Our colleague and MFA founder Susan Moore contributed the following update on Medicare.
Medicare open enrollment period starts October 15 and continues through December 7.
During the open enrollment period, Medicare enrollees can make certain changes in their coverage. Here are some of the changes you might consider during this enrollment period:
- If you’re enrolled in original (traditional) Medicare, change your Part D drug plan
- If you’re enrolled in Medicare Advantage, switch to a different Advantage plan
- Switch from original Medicare to Medicare Advantage
- Switch from Medicare Advantage to original Medicare – but note below that limitations apply in some states
This year’s enrollment period may be one of the more significant in Medicare’s 59-year history due to some of the changes that are coming. Here is what we know about Medicare changes and costs for 2025.
Medicare Part D
Most Advantage plans include drug coverage at no extra cost, but many people on original Medicare buy a stand-alone Part D plan for drug coverage. While the average projected monthly Part D premium will decrease to $46.50 from $53.95 in 2024, some plans have announced significant increases in premiums.
For this reason, it’s especially important this year to shop for your Plan D coverage. You may be able to lower your annual drug costs by switching to a different Plan D.
To compare plans, go to the Medicare.gov site and set up your account. In the “What do you want to do?” section, select “Open all options”, then “Find health & drug plans.”
One of the bigger developments for 2025 is a new, $2,000 cap on out-of-pocket drug costs. It applies to drug coverage through both stand-alone Part D and Advantage plans.
But it only applies to covered drugs, so it’s really important to make sure your plan covers the specific medications you take. Approximately 1.5 million Medicare beneficiaries have drug costs that exceed that amount, so this change will be a big help to them.
Switching to a Different Medicare Advantage Plan
Medicare Advantage plans are also seeing big changes. Insurers are facing increasing cost pressures, and many will push higher expenses onto members.
Enrollees may see changes in out of pocket costs. Although the average monthly premium for all Advantage plans is likely to drop slightly, it’s important to pay attention to changes in copays, deductibles, and other benefits (e.g., dental, vision, health clubs, etc.)
Switching from Medicare Advantage to Original Medicare
Some Advantage plans may even exit the market next year. If your Medicare Advantage plan is being eliminated, you must actively enroll in a new plan to stay in the Advantage program.
If you don’t make a choice, you will automatically be placed in traditional Medicare for 2025 and have the chance to buy a Medigap supplement plan without going through an underwriting process.
Normally in most states (except during a narrow period when you first enroll in Medicare,) when someone switches from Advantage to original Medicare, they must pass underwriting to buy a Medigap supplement plan. (MA, CT, ME and NY do not allow Medigap insurers to require underwriting for those who switch.)
If you switch from Medicare Advantage to original Medicare because your insurer exited the market, you will not have to undergo underwriting in order to obtain a Medigap plan.
Some people switch from Medicare Advantage to original Medicare because they don’t like the restricted network of an Advantage plan, or because frequent copays for services have become expensive.
If you make this change and you want drug coverage, be sure to sign up for a Medicare stand-alone prescription drug plan (Plan D), unless you have creditable drug coverage from another source. If you do not, and you decide to sign up for Part D coverage later, you may face a penalty for late enrollment.
And if you want a Medicare Supplement Plan (or Medigap Plan, which covers most out of pocket costs) you’ll need to sign up for that then, too.
In most states (except MA, CT, ME, and NY) Medigap insurers are not required to sell you a policy after your first year on Medicare if you don’t meet the medical underwriting requirements. In that situation, they can deny coverage or charge higher premiums.
Medicare Part B
Everyone who has Medicare coverage (original Medicare or Medicare Advantage) gets Medicare Part A free, but pays for Medicare Part B.
The Centers for Medicare & Medicaid Services (CMS) hasn’t said yet how much the base cost of Part B will be in 2024, but the annual Medicare Trustees report in March forecast the monthly price to rise from $174.70 to $185.00, a 6% increase, in 2025.
Income-Related Monthly Adjustment Amount (IRMAA)
Some people pay more in IRMAA charges for Medicare Part B and Part D based on income.
Your tax return for 2023 will be used to determine whether you will be subject to an IRMAA charge for 2025. If you retired in or after 2023, or had another life-changing event (e.g., marriage, divorce, death of spouse, etc.) you can file form SSA-44 to request that your IRMAA amount be reduced or eliminated.
IRMAA charges have not been released yet for 2025 but are expected to be about 6% higher than in 2023.
If you have questions or would like help evaluating your Medicare options, please let us know.
-SM
