As you begin to turn your attention to the Medicare Annual Enrollment Period (AEP), you may be thinking of your prescription drugs and how they may be impacted this year. Did you know that big changes are coming to Medicare Part D in 2025? The changes are part of the Inflation Reduction Act.
Learn about these three key changes coming to Medicare Part D in 2025
1. Out-of-Pocket Cost Cap
In 2025, people with Medicare Part D will have an annual spending limit of $2,000 for their prescription drug costs. In following years, annual caps will be based on inflation.
In 2024, most people contribute about $3,300 to $3,800 toward their annual cap, so this change could help people who have high drug costs save around $1,300.
The annual cap doesn’t apply to out-of-pocket costs of Medicare Part B drugs, which are drugs administered by a healthcare provider in an outpatient setting, such as some cancer drugs and injectable drugs.
2. Coverage Gap Phase Elimination
The coverage gap phase will be eliminated in 2025, which means “Part D enrollees will no longer face a change in their cost sharing for a given drug when they move from the initial coverage phase to the coverage gap phase,” according to Kaiser Family Foundation.
In years past, during the coverage gap phase, Part D enrollees faced 100% of their total drug costs, and in 2024, enrollees face 25% of costs for brand and generic drugs.
3. Medicare Prescription Payment Plan
Beginning next year, all Medicare Part D plans, including Medicare Advantage plans with prescription drug coverage, must offer enrollees the option to pay out-of-pocket prescription drug costs in monthly installments, with a cap on monthly spending. Members who opt in to the program will pay $0 at the pharmacy and instead will be sent monthly bills.
This is different than the current system that requires enrollees to pay all at once at the point of sale at the pharmacy.
This improvement can help retirees better manage their budget with prescription drug costs that are evenly distributed throughout the year.
Despite These Advancements, Some Medicare Part D Expenses Could Increase in 2025
While these changes will provide significant benefits for many seniors who have high drug costs, they could also result in increased costs for other Medicare Part D enrollees.
That’s because as insurance companies shoulder more expenses, they could make changes to manage their increased costs. Here’s how this could affect Part D members:
- Higher Medicare Part D premiums (the amount enrollees pay each month for their Part D coverage)
- New or higher drug deductibles (the amount enrollees must pay before their Part D plan starts covering their drug costs)
- More use of coinsurance (the percentage of drug costs paid by members) and/or higher copays (fixed amounts members pay for prescriptions)
- Narrower drug formularies and more step therapy or prior authorization (restrictions on which medications plans cover)
- Push to increase generic drug utilization
Get Help With Your Questions During AEP
We know navigating the changes coming to Medicare Part D can be overwhelming, which is why our agents are here to answer any questions you have about these changes.
We’re here for you!
Bankers Life is here to help customers with their financial and insurance needs so please visit us at BankersLife.com to learn more.
