Insurance companies that offer Medicare Advantage, Medicare Supplement and Part D (drug) plans are likely to raise their rates by more than usual for 2025 as a number of factors have increased their claims costs.
Health care is suffering from the same inflation as we’ve seen in our personal lives as hospitals are hit with higher costs for materials, wages and operating expenses in general. Additionally, the COVID-19 pandemic delayed many from seeking medical treatment for a couple of years, resulting in a flood of patients seeking medical services they should have had done earlier.
Moreover, big changes are coming to Part D plans, which are also facing a number of cost pressures. Here’s what you can expect for 2025.
Medicare Advantage and Supplements
Medicare Supplement (Medigap) insurers are facing more claims, and claims-cost inflation is running hot in the health care sector. If you are enrolled in a Medigap plan, you should expect a higher-than-usual premium increase for 2025.
Medicare Advantage plan premiums will also be affected. It’s likely MA insurers will scale back on offering $0 premium plans, as well as on plans that offer a Part B premium give-back. Some premiums may increase as well.
MA plans may also scale back on ancillary benefits like dental, vision, hearing, gym benefits, food delivery and other perks next year.
With that in mind, if you are currently enrolled in an MA plan, you may want to make full use of your ancillary benefits this year as they may be scaled back or disappear, depending on your plan.
Also, starting in 2025, every July MA plans will be required to send policyholders a personalized “Mid-Year Enrollee Notification of Unused Supplemental Benefits.” This notice must list:
- All supplemental benefits you haven’t used at the half-year mark,
- The scope and out-of-pocket cost for claiming each one,
- Instructions on how to access the benefits, and
- A customer service number to call for more information.
Part D plans
There are big changes coming to Part D plans. The out-of-pocket cap is being cut dramatically and the dreaded “donut hole” coverage gap is disappearing.
In 2024, once your out-of-pocket spending on medications covered by Part D reaches $3,300, you qualify for “catastrophic coverage” and pay nothing for your covered Part D drugs for the rest of the year. Last year, once you hit catastrophic coverage, you still had to pay 5% of your drug costs.
But starting in 2025, if you are enrolled in a Part D plan you will pay nothing for covered drugs once your out-of-pocket spending reaches $2,000.
While this is good news for those who spend a lot on pharmaceuticals, it is not good news for those who do not. MA plans and Part D plans are on the hook for all additional drug costs. Given the number of new and highly expensive drugs coming to market, insurance companies will spend significantly more than in the past. This is certain to affect premiums.
One of the biggest game changers is Medicare’s decision to require Part D plans to cover Wegovy, an obesity drug shown to reduce the risk of heart attacks and strokes in obese individuals.
Wegovy injections, which cost more than $1,000 a month, cannot be covered for weight loss alone, but only for those with cardiovascular disease struggling with their weight or those who are clinically obese and have diabetes.
Medicare may end up covering similar medications like Ozempic and Mounjaro if the Food and Drug Administration approves them for other conditions other than weight management alone in the future.
The most notable changes in Part D plans will be in stand-alone drug plans. Deductibles will increase. Drug copays for generics and brands will likely go up.
You may also see smaller formularies (meaning fewer drugs are covered) and more prior authorizations and step-therapy requirements to steer consumers toward lower-priced drugs.
The takeaway
With all of these changes coming in 2025, we can help you review your current policy as open enrollment nears.
You don’t want to be caught in a Medigap, MA or Part D plan that will cost you more than you need to pay. Call us anytime to review your current coverage.
