The start of a new year brings important changes to Medicare – changes that will almost certainly affect every enrollee, some moreso than others. As we step into 2025, we wanted to highlight some of these new rules which will bring a mixed bag of news. Part B premiums will rise a bit – the bad news – but prescription drug costs will generally be capped at $2,000 out-of-pocket, which is a major relief for those with costly medications.
For the basics, we’re sharing tidbits from several articles, including two from Kiplinger, both written by reporter Donna LeValley. We’ll take a look at her reporting to see what’s new, and how much you’ll pay in the year just getting underway.
Open Enrollment is Over – Welcome to Open Enrollment!
First, though, we feel we need to remind many if not most Medicare enrollees that, should you still want to change your coverage, there’s time. Yes, traditional open enrollment did end December 7th, but those on Medicare Advantage – currently over half of all beneficiaries – have another window during the first three months of the year to switch from one MA plan to another.
A year ago, NerdWallet described the window this way. “Medicare open enrollment happens every fall from October 15 to December 7,” wrote reporter Katye Ashford. “During this time, people with Medicare can join, change or drop Original Medicare, a Medicare Advantage plan or a Medicare drug plan. Coverage for plan changes starts January 1.”
But then she goes on to explain this “second window” of opportunity. “Medicare Advantage open enrollment, which runs from January 1 to March 31, is only for people who are already enrolled in a Medicare Advantage plan,” Ashford explains. “If you have Original Medicare, you can’t change plans during this time. Changes to plans made during this period take effect on the first day of the following month.”
Why change? People may have several reasons: lower premiums, better coverage, lower co-pays. Sometimes physicians will leave a company’s network, requiring either a change of plan or a change of practitioner. “The Medicare website is a great place to start shopping for Medicare Advantage plans,” says NerdWallet.
Higher Costs for Part B Will Affect Almost Everyone
Returning to the Kiplinger article, here’s how reporter LeValley describes proposed changes.
“Medicare will cost you more in 2025 than it did in 2024,” she writes. “Medicare Part A, Medicare Part B and Part D premiums and deductibles, have gone up. So have the income related monthly adjustment amounts (IRMAA) for Medicare Parts B and D.”
But as noted above, other costs will be going down. Prescription costs should be lower, and more price reductions are said to be on the way as Medicare negotiates lower costs with pharmaceutical manufacturers. (These cost reductions will begin taking effect in 2026.)
How Much Will You Pay in 2025?
In a separate Kiplinger analysis, LeValley spells out the basic coverage costs that enrollees will start facing this month. We lack the space to cover every eventuality, but here’s the overview. We’ve quoted LeValley verbatim for clarity, with some editing.
Medicare Part A deductible for hospital admissions will increase to $1,676 in 2025. That’s an increase of $44, up from $1,632 in 2024. The Part A inpatient hospital deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. There’s no limit to the number of benefit periods you can have in a year. This means you may pay the deductible more than once in a year.
Medicare Part B monthly premium is $185, up $10.30 from $174.70 in 2024. The annual deductible for all Medicare Part B beneficiaries is $257 in 2025, $17 more than the 2024 deductible of $240. Part B covers doctor visits, outpatient services, home health care, durable medical equipment and many preventive services.
The Part B IRMAA surcharge amounts range from $74.00 to $443.90. Part D surcharges range from $13.70 to $85.50 depending on income. (Note that “IRMAA” stands for income-related monthly adjustment amount” and generally will mean higher premiums for high earning households. For 2025, says NerdWallet, Part B IRMAA kicks in for individuals whose modified adjusted gross income exceeds $106,000. For couples, the threshold is $212,000.)
Changes for 2025: Out-of-Pocket Prescription Costs Capped at $2,000
In her Kiplinger article about looming Medicare changes, LeValley zeroes in on the biggest.
“Beginning in 2025,” she writes, “people with Part D plans won’t have to pay more than $2,000 in out-of-pocket costs, thanks to a provision in the Inflation Reduction Act of 2022. The $2,000 cap will be indexed to the growth in per capita Part D costs, so it may rise each year after 2025. Part D enrollees will also have the option of spreading out their out-of-pocket costs over the year rather than face high out-of-pocket costs in any given month.” Medicare Advantage drug coverage are also subject to the cap, says AARP.
LeValley points out that this new cost cap applies only to medications covered by your Part D plan. If your doctor administers a drug in his or her office, including vaccinations and some outpatient prescription drugs, they fall under Part B coverage
The Kiplinger article adds a very important note: if you have delayed enrolling in Medicare because you are covered by health insurance through your employer, the new cost cap might disqualify your workplace plan since coverage will no longer be “comparable.” LeValley’s advice: “See Medicare Upgrades Could Disqualify Your Private Plan to find out more about how this new $2,000 cap will impact the credibility of your employer-provided prescription drug coverage.”
Changes for 2025: MA Plans Will Advise of Unused Benefits
We stated above that Medicare Advantage plans are now the preferred choice of over half of all Medicare beneficiaries. As LeValley observes, these plans “often tout the coverage that they provide and traditional Medicare doesn’t — dental, vision, hearing and fitness benefits. Most Medicare Advantage plans offer at least one supplemental benefit, and the median number provided is 23, according to CMS.”
But having all those extra bennies is apparently no guarantee that they’ll be used. “Three in 10 beneficiaries in Medicare Advantage plans said they did not use any of their plan’s supplemental benefits in the past year, according to a study by The Commonwealth Fund,” LeValley writes.
As a proposed remedy, new rules require MA enrollees to receive a mid-year notice to remind them of what they’re missing. “Starting in 2025, Medicare Advantage plans will be required to send policyholders a personalized ‘Mid-Year Enrollee Notification of Unused Supplemental Benefits’ in July,” says LeValley. “It will list all supplemental benefits the person hasn’t used, the scope and out-of-pocket cost for claiming each one, instructions on how to access the benefits and a customer service number to call for more information.”
The intent sounds good, but it will be interesting to see if benefit usage actually increases as a result.
Changes for 2025: New Rules Put a Cap on Medicare Sales Commissions
Thousands of sales agents, as described in this article from US News, make their living as Medicare agents and brokers. Some are highly professional and represent multiple companies, while others may offer limited choices that might not be best for you. They generally earn their living from sales commissions and other incentives, which can make the advice they give much more subjective, tainted by self-interest.
The Centers for Medicare & Medicaid Services is fighting back. “CMS hopes to end sales incentives in 2025 for Medicare Advantage and Part D plans,” says LeValley in her Kiplingber article. “Salespeople sometimes get incentives, such as hefty bonuses, when they enroll Medicare beneficiaries into private insurers’ Medicare Advantage plans, Medigap or Part D prescription drug plans. The coming rule change is meant to disincentivize steering people to insurance plans to earn perks and not serve the best interests of Medicare beneficiaries.”
According to Kiplinger, new rules are intended to do away with incentives and to replace them with fixed caps. Brokers and agents will no longer be permitted to charge “administrative fees” which exceed those caps. “In most states, that cap has been $611 for new Medicare Advantage signups and $306 for renewals,” says the article. “Part D plans have had lower caps: $100 for initial enrollment and $50 for renewals.”
Hopefully, the new system will still provide compensation for agents and brokers while enforcing much greater pricing consistency for all concerned. Again, we’ll be watching this story to see if the new caps work as planned.
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(originally reported at www.kiplinger.com)