Important Changes Impacting Part D Benefits for 2025

Medicare is always evolving and changing, and 2025 will be no different. 

In 2025, we will begin to see the effects of the Inflation Reduction Act of 2022. This legislation introduces increased complexities to drug pricing, changes to stakeholder liabilities and significant impacts on patient affordability.

It is extremely important to understand the impact of these changes on your benefits since the Annual Enrollment Period—which began on October 15th—for many, is the only opportunity to make changes to your 2025 benefits.

Below are the Part D changes that will take effect on January 1, 2025.  All plans in 2025 will adopt these changes, so regardless of whether you receive your Part D prescription drug benefits through a stand-alone Part D plan or a Part C Medicare Advantage plan, you need to review your plan’s changes and new benefits.

The 2025 changes are as follows:

1. Medicare beneficiaries’ out-of-pocket costs for prescription drugs will be capped at $2,000.  This means your portion of prescription drug expenses (deductible, copays and coinsurance) will not exceed this limit.
2. The Medicare Prescription Payment Plan (M3P). Medicare beneficiaries will have the option to “smooth out” their $2,000 out-of-pocket maximum by spreading equal payments throughout the plan year.  If the member’s responsibility for a single medication for a one month refill exceeds $600, this would qualify for the payment plan. 

For example:

• Drug Cost:  $3000 for a 90-day supply
• Member Cost Sharing:  25% or $750
• Under M3P, the $750 would be eligible to be paid in equal installments for the balance of the plan year 
• $750 would count towards the $2,000 annual maximum out-of-pocket 

Note:  If preferable, members can still choose to bypass the M3P option and pay in full for medications.

1. Certain factors contributing to your monthly premiums will be capped at 6% annually. However, your premium could rise by more than 6% due to other factors that contribute to your premium calculation.
2. If a drug company increases their prices beyond the rate of inflation, they will be required to pay a rebate to Medicare. Medicare will start billing these companies no later than the fall of 2025.
3. The Medicare Drug Price Negotiation Program. Medicare has the authority to negotiate with participating drug companies to reduce the cost of specific medications covered under the program. Negotiations have begun for 10 medications, with the changes expected to take effect in 2026. The full impact of this policy won’t be experienced until 2026 and thereafter.

What do all these changes mean for your drug coverage in 2025?

We are anticipating the following changes:

1. Rising Costs:  Premiums, deductibles, copays and coinsurance are on the rise. The impact varies across plans, with some experiencing all of these increases and others just a few. Per CMS estimates, about 3-4% will see a reduction in their out-of-pocket prescription drug costs for 2025.
2. Fewer Plan Options:  Some plan providers will stop participating in Medicare. We’ve read announcements stating that in some markets, current plans won’t be renewed in 2025. If your 2024 Parts C or D plan is not being renewed, you will  have the option to enroll in a different plan or you could be offered to enroll in another plan with your current plan provider. 

Note: Please read the next article in this newsletter if your plan will no longer be offered. 

What steps can you take to find the right drug plan for 2025?

1. Read Your Annual Notice of Change (ANOC):  You should have received your ANOC in September. This letter outlines all of the changes to your plan or if your plan is leaving the market. We highly recommend that you read your ANOC because it is so important that you understand the specific plan changes and how they will impact your costs and benefits in 2025.
2. Schedule an appointment with your Medicare insurance agent during the Annual Enrollment Period (AEP).  Remember, this enrollment period began on October 15 and ends on December 7th.  Any changes made during AEP will begin on January 1, 2025.

At MP Group, it is important that you know more and stress less about your Medicare benefits. With significant changes for the 2025 plan year, we are ready to help you navigate these changes and the continued complexities of Medicare. 

Know more and stress less with MP Group.