill prescriptions or ration their medications, he said. Smaller, more predictable payments are easier to plan for and encourage people to stick with medications, he said. All experts who spoke to USA Today said there were no downsides to choosing this option.

  • If you’re considering switching to a Medicare Advantage plan because premiums are lower, you should be careful, experts say. “Once the Medigap policy holder cancels their coverage, you generally will not be able to get your policy back if you later change your mind,” Johnson said.

According to AHIP, MA’s out-of-pocket costs are capped annually, but they are high and will increase in 2025. The share of plans with maximum out-of-pocket costs above $5,000 will increase from 46% in 2024 to 52% in 2025, AHIP said. With traditional Medicare insurance with a Medigap plan, your annual out-of-pocket cost is equal to the Part B deductible, which is $240 in 2024.

Danger!: Have you received notice of your Medicare plan change? Here are 3 things to watch out for

Also consider how much you travel and which providers are available where you live. Traditional Medicare insurance covers almost all doctors and hospitals without a referral. Medicare Advantage covers in-network doctors and may require referrals and pre-authorizations for some treatments. “Medicare Advantage can be more inconvenient if you like to travel because you have to stay in network,” Pruemm said.

Even though traditional Medicare plus Medigap costs more in monthly premiums, “Plan G is rich in benefits,” said Brandon Hill, senior adviser at Beckett Financial Group. “If the supplement fits your budget, then get the supplement.”

Medora Lee is a money, markets and personal finance reporter for USA TODAY. Reach her at [email protected] and sign up for our free Daily Money newsletter every Monday through Friday morning for personal finance tips and business news.