Medicare annual enrollment is underway through Dec. 7, and millions of seniors may find picking a plan is much harder this year than in the past, experts said.
For the first time, out-of-pocket prescription drug costs will be capped annually at $2,000 and all enrollees will have the option to pay those costs in the form of capped monthly installment payments instead of all at once at the pharmacy. These are positives for consumers, particularly for those who reach the cap. AARP estimates in 2025, 3.2 million Americans, or 8.4% of all those with a Part D drug plan will reach the cap.
But to pay for the changes, insurers are tweaking their offerings, which could result in fewer benefits for many seniors that could also cost them more money, experts said.
Some insurers are cutting plans, exiting certain “unprofitable” markets, trimming popular offerings like dental coverage and increasing charges such as deductibles, premiums or co-payments that all Medicare enrollees pay.
“This year’s Medicare marketplace will be more chaotic than ever,” said Vijay Kotte, chief executive of Medicare marketplace GoHealth. “With fewer options, higher costs, and diminished benefits, older adults will be forced to navigate one of the most disruptive enrollment seasons in recent memory.”
How many Americans are affected?
More than 80% of traditional Medicare users buy a Part D plan. Many also buy a supplemental plan, known as Medigap or Plan G, so that once the annual deductible is met, all out-of-pocket costs like co-insurance and co-payments are covered. Otherwise, Medicare doesn’t cover 20% of medical costs or prescriptions, and there’s no limit on out-of-pocket expenses.
Is there a plus side to Medicare Advantage?
- Medicare Advantage (MA), provided by private insurers, often touts $0 or low monthly premiums but that really means “no additional premium,” said Cindy George, GoodRx senior personal finance editor. “You still pay your original Medicare Part B premium, and it’s usually deducted from your monthly Social Security payment,” she said. MA usually includes all three parts and often additional benefits like vision, dental and hearing coverage or gym memberships. It charges co-pays or co-insurance on almost all services.
- With changes insurers are making this year, about 6 million MA enrollees are expected to face erosion of their plan benefits, which would be the first time ever, according to Medicare marketplace GoHealth.
- About 1.3 million Americans with MA general enrollment plans won’t have those plans available to them in 2025, forcing them to change their Medicare coverage, according to America’s Health Insurance Plans (AHIP), a national nonprofit trade organization for health care providers and solutions. It estimates 243,000 beneficiaries have $0 premium MA general enrollment plans in 2024 but will have to pay a premium in 2025.
- The number of stand-alone Part D plans in 2025 is also dropping 26% from 2024, according to nonprofit health researcher KFF, as insurers aim to offset the $2,000 out-of-pocket drug cap.
Looking for a new plan
Mary Johnson, 73, is one who must find a new drug plan. She’s enrolled this year in a popular Aetna Part D plan with a $5 per month premium, and her three generic prescriptions are available before the deductible at zero co-pay, she said. That plan, which cost her about $63.60 for the year, will be discontinued in 2025.
“In 2025, my lowest-cost choice to replace that plan would result in increasing my premiums and out-of-pocket costs by $476.00, a total jump of 750%,” based on the same three generic drugs that she’s currently taking, Johnson said. Meanwhile, Social Security’s cost-of-living-adjustment for 2025 is 2.5%, she noted.
What should Americans consider when choosing a plan?
To save money, experts suggest:
- Create an account on Medicare.gov, then enter your medications, pharmacy, and location to compare available plans, providers, and drug costs. Mike Ramirez, associate director of financial planning at EP Wealth Advisors, suggests adding different pharmacies near you when comparing drug costs. “If you go two blocks to a different pharmacy, you may pay a different price,” he said.
- If drug costs are still too high for you, research assistance programs like Medicare’s Extra Help and Medicare Savings Programs (MSPs) or free discount programs like GoodRx, which might save you money versus using your prescription drug plan. Manufacturer savings cards are also an option. Prescriptions using discount programs like GoodRx won’t count toward a deductible, but people who don’t expect to reach their deductible may be better off using the discounts, George said. Others will want to weigh benefits of using the discounts versus insurance and hitting the deductible to get cost sharing, she said.
- Talk to a professional, such as “an insurance broker that represents all insurance companies, so they’re not biased to any one,” said Cynthia Pruemm, founder and chief executive of SIS Financial Group. Free one-on-one counseling also is available from the State Health Insurance Assistance Program (SHIP) that often operates through local agencies on aging, senior centers, and local Departments of Family Services, Johnson said.
- Part D enrollees can opt, for free, in 2025 to pay for medications in monthly installments over the year, and everyone should do it, said Brian Whorley, chief executive of health care software company Paytient.
“You can hold on to your money longer,” Whorley said. “If you’re a person who prefers to review bills at the end of the month and values predictability and certainty, then you’re interested in this.”
High cost is a top reason people don’t fill prescriptions or ration their drugs, he said. Smaller, more predictable payments are easier to budget for and will encourage people to stick with medications, he said. All experts who spoke to USA Today said there’s no downside to choosing this option.
- If you’re considering switching to a Medicare Advantage plan because premiums are lower, be careful, experts said. “Once a Medigap policy owner drops their coverage, you generally can’t get your policy back if you change your mind later,” Johnson said.
MA out-of-pocket costs are capped annually, but they’re high and will rise in 2025, AHIP said. The share of plans with maximum out-of-pocket-costs over $5,000 will rise to 52% in 2025 from 46% in 2024, AHIP said. With a traditional Medicare policy with a Medigap plan, your annual out-of-pocket cost is the Part B deductible, which is $240 in 2024.
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Also, consider how much you travel and what your provider options are where you live. Traditional Medicare covers nearly all doctors and hospitals without referrals. Medicare Advantage covers in-network doctors and might require referrals and pre-authorizations for some care. “Medicare Advantage can be more cumbersome if you like to travel because you must stay in network,” Pruemm said.
Even if traditional Medicare plus Medigap costs more in monthly premiums, “Plan G is benefit-rich,” said Brandon Hill, senior adviser at Beckett Financial Group. “If the supplement fits in your budget, then get the supplement.”
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
