We recently held a Medicare webinar to discuss upcoming changes to Medicare Part D prescription drug coverage that will take effect in January 2025. With Medicare open enrollment just around the corner, it’s essential to understand how these changes might impact your healthcare costs.
Hosted by Robert Adler, a seasoned expert in life, health, and senior insurance at O’Connor Insurance, this session aimed to break down the Inflation Reduction Act’s impact on Medicare and help you make informed decisions for the year ahead. Here’s a summary of the key takeaways from the presentation.
Key Takeaways from the Webinar
The Inflation Reduction Act and Medicare Part D
In August 2022, President Biden signed the Inflation Reduction Act (IRA) into law, bringing about significant changes to Medicare, particularly in the realm of prescription drug coverage. While some of the provisions began in 2023, several key changes will go into effect on January 1, 2025.
These changes apply to all Medicare recipients, including those enrolled in standalone Medicare Part D plans or Medicare Advantage plans that include prescription drug coverage.
1. Goodbye to the Donut Hole
If you’ve been on Medicare for a while, you’re likely familiar with the so-called “donut hole”—a coverage gap where you had to pay a significant portion of your drug costs out of pocket. One of the most important changes under the IRA is the elimination of the donut hole.
Instead of facing the confusion and cost during the gap phase, your out-of-pocket drug costs will now be capped at $2,000 per year once you meet your deductible. This means that after you spend $2,000, your Part D plan will cover 100% of your drug costs for the rest of the year.
2. Annual Deductible Increase
For 2025, the annual deductible for Part D plans will be $590 (up from $545 in 2024). This means that, before your coverage kicks in, you’ll need to pay the first $590 of your drug costs out of pocket. However, once this deductible is met, you’ll pay 25% of the cost for your medications until you hit the $2,000 cap.
3. Prescription Payment Plans
For individuals who need to manage expensive medications, starting in 2025, Part D plans will offer the option to spread out your medication costs. This allows you to pay for high-cost drugs in manageable monthly installments, rather than paying large sums upfront at the pharmacy.
This payment plan won’t reduce the total amount you owe for your medications—it simply helps to spread the cost over the year, which can be especially useful for those who incur high costs early in the year.
4. Who Qualifies for the Payment Plan?
The payment plan is optional and is available for medications that cost $600 or more per prescription. If you qualify, you can choose to spread the cost across the remaining months of the year. If you decide not to enroll in the payment plan, the pharmacy will inform you at the time of pickup about your options.
5. Impact on Part B Drugs
It’s important to note that Part B drugs, such as certain treatments administered in a doctor’s office (e.g., chemotherapy), are not included in Part D’s changes. These are covered under Medicare Part B, which has separate rules.
6. Creditable Drug Coverage and Employer Plans
For those still covered by employer health plans, it’s important to understand credible drug coverage. If you have prescription drug coverage through your employer that is as good or better than Medicare’s Part D coverage, you won’t face penalties if you delay enrolling in Part D.
However, if you delay enrolling in Part D and your employer’s coverage isn’t considered creditable, you may face a late enrollment penalty if you decide to join Part D later. This penalty can remain for the duration of your enrollment in Part D.
7. Potential Premium Increases and Plan Changes
Medicare plans can adjust their premiums, copays, and formularies annually, so your drug costs could increase or decrease in the coming year. Regardless of whether your medication use stays the same, the $2,000 cap will likely save many people money and provide greater predictability in their costs.
It’s crucial to review your plan each year, especially as formularies (lists of covered drugs) change and new drug therapies become available.
8. What Should You Do Now?
With open enrollment starting October 15 and ending December 7, now is the time to start preparing. During this period, you can review and adjust your Medicare coverage to ensure you’re getting the best benefits for your needs. Here are some important steps:
- Check your current plan: Make sure your medications are covered under your current Part D or Medicare Advantage plan.
- Review your out-of-pocket costs: With the new $2,000 out-of-pocket maximum, it’s a great time to explore whether switching plans could save you money.
- Consider the payment plan option: If you take expensive medications, evaluate if the payment plan could help you manage your costs better.
- Contact an expert: If you have questions, reach out to a local agent (like Robert Adler!) who can assist with a comprehensive Medicare review.
Robert highlighted that he offers personalized Medicare plan reviews tailored to your unique healthcare needs, helping you navigate the changes in Part D and find the best coverage for you and your family.
Take Action Today
As we near the Medicare open enrollment period, now is the time to review your options and ensure you’re prepared for the changes coming in 2025. The new Medicare provisions under the Inflation Reduction Act are designed to make prescription drug coverage more affordable and predictable, but it’s up to you to take full advantage of these benefits.
If you have any questions or would like a personalized review of your Medicare options, don’t hesitate to reach out to Robert Adler at O’Connor Insurance. You can contact him by:
- Phone: 704-510-8884, ext. 274
- Email: robert@oian-c.com
Or visit the O’Connor Insurance website at www.oianc.com for more information.
