Check your Plan!
If you’re on Medicare, we certainly hope you are aware that Oct. 15 through Dec. 7 is the open enrollment period for the 2025 plans. You may have ignored this in the past and simply allowed your coverage to renew, but there are some significant changes in 2025, especially for Part D drug coverage, making it especially important to review your plans this year.
If you have coverage under Part D, you may be familiar with the ‘donut hole’; the gap in previous coverage after reaching a certain spending level but before catastrophic coverage began. The donut hole produced sudden cost spikes for drugs, but in 2025, the donut hole is gone. It will be replaced by a three-tiered system providing steady coverage. The first stage is the deductible phase, where you cover you plan deducible. The second phase is the coverage phase and once the new $2,000 out-of-pocket cap is reached, you hit catastrophic coverage.
The elimination of the donut hole and establishment of the $2,000 out-of-pocket cap are welcome changes, but it isn’t quite that simple. The cap on out-of-pocket spending only applies to drugs covered by your plan and the plan can change coverage every year. Don’t assume that you can ignore open enrollment and automatically get the $2,000 out-of-pocket cap. All of these changes to drug coverage imply that many plans will change too. While we encourage Medicare users to review their plans every year, the changes to drug coverage make this a particularly important year to review your plan options.
Do you have a Medicare Advantage Plan (Part C)? If yes, the changes to drug coverage apply to you as well. Advantage Plans typically include drug coverage and will be subject to the same $2,000 out of pocket cap, so it is important to make sure that the drugs you take will be covered by your plan in 2025. If not, it may be time to switch plans.
You might also find that your current Advantage Plan no longer exists. According to Morningstar:
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- Wellcare announced it will discontinue offering Medicare Advantage products in six states.
- Humana is exiting 13 markets nationwide.
- CIGNA is rolling back its Medicare Advantage plans in eight states.
- Aetna is dropping Medicare Advantage plans in 2025.
- CVS plans to downgrade its plan benefits and geographic presence.
Note that if you were unhappy with your Advantage Plan and it is eliminated, you may be able to opt back into the traditional Part B Medicare Plans (Medigap). Normally, once you choose a Medicare Advantage plan, you cannot return to traditional Medicare plans.
The bottom line is that there are a lot of changes this year. Don’t allow decisions to be made for you by default.
Have Questions?
We’re here to help. If you need specific advice, just call us, we can get you to the right place. If you want to tackle this yourself, it might be easier than you imagine. First, go to Medicare.gov and click on “Find Plans” in the upper left corner. From there you can log-in or continue as a guest. Just follow the instructions and the site will walk you through your options, which you can sort based on the estimated total costs for the specific drugs you actually take and it even estimates the costs at your local pharmacies to get you the best deal.
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The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance, and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
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By: Adam
