As we head into 2025, we’ll see HUGE changes coming to Medicare that will affect nearly everyone, whether you have a Medicare Supplement plan or a Medicare Advantage plan.
Biggest Medicare Changes in 2025
Here are all the Medicare changes in 2025, in order of their impact:
1. $2,000 Annual Out-of-Pocket Cap for Prescription Drugs
The biggest change to Medicare in 2025 is the cap on annual drug costs. Over the last decade, Medicare Part D has progressively lowered out-of-pocket drug costs for consumers. This has forced plan premiums to rise to compensate for that, but now they have added a maximum out-of-pocket amount of $2,000 for any year going forward.
With the elimination of the “doughnut hole,” retirees will go from paying a max deductible (phase 1) of $590 (up 10% from last year) to only paying 25% of the costs (the initial coverage phase) until they hit $2,000 out-of-pocket, which is known as the catastrophic phase. After they hit $2,000, their prescription drug costs are free for the rest of the year.
2. Medicare Prescription Payment Plan
The second biggest change to Medicare in 2025 is also related to prescription drugs. Since the deductible keeps going up (to compensate for lower out-of-pocket costs on the back end), many retirees might find themselves unable to pay, or at least stretched a little thin, paying that whole deductible up front in the first few months of coverage.
That’s why retirees will now have the option to pay their average the cost of drugs over the whole year to come up with an easy out of pocket coinsurance amount to pay for their drugs each month. How this works is that the insurance company at your express consent, averages the annual drug cost, broke down into equal monthly coinsurance payments. When electing this coverage, it may take 2-3 months to take effect (which seems contrary to the idea of not paying the whole deductible upfront, but maybe next time the government will get it right).
3. Part D Premium Stabilization Program
Another change to Medicare in 2025 will be the Part D Premium Stabilization Program. This program is essentially a bribe for insurance companies to not increase their premiums for next year after politicians rammed the Inflation Act through, triggering huge changes for providers by creating additional red tape without adequate compensation (in their eyes). This program caps premium increases due to part D changes. It’s like a free subsidy to the insurance companies so they don’t pass on the rising costs for Medicare onto the consumer before the election.
This program was created to cover up the huge change made to Medicare Part D (capping drug costs at $2,000) that would’ve no doubt had repercussions for this presidential election, because politicians (who give up their votes for kickbacks) didn’t want to have to go home and explain to their constituents why everyone’s Medicare costs are increasing while benefits are decreasing.
In fact, companies are now lowering the number of Part D plan options available, while also limiting commissions to agents and brokers. This will either force brokers to not recommend the plans or just send their clients to Medicare.gov because they’re essentially working for free if they provide any Part D advice.
Here at OhioMedicarePlans.com, we are committed to providing clients an unbiased comparison of their options, even if we don’t get paid for it. We believe that if we do right by the client, in the end, the money will take care of itself.
4. Brokers Can’t Have Incentives to Sell Plans
Piggybacking on the previous change, getting rid of broker incentives sounds like a great idea in theory. Nobody wants to be saddled with a plan that doesn’t suit their needs, and letting incentives influence brokers to push plans that aren’t in the consumer’s best interests should be outlawed, right?
I can’t disagree with that argument; however, the execution of that goal is where this rule will have unintended consequences, i.e. blowback.
Most consumers don’t realize that, to sell Medicare Advantage or Part D plans, agents and brokers have to go through multiday trainings every year for a week. On top of the copious new regulations thrown at agents every year (that consumers aren’t even aware of), the red tape agents have to endure doesn’t allow them to push plans based on incentives.
In fact, it’s practically impossible to put a retiree on a Medicare Advantage plan or Part D plan that’s NOT in their best interests just to get an incentive, due to all the requirements involved when switching to another plan.
What this rule ended up doing is destroying the supporting incentives contracting uplines gave agents – forcing brokers and agents alike to pay more for support services or forgo them completely. This will put a strain on the quality of service brokers try to provide to consumers, as happens when anyone’s pay is cut while still providing the same or greater service while juggling new rules and changes every year.
5. Mid-Year Reminder for Unused Medicare Advantage Benefits
This is a great benefit because so many retirees don’t either take the time to learn how their Medicare Advantage benefits work, or they don’t even know they exist. Now, plans will have to notify plan beneficiaries (you) if you have any unused benefits left.
This mostly applies to the extra benefits like the Quarterly Over-the-Counter (OTC) benefit or the Food/Utility/Rent payments card. Just be careful because some of those benefits don’t carry over month to month, so you will have to find out what carries over, so you don’t end up losing anything.
If you have a Medicare Supplement Plan…
This year will be huge for Medicare Supplement holders because they often pay more for their drugs compared to someone on a Medicare Advantage plan, where the plan can take their government subsidy and average all the plan costs together to lower their prescription drug costs.
Since there are fewer Part D plan options this year, higher deductible amounts and premiums, and higher upfront drug costs, it will be imperative to recheck your Part D plan options going forward. Remember, agents and brokers are likely not getting paid to help you compare options, so be sure to ask them if they’re taking into consideration all plan options including ‘non-commissionable’ plans (like we do here at OhioMedicarePlans.com).
Although there are no new changes to Medicare Supplements, don’t forget, Ohio is one of 8 states that forbids Medicare balance-billing, which makes Plan N a huge cost-saver! Be sure to recheck your rates every 2-3 years to maximize your savings while you can still pass underwriting.
If you have a Medicare Advantage Plan…
Due to the changes in Part D benefits and reimbursement amounts, you may see your benefits cut from last year, which was a very benefit rich year for Advantage plans. You may see higher cost share, a change in doctor networks, or even higher drug costs if you didn’t previously.
More so than with a Medicare Supplement, enrolling in a Medicare Advantage plan requires CONSTANT DILIGENCE for both you and your broker. Be sure to double check changes every year to stay abreast of any possible disruptions compared to the plan benefits you enjoyed in the previous year.
Regardless of your plan type, if you’re living on a fixed income, definitely take advantage of the Prescription Payment Plan to average out the cost of your drugs. Also be aware of any changes to your pharmacy networks; some plans only have mail-order as their preferred pharmacy provider, while retail pharmacies may be classified as standard with higher cost share.
Of course, if you have any questions about your options or changes in the year ahead, just click the Get a Quote button above.
