[Last updated August 28, 2024]
Choosing a Medicare plan or reconsidering your current one can be complicated and stressful, especially when each year brings additional changes to consider. Open enrollment for making changes to your Medicare plan runs from October 15 to December 7, with updates taking effect on January 1. Some new developments will come in 2025, and understanding the changes can help you make informed choices when selecting a Medicare plan or deciding whether to change the one you have. Here, we review Medicare changes for 2025 and how they might affect you.
Changes to original Medicare for 2025
There are a few changes in store for original Medicare and Medicare Part D to be aware of.
Part B premium adjustment
Original Medicare Part B provides medical coverage. Most people pay a monthly premium for this part of Medicare. The Part B premium for a single person making less than $103,000 a year is expected to increase to $185.00 a month in 2025, up from $174.70 monthly in 2024.
Part D out-of-pocket cap
In 2025, the out-of-pocket cap on prescription drug expenses on Part D plans will be $2,000, down from $8,000 in 2024. The possible downside of a lower out-of-pocket cap is that insurance companies will likely find other ways to recoup those financial losses, such as cutting back on prescriptions they cover, requiring preauthorization for certain drugs, or increasing premiums.
Broker incentives
Currently, insurance brokers get hefty incentives and bonuses to enroll beneficiaries in Medicare Advantage and Part D plans. In 2025, salespeople will no longer be offered incentives to enroll someone in one plan over another. This rule aims to prevent salespeople from pushing more lucrative plans that aren’t in an enrollee’s best interest.
Changes to Medicare Advantage for 2025
In 2025, there will also be a few changes to Medicare Advantage plans, which are alternatives to original Medicare. The federal government regulates and administers original Medicare, and private insurance carriers offer Medicare Advantage (MA) plans approved by the Medicare program. MA plans can be attractive to seniors due to their low premiums and additional benefits not offered by original Medicare.
The most significant changes to Medicare Advantage plans relate to addressing some concerns about and issues with Medicare Advantage through reducing payments to MA plans by government regulators and changing marketing practices. Let’s take a look at these changes now.
Payments to Medicare Advantage plans
The Medicare program will reduce payments to Medicare Advantage plans. This change will likely result in higher premiums, deductibles, and copayments and reduced coverage for Medicare Advantage enrollees in 2025.
Broker compensation caps
In 2025, caps will be imposed on broker compensation so they are not more likely to push older adults to choose a Medicare Advantage plan for the broker’s financial benefit.
Streamlining of MA appeals process
The appeals process for when a Medicare Advantage plan denies coverage will be more streamlined for enrollees.
According to the Centers for Medicare and Medicaid Services (CMS), “Currently, enrollees in a Medicare Advantage plan do not have the same access to Quality Improvement Organization (QIO) review of a fast-track appeal as individuals in Traditional Medicare. CMS is revising regulations to … require the QIO, instead of the Medicare Advantage plan, to review untimely fast-track appeals of a Medicare Advantage plan’s decision to terminate services in a skilled nursing facility, comprehensive outpatient rehabilitation facility or by a home health agency; and … fully eliminate the provision requiring forfeiture of an enrollee’s right to appeal a termination of services from these providers when they leave the facility. These changes will bring Medicare Advantage plan regulations in line with the parallel reviews available to individuals [in] Traditional Medicare and expand the rights of Medicare Advantage plan enrollees to access the fast-track appeals process.”
Midyear benefits usage
Medicare Advantage plans are required to inform enrollees midway through the year of any unused supplemental benefits. This will allow participants to better understand what they’ve used, what they haven’t, and how to make the most of their health insurance plan.
Disclosure of benefits criteria
Medicare Advantage plans must disclose that supplemental benefits apply only to enrollees who meet specific criteria. This can help participants and potential beneficiaries understand not only all the benefits they can have with an MA plan but also whether their situation allows them to qualify.
Concerns about Medicare Advantage plans
We mentioned earlier that there have been some concerns about Medicare Advantage plans. For many people, Medicare Advantage’s low (or no) premiums and additional service coverage can be enticing, but it is important to understand some of the problems and criticisms associated with Medicare Advantage plans and how these could affect your decision about whether to choose one in 2025.
- Medicare Advantage plans have been accused of defrauding taxpayers of about $50 billion between 2019 and 2021. Fraudulent companies do so by submitting inflated bills and overdiagnosing patients to receive higher reimbursements from the Medicare program. In some cases, companies have been accused of diagnosing serious illnesses that did not exist.
- Some Medicare Advantage plans deny care to enrollees or make it difficult for them to get the care they deserve, resulting in larger profits for the company. They also disincentivize sicker patients by reducing their access to care and expensive medications.
- Consumer complaints about Medicare Advantage marketing doubled from 2020 to 2021. Insurance brokers have a financial incentive to sign seniors up for Medicare Advantage plans because they receive higher fees for doing so than they would with original Medicare plans. Original Medicare does not market itself.
- Many seniors are not informed that returning to original Medicare with a Medigap plan could present challenges: Enrollees have one year to evaluate their Medicare Advantage plan and return to original Medicare if they wish. If you wait longer than a year, you are subject to underwriting for a Medigap plan, which could result in much higher premiums or outright denial of Medigap coverage.
Final thoughts on Medicare changes in 2025
There is no perfect solution to these challenging choices regarding Medicare. However, the better informed you are, the more confidence you can have in choosing or changing your Medicare plan. It will take time to review all of the options, but by knowing the changes to Medicare coming in 2025, you will have a better chance at getting the best care you can at a price you can afford.
