Key Updates for Medicare Enrollees: What You Need to Know for 2025

Roughly 2 million Medicare Advantage beneficiaries nationwide are expected to face coverage disruptions.

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Significant changes are coming to Medicare Advantage (a Medicare plan offered by private insurance rather than the government) and Medicare Part D prescription drug plans. It’s essential to understand how your coverage will—or won’t—work for you in 2025.

Due to adjustments under the Inflation Reduction Act, roughly 2 million seniors will lose access to their Medicare Advantage plans and will need to enroll in a new health insurance plan.

For Medicare beneficiaries with Part D drug coverage, there’s a new $2,000 cap on prescription drug costs starting in 2025.

“Roughly 2 million Medicare Advantage beneficiaries nationwide are expected to face coverage disruptions,” Susan Reilly, vice president of communications at Better Medicare Alliance, told The Epoch Times.

“While some Medicare Advantage plans may no longer be available in 2025, it’s important for seniors to understand that they still have choices. Our advice is to use this opportunity to carefully evaluate new plan options available in your area.”

Open enrollment runs through Dec. 7, 2024. During Medicare open enrollment, retirees can make various changes to their coverage. They may switch from Original Medicare (Parts A and B) to a Medicare Advantage plan or change between different Medicare Advantage plans.

Original Medicare includes hospital care (Part A) and doctor services (Part B), with the option to add prescription drug coverage (Part D) or supplemental insurance (Medigap) for additional out-of-pocket protection.

Alternatively, beneficiaries can opt for a private Medicare Advantage plan, which combines Parts A and B and may offer extra benefits such as vision, dental, hearing, and prescription drug coverage.

Here are key changes experts say to watch for this fall.

Changes to Medicare Advantage Plans

1. Providers Are Dropping Plans: Insurers are cutting or consolidating Medicare Advantage plans, and roughly 2 million Americans will be affected. If your plan is discontinued, you will have received an “Annual Notice of Change” letter, a spokesperson from the Centers for Medicare & Medicaid Services (CMS) told The Epoch Times.

On average, seniors will have 34 Medicare Advantage plans with drug coverage to choose from in their county in 2025, down from 36 in 2024, according to CMS. (This doesn’t include special needs plans available to those in certain specified situations.)

Tip: Check your Annual Notice of Change to see if your plan is being discontinued or altered and select a new plan before Dec. 7, 2024, to avoid any gaps in coverage.

2. Providers Are Reducing Benefits: In addition to dropping plans, some insurers are scaling back the benefits of the remaining Medicare Advantage plans. This includes reductions in dental, vision, and hearing coverage—benefits many seniors rely on.

“While some Medicare Advantage plans will be adjusting their supplemental benefits in response to changes in funding and federal policy, an overwhelming majority will continue to offer critical benefits like dental, vision, and hearing coverage,” Reilly said. “However, many seniors also depend on nutrition assistance, transportation service coverage, and over-the-counter benefits to close coverage gaps—and those and other benefits will be offered by fewer Medicare Advantage plans next year.”

Tip: Review your plan’s 2025 benefits carefully. You can look at the “evidence of coverage” documents on your insurer’s website. If coverage is reduced, consider switching to a plan that offers the services you need.

Changes to Part D Prescription Drug Plans

3. $2,000 Out-of-Pocket Cap on Prescription Drugs: Starting in 2025, out-of-pocket costs for prescription drugs will be capped at $2,000 per year for those enrolled in Part D. In 2024, the maximum out-of-pocket cost ranged from $3,300 to $3,800. This cap will be especially beneficial for those with chronic conditions who rely on expensive medications.

Under the new rules, once seniors hit the $2,000 limit, catastrophic coverage will kick in, and they won’t pay out-of-pocket for covered drugs for the rest of the year.

“People with Medicare no longer need to pay 5 percent of the cost of the drugs in the catastrophic phase in 2024,” CMS stated.

Tip: The $2,000 may not apply to all medications. Brand-name and specialty drugs are likely to see the greatest savings, but check with your insurer to understand how the cap applies to your medications.

4. Increased Part D Deductibles: Part D prescription drug deductibles, the share of the health care services that the insured is responsible for, will increase to $590 in 2025 (up from $545 in 2024). While the $2,000 drug cost cap will provide relief later in the year, those who take multiple medications may face higher upfront costs due to this increased deductible.

“Most plans with Medicare prescription drug coverage (Part D) have a coverage gap phase,” CMS stated. “While the coverage gap has been fully ‘closed’ since 2020, some people still refer to this as the ‘donut hole.’ After a person with Medicare and their drug plan have spent a certain amount of money for covered drugs, the individual must pay 25% of the costs out-of-pocket for their covered prescriptions up to a yearly limit.”

Tip: Compare plans to see how the new deductible affects your out-of-pocket costs.

Other Changes to Medicare Plans

In addition to the major changes above, opt-in prescription payment plans will be available.

5. Prescription Payment Plans: New for 2025, an opt-in Medicare Prescription Payment Plan allows medications to be paid for in monthly installments rather than paying the full cost upfront.

Help Is Available

While the changes to prescription drug costs and Medicare Advantage plans are significant, seniors should also be mindful of other aspects of their coverage during open enrollment, according to Reilly.

“During this year’s open enrollment, it’s essential for seniors to carefully review any changes to their Medicare Advantage plans, including premiums, out-of-pocket costs, and the scope of benefits,” she said. “The average Medicare Advantage plan premium will remain stable in 2025 at $17, compared to $18.23 in 2024. However, premiums are not the only important consideration for seniors. For example, the median maximum out-of-pocket limit will increase by 8 percent, from $5,000 in 2024 to $5,400 in 2025.”

CMS encourages all people with Medicare to compare plans by going to Medicare.gov to learn the difference between Traditional Medicare and Medicare Advantage and to do side-by-side comparisons of costs and coverage for Medicare Advantage and prescription drug plans.

People can also work with a licensed insurance agent or counselor, such as those provided through the State Health Insurance Assistance Program, to explore plans that suit their health care needs and budget.

Other resources include:

• Medicare’s Plan Finder or call 1-800-MEDICARE, which is 1-800 633-4227.
• Medicare Rights Center’s national helpline at 800-333-4114 for help with questions.