It may be months before the calendar turns to 2025, but not for Medicare. The Centers for Medicare and Medicaid Services (CMS), which administers the program, just announced two major changes for 2025 you’ll want to know about. Next year, Medicare will also radically change the maximum amount beneficiaries will have to pay out of pocket for covered drugs.
Here’s a quick look at these three ways Medicare will work differently in 2025 and what they will mean for you.
1. Repression against agents and brokers which sell three types of Medicare policies
Nowadays, sellers sometimes receive incentives such as exotic vacations and hefty bonuses when they enroll Medicare beneficiaries in private insurers’ Medicare Advantage plans (alternatives to traditional Medicare), Medigap (Medicare Supplement) or Part D prescription drug plans.
CMS hopes to end sales promotions for Medicare Advantage and Part D plans in 2025. “This announcement is a big win for seniors because it strengthens protections against deceptive and aggressive marketing practices,” said Senate Finance Committee Chairman Ron Wyden (D-S.C.). Oregon). statement.
The new restriction, contained in CMS’s 1,327-page 2025 final rule for Medicare, says it is intended to “ensure that agent and broker compensation reflects only the legitimate activity required by the agents and brokers” selling those plans.
This means that sellers can no longer offer incentives to attract people.
Additionally, the rule states that Medicare intermediaries, known as third-party marketing organizations, will not be able to offer incentives that “limit the ability of an agent or broker to objectively evaluate and recommend the plan that best meets the needs of a potential enrollee.”
Marvin Music, whose MedicareSchool.com sells Medicare policies says Luck,
“I think it’s a really good idea because there shouldn’t be an incentive for agents to favor one company over another.”
The new rule also says it will prevent brokers and agents from receiving “administrative fees” above Medicare’s fixed compensation limits. In most states, the limit was $611 for new Medicare Advantage enrollment and $306 for renewal. Part D plans have lower limits: $100 for initial enrollment and $50 for renewal.
In 2025, the government will increase reimbursement for original enrollees in Medicare Advantage and Part D plans by $100—more than three times what CMS originally proposed.
“This is much higher than most people in our business expected,” says Musick.
Consumer advocates at the Center for Medicare Advocacy and the Center for Medicare Advocacy believe that even after the rules change, brokers and agents will still have a significant incentive to refer people to Medicare Advantage plans.
That’s because the rule will continue to allow sellers to earn much more by selling these plans than the stand-alone Part D prescription drug plans that some people with traditional health care buy along with Medigap policies.
“It’s not really going to solve the problem of getting people into Medicare Advantage,” says David Lipschutz, deputy director of the Center for Medicare Advocacy. “I think it will limit or restrict people from being referred to one particular plan because that agent or broker is trying to get a certain bonus or other incentive.”
Philip Möller, author of the forthcoming book Get What’s Yours for MedicareThe new rule, the new rule says, “simply reinforces the need for consumers to ask some basic questions when they deal with a broker.”
Agents and brokers do not sell every Medicare Advantage, Part D or Medigap plans are available locally, he noted, to name a few.
Once you know what plans your broker can sell, Moeller advises, “go to Medicare Plan Finder Tool and look at the available products in your zip code and see what’s missing” in your retailer selection.
2. New mid-year notice to Medicare Advantage policyholders reminding them of their plan’s unused supplemental benefits.
This is because people enrolled in these plans often do not take advantage of certain benefits.
This is somewhat surprising since Medicare Advantage plans often advertise the coverage they provide that traditional Medicare cannot – dental, vision, hearing and fitness benefits. Most Medicare Advantage plans offer at least one supplemental benefit, and the average number is 23, according to CMS.
But February 2024 Commonwealth Fund Research found that three out of 10 Medicare Advantage members did not use any of their additional benefits last year. CMS said in a statement about the 2025 rule that “some plans have demonstrated that enrollee utilization of many supplemental benefits is low.”
In 2022, the Commonwealth Fund found that supplemental benefits were the most common reason people chose a Medicare Advantage plan over traditional Medicare.
Therefore, beginning in 2025, Medicare Advantage plans will be required to send policyholders a personalized “Semi-Annual Member Notice of Unused Supplemental Benefits” each July. It will list any additional benefits that the person has not taken advantage of, the amount and out-of-pocket cost of each benefit, instructions on how to access the benefits, and a customer service number to call for more information.
Music welcomes this change, but wishes Medicare Advantage members would receive these letters quarterly.
Moeller said it would have been better if plans had sent out letters in March “to give people more time throughout the year to actually take advantage” of the benefits.
Why aren’t Medicare Advantage beneficiaries using their supplemental benefits?
Nobody really knows because there is no reliable data about it. “The Health Care Payment Advisory Commission stated that CMS does not have reliable data on enrollee use of supplemental benefits,” Lipschutz says.
Experts believe there are three possible reasons for the low use of fringe benefits.
First, Medicare Advantage members can’t find a doctor or dentist they like who is in their plan’s network. So, they either won’t be able to get insurance to see their preferred health care providers or the cost will be too high.
Another possible reason: the additional benefit is too meager.
“Sometimes the dental benefit is one or two cleanings a year, so it’s not that much of a benefit,” Lipschutz said.
A third explanation is that people enrolled in plans may not be aware of their fringe benefits or how to use them.
“I think plans have a significant incentive to advertise benefits when they’re trying to get you to enroll, and less incentive to link you to those benefits once you become a member,” Lipschutz says.
In addition, he notes, “there is a whole subset of benefits that are only available to certain people with certain chronic conditions.”
3. New $2,000 annual limit on out-of-pocket prescription payments.
Generally speaking, in 2024, once your out-of-pocket prescription costs exceed about $3,300, you’ll qualify for Medicare “catastrophic coverage” and won’t pay anything for covered Part D drugs for the rest of the year. (In 2023, once you reach catastrophic coverage, you’ll still owe 5% of your drug costs.)
But in 2025, people with Part D plans won’t have to pay more than $2,000 out of pocket thanks to a provision of the Inflation Relief Act of 2022.
“I think this is a very big deal,” Lipshutz says.
This new rule applies only to drugs covered by your Part D plan and does not apply to out-of-pocket costs for Medicare Part B drugs. Part B drugs are usually vaccinations, injections given by a doctor, and prescription drugs for outpatient use.
The $2,000 cap will be indexed to Part D capital cost increases, so it may well rise each year after 2025.
The $2,000 cap will likely save some Medicare beneficiaries money, especially those taking expensive brand-name drugs.
But it’s possible that the cap will also have a detrimental effect on people who have or are seeking Part D plans.
Experts believe some insurers will look for ways to offset their new additional costs. This could mean more preauthorizations for prescriptions, more restrictions on what drugs are covered by the plan, and increases in Part D premiums and copays. Or some combination of these.
Musick believes the $2,000 cap might even convince some health insurers to stop offering Part D plans.
“We have yet to see how these plans respond to the restriction,” says Möller. “But drug companies and Part D plan participants are in business to make money, and it’s hard to make money if you don’t sell anything.”
Moeller believes that if the $2,000 cap forces Part D insurers to cut costs on the prescriptions they cover, “lawmakers and others will be very aggressive in holding plans accountable.”
Tip for people looking to enroll in Medicare Part D plans in 2025: Review your choices carefully using the Medicare Plan Finder to see if the drugs you take are covered by the plan.
If your plan doesn’t cover a drug your doctor wants to prescribe, Lipschutz says, “ask the plan to make an exception request” with the support of your doctor. “It’s worth a try,” he adds.