Chris Goodwin, Insurance Pros
This post was guest contributed by Chris Goodwin. Chris is the Owner and President of Insurance Pros, an insurance broker located in Kansas City specializing in both group insurance and Medicare coverage.
The Inflation Reduction Act, which was signed into law in 2022 has already had significant impacts on Medicare Prescription Drug Plans. Some of the changes that have already resulted from the law include reduced pricing on insulins and free adult vaccinations.
A major phase of The Inflation Reduction Act will be implemented in the fall of 2024 for the 2025 plan year. One change included is that Medicare beneficiaries with Prescription Drug Plan coverage will have an out-of-pocket maximum of $2,000 for covered drugs. While this has been viewed positively, the insurance companies offering prescription drug coverage will be required to pay for most of the cost over the $2,000 cap with little to no increase in compensation from the federal government.
Per the visual below, it is estimated that the average prescription drug cost contribution percentage for insurance companies will double from 30% to 60% from 2023 to 2025.
Such changes may cause major disruptions to Medicare Part D plans and Medicare Advantage Plans this fall and beyond. Some of the consequences of these changes may include:
Insurance companies choosing to discontinue their plans and leave the market. One major insurance carrier has already made this announcement.
Price increases Medicare Prescription Drug Plans and Medicare Advantage Plans. Some Medicare Advantage Plans with $0 premiums will have a monthly cost to their members in 2025.
Changes to Prescription Drug Plan formularies. While some drugs will be moved to different drug tiers, other drugs may be dropped from a plan altogether.
Reduced benefits on Medicare Advantage Plans. To make up for drug costs, some extra benefits on MA plans may be reduced or eliminated.
Recommended Actions to Take Today:
Based on the many changes coming for 2025, the following actions are recommended for Medicare beneficiaries with prescription drug coverage through Part D plans or Medicare Advantage Plans:
Read your Annual Notice of Change to determine what changes will occur with their Prescription Drug Plan or their Medicare Advantage Plan.
Go to Medicare.gov on or after October 1, 2024 to see all of the Prescription Drug Plans and Medicare Advantage Plans for 2025.
Use a credible health insurance consultant that works with Medicare plans to help them gain insight on the nuances of the new and changing plans.
Those with Medicare Advantage Plans that are being discontinued should examine whether it makes sense to consider moving to Original Medicare while adding a Medicare Supplement. This is one of the few occasions that allows for a guaranteed issue right to buy a Medicare Supplement.
For additional information regarding the upcoming changes stemming from the Inflation Reduction Act, we recommend the following references:
Explaining the Prescription Drug Provisions in the Inflation Reduction Act | KFF
Healthcare provisions in the Inflation Reduction Act (milliman.com)
At Insurance Pros, we welcome the opportunity to serve anyone who is seeking professional assistance with their Medicare coverage. We are reachable at Medicare@insuranceprosinc.com or at 913-944-4465. Chris, Gaby and Jaden are the main contacts at Insurance Pros for Medicare coverage.
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