Major Medicare Part D reforms are coming in 2025! The Inflation Reduction Act will enact the final two Part D prescription drug reforms on January 1st. People with Medicare will benefit from lower prescription drug costs and a redesigned prescription drug program because of the new drug law. Below, we will outline the changes and how they may affect your costs and plans.
- What is the Inflation Reduction Act?
- What are the Medicare Part D changes for 2025?
- How will this affect my current Part D plan?
- What actions do I need to take?
What is the Inflation Reduction Act?
The Inflation Reduction Act was passed in 2022 and included several reforms to Medicare Part D to reduce prescription drug costs. These reforms have been enacted in stages, starting in 2023, with the final Part D reforms scheduled for 2025. The first set of reforms in 2023 and 2024 eliminated copays on many necessary vaccines, capped insulin copays at $35 per month, expanded the Low-Income Subsidy for Extra Help, eliminated the coinsurance for the Part D Catastrophic Stage. The Inflation Reduction Act has also allowed Medicare to negotiate with drug companies on the price of the higher cost, higher utilized drugs.
See the first list of drugs up for negotiations on the Department of Human Health site HERE
What are the Medicare Part D changes for 2025?
The final 2025 Part D reforms will have the biggest impact on many beneficiaries yearly drug costs. They will also help make drug costs more predictable on a monthly basis. The newest reforms will require all Medicare Part D prescription drug plans to have the following:
- Annual prescription drug costs will be capped at $2,000 annually
- Option to pay out-of-pocket prescription drug costs in the form of capped monthly installment payments.
- Eliminate the coverage gap, known as the “Donut Hole”
It does not matter how you receive your Part D plan. These rules are the same for both stand-alone Part D plans, as well as Part D plans included in a Medicare Advantage. The $2,000 maximum out-of-pockets is calculated based on what you pay for your deductible, copays, and coinsurance for any plan covered prescriptions. Your monthly premium does not count toward the maximum out-of-pocket. Over the counter drugs and prescriptions that are not covered on the formulary also do not count toward this maximum.
How will this affect my Part D plan?
All plans must include the above changes! Your prescription drugs will automatically be capped at $2,000 for any plan with Part D coverage. This is true even if you are already enrolled in a plan from 2024. However, the consequences of the new Part D reforms could significantly alter the makeup of your prescription coverage. This could mean changes to plan formularies, premiums, and/or deductibles across carriers. If you receive your drug coverage through a Medicare Advantage plan, there could also be changes to any of the extra benefits you receive. Some carriers may even discontinue and exit their Part D plan from your area.
What do I need to do during the Annual Enrollment Period?
Review your current Part D coverage:
It will be very important to review your coverage for 2025 during the Annual Enrollment Period! Your plan will send out an Annual Notice of Change (ANOC) before September 30th highlighting any changes. Formulary changes can be very costly if prescriptions you take change tiers or are removed altogether. The ANOC will not list if your specific prescription is changing, and you will need to search the formulary for changes. It is best to seek help from an independent agent that can search the formulary for you.
If you receive your drug coverage through a Medicare Advantage plan, also be sure to check if your plan is making any changes to its extra benefits. Doctors can also leave networks each year, so meet with an agent to check if your providers will still be covered.
Compare plans in your area:
Due to changes, we advise that you use the Annual Election Period to compare all plans in your area. This is the best way to ensure you have the coverage you need for the new year. It will also identify plans that can help reduce costs and maximize your benefits. It is anticipated that many beneficiaries may make a change for 2025 because of the new reforms.
We know comparing all plans is a daunting task! We advise you get help from an independent agent (like our local, friendly agents!) that has access to all major carriers in your area. This will save a tremendous amount of time!
What are the benefits of using an independent agent?
Request installments if you have expensive prescriptions:
If you have expensive prescriptions that cause higher copays in the beginning of the year, then you can request monthly installments for the year. This can help with more predictable monthly costs. If you enroll in a new plan during the Annual Enrollment Period, then you can request this on your enrollment form. If you stick with your current plan, then you will need to call and request the installments.
