Autumn changes more than just the leaves and the weather. For the roughly 66 million Americans who are Medicare beneficiaries, this season presents an opportunity to change their coverage, perhaps to pay less or get more from their plan.
The annual open enrollment period began Tuesday and runs through Dec. 7. Those on Medicare—generally those over 65 and younger people with disabilities or certain chronic conditions—can choose a number of changes. They can choose a new Medicare Part D drug plan, a new Medicare Advantage plan, or switch from Original Medicare to Medicare Advantage or vice versa. Any coverage changes made during this period will take effect on January 1, 2025.
The private Medicare plan market operates on the premise that people enrolled in Medicare will shop around during open enrollment to select the best source of coverage based on their individual needs and circumstances. But most beneficiaries do not take this step. The Kaiser Family Foundation, or KFF, found that nearly 7 in 10 people on Medicare did not compare plans during the 2022 open enrollment period, the most recent for which data is available.
However, while checking your insurance coverage is no fun, it can pay off.
The season also provides incentive to learn what will change in Medicare in the coming year. Changes will be especially significant in 2025, as several key measures included in the Inflation Reduction Act of 2022 that affect Medicare will take effect.
Here’s a summary of the major Medicare changes for 2025.
Cost of prescription drugs
How much and how you can pay for prescriptions is a leading area of change in Medicare by 2025. The benefits are especially large for recipients who take expensive medications for cancer, rheumatoid arthritis and other serious illnesses.
The improvements mainly affect Medicare Advantage plans (also known as Part C), an alternative to Original Medicare that offers services administered by private insurance companies that contract with the government. In addition, benefits may also be available to those with supplemental Part D drug plans that can be combined with Original Medicare coverage.
Personal expenses are limited to $2,000.
Beginning in 2025, all Medicare plans will include a cap on the amount you pay out of pocket for prescription drugs covered by your plan. If your out-of-pocket costs for covered drugs reach $2,000 (including certain payments made on your behalf), you automatically receive what is called catastrophic coverage. This means you won’t have to pay extra for your Part D drugs until the end of the calendar year.
However, this benefit will only apply to drugs that are actually covered by your MAPD program (that is, Medicare and Part D). That’s why it’s doubly important to compare plans during open enrollment to make sure your plan covers the medications you take and meets your needs.
For Medicare beneficiaries who buy a lot of drugs, the $2,000 limit can provide significant savings. If the cap had been in place in 2021, the latest year for which data is available, 1.5 million Medicare beneficiaries would have benefited, according to a KFF analysis of Part D drug claims data. A third of this group spent at least $3,000 a year on prescriptions.
Of course, even the cost of a drug, capped at $2,000, is unaffordable for those with very low incomes. If this describes you or anyone else you know with Medicare, check your eligibility for Extra Help. It is available in 2024 to those whose incomes are below a certain level and have no more than a certain balance in their bank or investment accounts. (For a married couple, the allowed maximum for 2024 is $30,660 and $34,360, respectively.)
Drug Bill Payment Plans
Huge drug bills (or multiple bills) can easily ruin a family’s budget. Medicare will now offer an additional plan to pay for these costs.
Beginning January 1, 2025, all Medicare prescription drug plans, including both stand-alone Medicare prescription drug plans and Medicare Advantage plans with prescription drug coverage, must offer enrollees the option to pay out-of-pocket for their prescription drug costs during their coverage period. Medicare plan. year. There are no income requirements or fees to participate in the program. No interest is charged.
Here’s how the program will work once you agree: Each drug expense you incur will be added to any balance you may have from past unpaid drug bills under your payment plan. The total balance is then divided by the number of months remaining in the year.
For example, let’s say that in March 2025 you received an invoice for $600, and in January and February you had $300 outstanding on invoices you received in January and February for a total of $900. You will be billed $100 per month for the remaining nine months of 2025 (April to December). You won’t pay this amount to the pharmacy, but directly to the plan, and your monthly premium will also be included in the bill.
If you miss two or more payments, you may be disenrolled from the plan. (You will still have to pay the amount due as if you had decided to leave the plan voluntarily.)
Expanded Mental Health Coverage
Mental health services have long been covered by Medicare through Part B, an optional supplement to Original Medicare offered by the federal government at an additional cost. Mental health professionals authorized under Part B include psychiatrists or other physicians; clinical psychologists; social workers; and nurse practitioners.
In 2025, additional mental health professionals will be available to Medicare beneficiaries. Individuals added include licensed mental health counselors, addiction counselors, and marriage and family therapists.
Mid-year account update
Medicare Advantage plans offer a number of benefits over those available under Original Medicare and Medicare Plan B. But the number of services available and their complexity make it easy for beneficiaries to overlook the benefits or use them too sparingly.
Beginning in 2025, Medicare Advantage plans will be required to provide policyholders with semi-annual notice of unused supplemental benefits each July. This notice will detail any unused fringe benefits, including the scope and cost of each benefit claim, and provide a customer service contact number for further assistance.
More money:
Medicare drug negotiations are expected to save enrollees $1.5 billion a year.
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