In 2025, Medicare will experience some of the most significant changes in a generation. These changes will include a $2,000 cap on out-of-pocket costs for Part D drugs, a new opt-in payment plan, and possible broad adjustments to Medicare Advantage plans. Most of these modifications stem from the Inflation Reduction Act.
Here are three reasons you should spend some time with your Medicare paperwork this fall.
1. You Won’t Pay More Than $2,000 for Drug Copays and Coinsurance Under Part D
In 2025, Medicare will introduce a new framework to replace the confusing phases of Part D, including the removal of the notorious “donut hole” and a new annual cap of $2,000 on out-of-pocket expenses for Part D medications.
According to Rubin, this limit is “great for individuals who take multiple medications and incur high copays, as they can quickly reach that $2,000 threshold.”
Here’s how the new phases will operate:
- Deductible Phase: If your Medicare Advantage drug plan or standalone Part D plan has a deductible, you’ll pay 100% of your prescription drug costs until you reach $590, which is the Part D deductible for 2025.
- Initial Coverage: You will pay 25% coinsurance for covered medications until your out-of-pocket costs total $2,000.
- Catastrophic Coverage: Once you hit the $2,000 spending limit on your medications, you won’t have to pay anything else out of pocket for the remainder of 2025. Those who reach the catastrophic threshold will save approximately $1,300 on drug costs in 2025 compared to 2024, according to a review by the Kaiser Family Foundation (KFF).In subsequent years, the $2,000 limit will increase to account for inflation.
Unfortunately, these out-of-pocket limits do not extend to Part B drugs administered by healthcare professionals in an outpatient hospital setting. For instance, chemotherapy treatments may be included in this category.
2. Medicare Advantage providers might be scaling back their benefits.
Reports indicate that some Medicare Advantage companies may reduce benefits in 2025 due to financial challenges. This could happen in several ways. “For instance, cost sharing might increase for certain services, or the plan could become less comprehensive in terms of the benefits it offers,” Freed explains.
If the additional benefits matter to you, carefully review the plan documents to see what changes are coming in 2025 and whether other plans might suit your needs better.
If you have questions about your plan coverage in 2025, you can get assistance by calling 800-MEDICARE (800-633-4227, TTY 877-486-2048) or reaching out to your State Health Insurance Assistance Program (SHIP). “You can actually discuss it with someone to ensure you understand the changes to your plan and determine if you really want to remain in a specific plan,” Freed advises.
3. Medicare Advantage providers are dropping plans
Some Medicare Advantage companies have announced plans to discontinue certain offerings in 2025, and in some cases, they are even withdrawing from entire states. If your provider is discontinuing your plan, you have two options: switch to another Medicare Advantage plan available in your area or revert to Original Medicare. If you take no action, you will automatically be switched to Original Medicare.
If you decide to return to Original Medicare because your plan is ending, you will have another opportunity to enroll in a Medicare Supplement Insurance plan, also known as Medigap, without undergoing medical underwriting. Typically, this option is only available during the Medigap open enrollment period, which lasts for six months starting from the month you turn 65 and enroll in Medicare Part B.
“When you are dropped from a plan due to circumstances beyond your control, such as the plan going out of business, you get a Medicare do-over,” says Caughill.
No matter what you choose, don’t simply allow your coverage to renew without thoroughly reviewing it. “This requires effort,” Caughill emphasizes. “You need to invest the time to understand the changes in your provider’s terms, as you are agreeing to those changes.”
Need help? Call Health Plans in Oregon: 503-928-6918. Our assistance is at no cost to you.
