11/2024
By Charlotte Disley and Stetson Ponder
As we look ahead to 2025, some important changes are set to shake up Medicare. It’s crucial to understand how these updates might impact your coverage, costs, and access to healthcare. Here’s a straightforward overview of the upcoming changes that all beneficiaries should keep in mind.
Drug Benefits – Part D
$2,000 Out-of-Pocket Cap – One of the biggest changes in 2025 is the introduction of a $2,000 cap on out-of-pocket costs for Part D prescription drugs. Here’s how it breaks down:
- Deductible Phase: If your plan has a deductible, you’ll need to spend up to $590 out of pocket before coinsurance kicks in.
- Coinsurance Phase: After you hit that $590 threshold, you’ll pay 25% of the cost for covered drugs until your total out-of-pocket expenses reach $2,000.
- Catastrophic Phase: Once you hit the $2,000 cap, you won’t have to pay anything else out of pocket for the rest of 2025.
Payment Plans – Starting in 2025, if you’re enrolled in a Medicare drug plan (or a Medicare Advantage plan with drug coverage), you can opt to spread your out-of-pocket drug payments throughout the year through the new Prescription and Copay Payment Schedule Option. There’s no cost to join, but keep in mind this option won’t lower your total drug costs—it just helps manage your payments better!
However, be aware that these changes might lead to some unexpected shifts. For instance, medications could be reclassified to tiers with higher copayments, or some might not be covered at all. It’s important to do your homework—check which prescriptions are included in your plan and get an estimate of their costs for 2025.
Medicare Advantage Plans – Part C
Increased cost of coverage – Medicare Advantage plans might also see higher costs or fewer coverage options due to expected decreases in government funding. Providers will take on more responsibility for prescription drug coverage under the new $2,000 cap, which could lead to changes in available plans.
Scrutiny of prior authorization policies – There is set to be more scrutiny of prior authorization policies by Medicare, which had seen a rise in denials for coverage in recent years. Medicare Advantage plans will need to assess how their prior authorization policies affect different groups and will be required to make this information publicly available on their websites. Responses to prior authorization requests must be given within seven days, down from the previous 14-day requirement.
Unused Benefits – Starting in July 2025, enrollees will receive notifications about any unused benefits in their plans. With an average of 23 supplemental benefits—like hearing aids, fitness programs, and dental services—available in many plans, it’s essential for participants to be aware of what’s offered. Last year, about 30% of Medicare Advantage plans had unused benefits, underscoring the importance of being proactive in managing your options.
Expanding Support in Other Areas
Enhanced Mental Health Services – The availability of licensed mental health professionals who are covered by Medicare is set to expand. This includes Licensed Mental Health Counselors (LMHCs) and Licensed Marriage and Family Therapists (LMFTs), and addiction counselors. This is a significant step toward improving access to mental health care for Medicare beneficiaries.
Family Caregiver Support – Earlier this year, a new program, Guiding an Improved Dementia Experience (GUIDE), was implemented to support patients with Dementia and their unpaid caregivers. GUIDE offers services including a 24/7 support line, a care navigator to help find medical and community-based services, caregiver training, and up to $2,500 per year for at-home, overnight, or adult day care respite services. Typically, patients and their caregivers won’t face copayments. In 2025, the GUIDE program is set to quadruple in size, serving far more of the population experiencing these challenges.
Stay Informed and Prepared
With these major changes on the horizon for Medicare in 2025, it’s vital for beneficiaries to review their prescriptions and healthcare needs to ensure continued coverage. Staying informed and proactive will empower you to navigate these updates and maximize your Medicare benefits.
Reach Out
If you have any specific questions about your situation or enrollment, please reach out to the Cahaba Team directly and we are happy to provide additional resources for Medicare related inquiries.
Sources
- https://www.aarp.org/health/medicare-insurance/info-2024/medicare-changes-coming-in-2025.html
- https://www.investopedia.com/major-medicare-changes-for-2025-8713206
- https://www.panfoundation.org/everything-you-need-to-know-about-medicare-reforms/
- https://www.nerdwallet.com/article/insurance/medicare/medicare-changing-2025
- https://www.usatoday.com/story/news/health/2024/10/15/medicare-enrollment-changes-for-2025/75671849007/
- https://www.wsj.com/health/healthcare/medicare-plans-are-making-big-changes-for-2025-heres-how-to-navigate-them-5c81fd05
Charlotte Disley and Stetson Ponder are Financial Planning Analysts in the Atlanta office of Cahaba Wealth Management, www.cahabawealth.com.
Cahaba Wealth Management is registered as an investment adviser with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser does not constitute an endorsement of the firm by the SEC nor does it indicate that the adviser has attained a particular level of skill or ability. Cahaba Wealth Management is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Content should not be construed as personalized investment advice. The opinions in this materials are for general information, and not intended to provide specific investment advice or recommendations for an individual. Content should not be regarded as a complete analysis of the subjects discussed. To determine which investment(s) may be appropriate for you, consult your financial advisor.
