Social Security payments people can expect to receive are also an important piece of the retirement income puzzle.
One factor that is not unexpected, but has layers of complexity, is health care costs.
And that frequently involves how people understand their Medicare benefits. Important specifics that are vital to know about those are changing in 2025.
In fact, next year, the federal health insurance program will implement a policy that affects the maximum amount its beneficiaries will pay in out-of-pocket expenses.
Three ways Medicare will change for people in retirement next year
TheStreet's Retirement Daily explains the three major things to understand about Medicare changes announced by the Centers for Medicare and Medicaid Services (CMS) that begin in 2025.
The first involves clamping down on how the policies are sold to Medicare beneficiaries.
Specifically, that refers to bonuses for sales agents that enroll Medicare beneficiaries in private insurance such as Medicare Advantage plans and Medigap, or even Part D prescription drugs.
Medicare Part D is a voluntary prescription drug benefit that assists in covering medications through private companies that contract with the federal government.
"This announcement is a big win for seniors because it strengthens protections against deceptive and high-pressure marketing practices," Senate Finance Committee Chairman Ron Wyden (D-Ore.) said in an April 5 statement.
The result, plainly stated, is that salespeople will not be given financial incentives to get people enrolled in their programs.
Retirement plan charts and graphs are pictured on a desk. Medicare changes coming in 2025 will have a major impact on retired people's finances.
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Retired people relying on Medicare will get additional notifications
Some Medicare beneficiaries are unaware of their unused supplemental benefits. So one new change is aimed at helping to educate them on the subject.
Beginning in 2025, Medicare Advantage beneficiaries will receive notifications in the middle of the calendar year that list all supplemental benefits they have not yet used.
That notification will also include instructions on accessing the unused benefits and a customer service number people can call to find out more information.
Medicare patients will spend less on medicine in 2025
The other big Medicare change in 2025 is a limit on out-of-pocket prescription drug expenses.
In 2024, most out-of-pocket costs on prescription medications cap at $3,300. Catastrophic coverage kicks in for covered Part D expenses during the remainder of the year.
In January 2025, people with Part D plans will find that they will not have to pay more than $2,000 in out-of-pocket costs. This policy is part of the Inflation Reduction Act of 2022.
Retirement Daily explains those changes in this way :
The advice for people looking to enroll in Medicare Part D plans in 2025: Review your choices carefully, using the Medicare Plan Finder, to see whether the prescriptions you take will be covered by the plan.
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