October Agency Insights
Navigating the 2025 AEP: Preparing for Medicare Changes in 2025
As we approach Medicare’s Annual Enrollment Period (AEP), it’s important to stay informed. So, you’re ready to make decisions that affect your health care coverage for the coming year. AEP runs each year from October 15 to December 7. It’s a chance to review your current Medicare coverage. And consider changes to ensure you’re set up for the right health care coverage in 2025. It’s also important to look at some significant Medicare changes.
What Is AEP and Why Is It Important?
AEP is the one time each year when Medicare individuals can update their Medicare coverage if they wish to do so. This includes Original Medicare, Medicare Advantage, and Part D prescription drug plans. Whether you’re looking to enroll in, switch, or drop a plan, AEP is the time to do it. It’s also the time of year to review your current coverage. This ensures you have the right coverage for your health care needs and budget. Plans can change each year, and so can health and medications.
Medicare Changes in 2025: What You Need to Know
While your focus may be on 2024, it’s also wise to keep an eye on what’s coming in 2025. Major changes to Medicare are on the horizon. And understanding these updates now can help you make more informed decisions during this year’s AEP.
Key Medicare Changes
1. $2,000 Cap on Out-of-Pocket Prescription Drug Costs
One of the major 2025 changes is the introduction of a $2,000 annual out-of-pocket cap for prescription drug costs under Medicare Part D. This protects Medicare enrollees from high catastrophic drug expenses. And significantly reduces costs for those who need expensive medications.
2. Elimination of the Coverage Gap
Currently, once Medicare individuals are in the catastrophic coverage phase, they do not pay a copayment or coinsurance for their covered Part D drugs for the rest of the calendar year. For 2024 an individual moves to the catastrophic phase once their out-of-pocket spending reaches $8,000.
Starting in 2025, the coverage gap (also called donut hole) is eliminated. Once individuals hit the catastrophic phase (when out-of-pocket spending reaches $2,000), enrollees pay $0 for covered Part D drugs for the rest of the calendar year.
3. “Smoothed” Out-of-Pocket Costs for Part D
The Medicare Prescription Payment Plan (PPP) is a new benefit that starts in 2025. It allows individuals with Medicare Part D prescription drug coverage to pay for their prescriptions in monthly installments. Rather than paying the full cost at the pharmacy each time they fill a prescription. It’s intended to make prescription drugs more accessible and manageable. And may be especially helpful for those with high cost sharing earlier in the plan year.
4. Expanded Low-Income Subsidies
The Part D Low-Income Subsidy (LIS) expanded in 2024. This program is also known as Extra Help. LIS helps Medicare individuals with limited income and resources pay for their Part D premiums, deductibles, and copayments. In 2025, the Medicare Extra Help program expands its eligibility to an estimated 3 million more low-income patients.
To determine eligibility, the Social Security Administration (SSA) considers a person’s income, savings, investments, and real estate (other than their home). Individuals can apply for Extra Help online, by calling the SSA, or by visiting their local Social Security office.
5. Negotiation of Drug Prices by Medicare
The Inflation Reduction Act of 2022 granted Medicare the authority to negotiate prices for certain high-cost prescription drugs. The negotiation process is ongoing, but the first 10 negotiated drug prices will be released in September. They take effect in 2025. This may lower the costs of more expensive medications for Medicare individuals.
6. Changes to Part D Premiums
To offset the cost of the new benefits for 2025, there may be adjustments to Part D premiums. While these changes are intended to keep costs balanced, some enrollees may see increases in their monthly premiums.
7. Introduction of New Benefits and Services
Some Medicare Advantage plans may expand the added benefits they offer. New services may provide more complete care and influence an enrollee’s plan selection.
8. Potential Plan Structure Changes
The structure of some Medicare plans may change. This includes provider networks and the types of benefits they offer. Individuals must review their Medicare options carefully to ensure their preferred doctors and services remain covered. If an enrollee is unhappy with upcoming changes to their current coverage, they can use AEP to make plan changes.
How to Prepare During This AEP
Given the upcoming changes, here are tips to help you prepare during this AEP.
Review Your Current Plan: All Medicare Advantage and Prescription Drug plans must send by the end of September an Annual Notice of Change (ANOC) letter to all enrollees. The ANOC outlines any changes to an enrollee’s current plan for the upcoming new year. Take a close look at your existing Medicare plan. Are you satisfied with the coverage changes? Are your medications and preferred doctors still covered? This review gives you a baseline when comparing other Medicare options.
Consider Future Needs: Think about how the 2025 changes may impact your health care requirements. If you anticipate needing more extensive prescription drug coverage or have an interest in new benefits introduced in Medicare Advantage plans, factor this into your decision-making process.
Consult a Licensed Insurance Agent: Navigating Medicare and the changes can be overwhelming. Speaking with a licensed insurance agent can provide clarity. Agents can help you understand the new regulations and how they may affect your health care choices.
Stay Informed with Insurance Benefit Navigators
By staying informed and proactive, you can maximize your Medicare benefits. And ensure you have the coverage you need now and in the future. If you have any questions or need assistance with your Medicare plan, don’t hesitate to reach out to our team at Insurance Benefit Navigators. We’re here to help you navigate the complexities of Medicare. And find the coverage that’s right for you.
