The Inflation Reduction Act has implemented changes that will effect everyone on Medicare.  The sooner you understand what is coming, the easier the change will be!  If you are on Medicare, you need to tune in to what is happening, learn from an educated agent now so you are not surprised this Annual Enrollment Period.  You will not receive this information from CMS or insurance companies until October 15th, and that is too late.

Why are drug plans changing for 2025?

No one likes change, but this one might reduce your drug costs for 2025 and beyond, at least that is the intent of the Inflation Reduction Act (IRA).  We have actually seen small changes from the IRA the last few years in insulin costs and catastrophic coverage.  This one is so big, they (CMS) had to change the entire structure of drug plans.

What are these changes going to look like?

The new basic format of Part D plans and Advantage plans with Part D is relatively simple, thank goodness!

1. You will first meet a deductible of up to $590.  Notice I said "up to", some plans could have no deductible or a deductible of a lesser amount.  Note to self for AEP shopping!
2. Initial coverage is now up to 25% coinsurance of the retail price of your medication.  I said it again, in this case "up to" means, low cost generics could still have a low or no copay.  We have to wait for AEP (October 15th to December 7th) to see what the drug plan carriers are going to do with this new structure, but they have options!
3. Once your deductible, plus copays for all drugs on the plan's formulary, from a networked pharmacy total $2,000, you will hit your annual maximum out-of-pocket and enter catastrophic coverage with zero copy.  There are some important nuggets in this you need to pay attention to, one being, what you pay for your deductible counts towards the $2,000.  Second, drugs will only count towards the $2,000 maximum out of pocket IF they are on the plans formulary, BIG "note to self" for AEP shopping! Third, you must use a networked pharmacy.  Many people have been getting financial relief by purchasing medications from Canada, it might be a time to reconsider bring that purchase back to the USA and purchase it from a pharmacy in-network on your drug plan.  You want all those dollars spent to count, right?!
4. Opt-in payment plan option will be offered through your drug plan.  Hold the phone, this is brand new, never seen before breaking news!  There is so much around this change, it probably requires it's own post when we know more.  What we know now is that you will have the option to pay out the $2,000 maximum out of pocket for the duration of the year after you opt-in.  These payments will be made monthly to your drug plan company and you will pay nothing when you pick up your medications from the pharmacy.  More to come on this, however, although this will be available for everyone, the people who it will benefit the most are those on drugs with retail prices $600 and over.  That little nugget might trigger another "note to self " for AEP shopping!

Who is this change going to effect?

The new changes are going to effect EVERYONE who is on Medicare.  Beneficiaries on a stand alone drug plan are going to be effected more than those on an Advantage plan because Advantage plans have more wiggle room to buffer the cost burden on the insurance companies.  We are expecting premiums to go up, plans to leave the market and who knows what else until they tell us in October.

For those of you who remained one employer coverage, CMS has made a blanket decision for 2025 that employer coverage will remain creditable.  You should get a letter stating this towards the end of the year.  However, this could be different for 2026, stay tuned!

What can you do now to be ready for this change?

1. Learn! Learning about the change early, like you are doing right now, is great big step in the right direction!  I sat through three one hour long, in depth  training sessions to get my head around it all, it might take a few for you too.  At least you won't be surprised on October 15th!  I am offering many ways for you to learn.  I am doing regular trainings on my Facebook page, in person classes in my office and webinars on Zoom to help as many people learn as much as they can before Annual Enrollment period.  All of these can be found on my Events page calendar over here.
2. Update or create your Medicare.gov account.  You can update all of your prescriptions and pharmacy information now or anytime leading up to Annual Enrollment Period.  Even if you are working with me or an agent like myself, this platform will be a resource in our tool box to ensure we find a suitable plan for you for 2025.
3. Know the retail cost of your drugs and if you need to plan on "opting-in" to the payment plan.  This is new to EVERYONE, beneficiaries, agents and insurance companies.  This is the first step, the rest will come after enrollment.
4. Schedule your appointments early!  More people will be shopping plans this year than ever before, if you would like one-on-one time with an agent to help make your selection for 2025, get on their schedule ASAP.  If you are looking for an agent and would like to schedule with me, fill out the contact form so we can get in touch with you!
5. Don't panic!  Remember, this is intended to help and once we figure out the details, you will be smooth sailing.  We just need to get over the hump of something new!

Tami Brunner

Independent Health Insurance Broker

Content relevance is subject to change based on new rules, rule interpretations and plan development.