Big Changes Coming To Medicare in 2025 Thanks to The Inflation Reduction Act, What!?

Remember the Inflation Reduction Act, IRA (no, not an Individual Retirement Account) how it was a historic investment in climate change, what?!, I mean it meant big changes to Medicare. Well, it does mean big changes to Medicare, especially Medicare Prescription Drug Plans, Part D.

CMS, IRA and Medicare

CMS stands for Centers for Medicare and Medicaid Services, they run Medicare.

We joke but the IRA does provide meaningful financial relief to millions of people with Medicare by improving access to affordable treatment and in particular help with prescription drug costs.

Part D improvements for 2025

People with Medicare Prescription Drug plans will see some big changes.

- A Yearly cap of $ 2,000 in 2025 on annual out-of-pocket prescription drug cost, which is a $6,000 decrease over 2024.

- Three Prescription Drug phases instead of four. In 2025 you’ll have the Deductible phase; the enrollee pays 100% of their gross covered prescription cost until deductible of $ 590 for 2025 is met. The Initial Coverage Phase, which will be capped at $ 2000 dollars, the enrollee pays 25% coinsurance for covered Part D drugs. The Catastrophic phase, enrollee pays no cost sharing. The Coverage Gap phase or notorious “Donut Hole” will be eliminated.

- Medicare Prescription Payment Plan, the IRA requires all Medicare prescription drug plans (Medicare Part D Plans) to offer enrollees the option to pay out-of-pocket prescription drug costs in the form of capped monthly installment payments instead of all at once at the pharmacy.

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Other Changes in 2025

Costs Counted Toward True Out-of-Pocket Costs (TrOOP) TrOOP is the portion of spending on covered Part D drugs made by the beneficiary or on their behalf by certain third parties. The IRA updates which categories of payments count toward TrOOP spending. TrOOP is the spending that determines when a beneficiary enters the initial coverage phase, becomes an applicable beneficiary for the Discount Program, reaches the annual OOP threshold, and subsequently enters the catastrophic coverage phase. In addition to the third-party arrangements that already count toward TrOOP, the IRA specifically amends the definition of incurred costs that count toward TrOOP for CY 2025 to include payments for previously excluded supplemental benefits provided by Part D sponsors and Employer Group Waiver Plans (EGWPs) and exclude payments under the new Discount Program.

Broker Commissions- Many people rely on agents and brokers, like your friends at Sound Insurance Brokerage Group, to help navigate and choose Medicare Medigap plans, Prescription Drug plans and Medicare Advantage plans.

In 2025 there will be caps on broker commissions and other changes such as volume-based incentives for Prescription Drug plans and Part D plans.

As brokers we are paid commissions on the plans we help enroll you in by the insurance companies. These commissions are built into the Medicare plans costs, which you can check by shopping a plan before we talk and then checking the cost we quote after. The commissions are no different than what you pay towards your homeowners insurance, or auto insurance for example. CMS sets the commissions for Medicare Advantage plans and Part D plans.

Medication Therapy Management (MTM) program adjustment- With the goal of optimizing therapeutic outcomes for Part D beneficiaries, particularly those at higher risk of adverse outcomes due to Chronic Conditions there have been some changes. The idea is better access to broader critical MTM services.

Expansion of Eligibility Criteria

· Inclusion of Core Chronic Diseases: The MTM program now formally includes nine core chronic diseases identified by CMS:

· Alzheimer’s disease

· Bone disease-arthritis (including osteoporosis, osteoarthritis, and rheumatoid arthritis)

· Chronic congestive heart failure

· Diabetes

· Dyslipidemia

· End-stage renal disease

· Hypertension

· Mental health (including depression, schizophrenia, bipolar disorder, and other chronic/disabling mental health conditions)

· Respiratory disease (including asthma, chronic obstructive pulmonary disease, and other chronic lung disorders)

· Addition of HIV/AIDS: Recognizing the complex medication regimens required for managing HIV/AIDS, CMS added this condition to the list of eligible diseases for MTM services. This inclusion highlights the importance of personalized support in managing medications and the potential for MTM services to significantly benefit individuals with HIV/AIDS.

Medicare Advantage Changes- such as improved access to Behavioral Health for marriage and family therapists, along with mental health counselors. Mid-year enrollee notifications for the most frequent supplemental benefits used, or in this case not, alerting you to the benefits not being used. Such as Vision, Hearing, Dental, Fitness.

As always Sound Insurance Brokerage Group is here to help you navigate the maze of going from employer provided health benefits to a Medicare plan that’s right for you!