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Fall doesn't only spell change to the leaves and the weather. For the approximately 66 million Americans who are Medicare beneficiaries, the season offers an opportunity to alter their coverage, perhaps to pay less or get more from their plan.
The annual open enrollment period started Tuesday and runs through Dec. 7. Those who receive Medicare — who, in general, are over 65 and younger people with disabilities or certain chronic conditions — can opt for a number of changes. They can pick a new Medicare Part D drug plan, a new Medicare Advantage plan, or switch from Original Medicare to Medicare Advantage or vice versa. Any coverage changes made during this period go into effect on Jan. 1, 2025.
The marketplace of Medicare private plans operates on the premise that people with Medicare will shop around during open enrollment to select the best source of coverage given their individual needs and circumstances. But most beneficiaries don't take this step. The Kaiser Family Foundation, or KFF, found that nearly 7 in 10 people who receive Medicare didn’t compare plans during the 2022 open enrollment period, the most recent for which data is available.
However, while reviewing your insurance coverage is anything but exciting, it can pay off.
The season also provides the impetus to learn what is changing for Medicare in the year ahead. For 2025, the changes are particularly impactful, as several key measures included in the Inflation Reduction Act of 2022 that affect Medicare kick in.
Here's a rundown of the major Medicare changes for 2025.
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Prescription drug costs
How much — and how — you may pay for prescriptions is a leading area of change in Medicare for 2025. The wins are especially big for recipients who take high-cost drugs for cancer, rheumatoid arthritis and other serious conditions.
The enhancements are mostly to plans under Medicare Advantage (also known as Part C), an alternative to Original Medicare that offers care managed by private health insurers that contract with the government. In addition, benefits could also flow to those with optional Part D drug plans, which can be paired with Original Medicare coverage.
Out-of-pocket costs capped at $2,000
Starting in 2025, all Medicare plans will include a cap on what you pay out of pocket for prescription drugs covered by your plan. If your out-of-pocket spending on covered drugs reaches $2,000 (including certain payments made on your behalf), you’ll automatically get what's called “catastrophic coverage.” That means you won’t face additional out-of-pocket costs for covered Part D drugs for the rest of the calendar year.
However, this benefit will apply only to drugs that are indeed covered under your MAPD (that is, a Medicare And Part D) program. That makes it doubly important to compare plans during Open Enrollment to make sure your plan covers the drugs you take and meets your needs.
For Medicare beneficiaries who buy a lot of drugs, a $2,000 cap could deliver significant savings. Based on KFF’s review of Part D drug claims data, if the cap had been in place in 2021 — the latest year for which data is available — 1.5 million Medicare beneficiaries would have benefited. A third of that group spent at least $3,000 a year on prescriptions.
Of course, even a drug cost that's capped at $2,000 is unaffordable to those who have very low incomes. If that describes you, or any other Medicare recipient you know, check eligibility for the program's Extra Help assistance. It's available in 2024 to those whose incomes are below a certain level and have no more than a specified balance in banking or investment accounts. (For a married couple, those allowed maximums for 2024 are $30,660 and $34,360, respectively.)
Payment plans for drug bills
Incurring a huge drug bill, or a series of them, can easily derail a household budget. Now, Medicare will offer an optional payment plan for such expenses.
Beginning on January 1, 2025, all Medicare prescription drug plans — including both stand-alone Medicare prescription drug plans and Medicare Advantage plans with prescription drug coverage — must offer enrollees the option to pay out-of-pocket prescription drug costs over the course of the year. There are no income rules to enroll in the program, nor any fees to do so. Interest is not charged.
Here's how the program will work once you opt in: Each drug expense you incur will be added to any balance you may have from past unpaid drug bills under the payment plan. The total balance is then divided by the number of months left in the year.
For example, let's say you incurred a $600 bill in March 2025 and had $300 unpaid from bills you received in January and February, for a total of $900. You'd be billed $100 a month over the remaining nine months of 2025 (April through December). You'd pay that balance not to your pharmacy but directly to the plan, and the bill would also include your monthly premium.
If you miss two or more payments, you could be ejected from the plan. (You'd still be required to pay the amount due, as you would if you chose to leave the plan voluntarily.)
Expanded mental health coverage
Mental health services have long been covered by Medicare under its Part B plan — an optional, extra-cost add-on to Original Medicare that's offered by the federal government. The mental health professionals allowed under Part B include psychiatrists or other doctors; clinical psychologists; social workers; and nurse practitioners.
In 2025, further mental health professionals will be available to Medicare enrollees. The additions include licensed mental health counselors, addiction counselors and marriage and family therapists.
A mid-year account update
Medicare Advantage plans offer a range of benefits above those available with Original Medicare and Medicare Plan B. But the number of services available, and their complexity, makes it easy for beneficiaries to overlook benefits or use them too sparingly.
Beginning in 2025, Medicare Advantage plans will be required to provide policyholders with a Mid-Year Enrollee Notification of Unused Supplemental Benefits each July. This notice will detail any unused supplemental benefits, including the extent and cost of claiming each benefit, and provide a customer service contact number for further assistance.
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