In short, yes—without a doubt. It's important to pay attention to these changes.
The IRA in question is not your Individual Retirement Account; it refers to the Inflation Reduction Act, enacted in 2022. If you've followed the political debates, you’ve likely heard candidates mention this act.
The Inflation Reduction Act has several components aimed at promoting economic stability and facilitating the transition to clean energy. It also impacts Medicare beneficiaries, with significant changes set to take effect on January 1st.
Medicare Part D Prescription Drug Plans will experience the most significant changes, although Medicare Advantage Plans will also be affected. Let's explore the positive aspects first:
Capped Insulin Costs: Insulin copays are now limited to $35. This change helped many avoid the difficult choice between purchasing medications and essential groceries. Unmanaged diabetes can lead to severe health issues, including amputations and kidney failure, which impose heavy costs on the healthcare system.
End of the Donut Hole: The coverage gap, commonly known as the "donut hole," is being eliminated. Previously, after spending a certain amount on medications, beneficiaries faced 100% of costs instead of copays or coinsurance.
Lower Annual Caps: The maximum out-of-pocket cost will decrease from $8,000 to $2,000. This is a significant relief for those who spend a large portion of their retirement income on medications.
Price Negotiations: Medicare can now negotiate drug prices directly with manufacturers. The first round of negotiations will lead to lower prices for Eliquis, Xarelto, Jardiance, Lantus, NovoLog/Fiasp, Enbrel, Entresto, Farxiga, Imbruvica, and Stelara.
Spread Costs Throughout the Year: Starting in 2025, the standard deductible will rise to $590, but beneficiaries can now spread this cost throughout the year rather than paying it all upfront in January. This program is referred to as the Medicare Prescription Payment Plan, M3P, or PPP.
Expanded Low-Income Subsidies: More individuals with lower incomes became eligible for the federal program that lowers Part D prescriptions, deductibles, and copays.
While the reduction of the annual maximum from $8,000 to $2,000 is a major win, it does come with implications for everyone else. Here’s what to watch for:
Rising Premiums: Expect to see an increase in premiums for most plans, with some potentially tripling. Efforts have been made to keep these increases lower than the initial bids submitted to CMS.
Higher Deductibles on More Tiers: More plans may apply deductibles to various tiers of medications, leading to increased costs for refills in early 2025.
Increased Copays: Copay amounts may rise based on the tier of the medication. Plans might shift medications to higher tiers, increasing what Part D beneficiaries pay.
Fewer Covered Medications: Some Part D plans may reduce the number of medications they cover to manage costs.
Plan Exits: Several insurers will offer fewer Part D plans in 2025, and some Medicare Advantage and Part D plans are exiting certain states or counties. In addition to the IRA changes, some MAPD plans experienced higher-than-expected use of medical benefits, which is contributing to this decision.
Medicare Advantage members may not see the same premium increases as standalone Part D plan members, but you may notice a reduction in medical benefits compared to 2024. This adjustment occurs because these plans have modified their medical benefits to stabilize the prescription drug portion.
This is a critical year to review your coverage, as it’s the most significant change since 2005. The Annual Enrollment Period runs from October 15 to December 7. If you have a Part D drug plan, you must make your selection during this window; otherwise, you'll remain in your current plan for all of 2025, assuming it is renewing. Medicare Advantage members will have a second opportunity to change plans from January 1 to March 31, but it's advisable to make your choice during the Annual Enrollment Period.
Medicare Advantage members affected by plan exits will have a guaranteed issue into other Medicare Advantage and Medicare Supplement plans through February 28. However, if you don’t select a new plan by December 31, your coverage will revert to Original Medicare beginning in January. Click here to review all of your Medicare options. Or call (720) 990-1680 to speak with a licensed insurance agent with Integrity Insurance.
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