Each September, insurance companies who sell Part C (Medicare Advantage) and Part D (Prescription Drug Plans) publish a letter to their members called the Annual Notice of Changes, or ANOC for short.
This document is sent in September because it gives folks a chance to review how their insurance company is changing the plan before Annual Enrollment, (sometimes called ‘Open Enrollment’) starts on October 15.
This year in particular, will include some significant changes. So why the big changes this year, and what can one expect?
One of the main reasons for significant change this year is the Inflation Reduction Act of 2022.
Wait, why would a 2022 law affect 2025 Medicare plans?
The Inflation Reduction Act (IRA) included stipulations that gradually lowered the cost of prescriptions for Medicare recipients. Prior to 2024, there was no cap on how much a senior would spend on meds. They could potentially spend tens of thousands of dollars each year if they took expensive prescriptions. In 2024, the IRA put a cap of $8000 per year on meds. In 2025, the final stage of implementation for the IRA will cap drug spending for seniors at $2000.
Before the cheering begins, it’s important to know that the cap for seniors means that insurance companies are shouldering the additional financial responsibility for meds. The cost of the meds themselves has not been lowered, just the portion that Medicare recipients pay.
To counter this newfound financial responsibility, many insurance companies will lower their benefits in 2025 and/or increase copays for members.
In Part C Medicare Advantage plans, you could potentially see increased monthly premiums, higher copays for doctor visits and medical services, as well as reduced benefits for “extras” like dental, vision, and hearing. There may also be a larger deductible for prescriptions, or even medications that will no longer be covered.
In Part D Prescription Drug plans, you may see increased premiums, increased deductibles, medications that will get moved to higher “tiers”, and medications that will no longer be covered.
For both Part C and Part D plans, there may even be reduced service areas, meaning that your plan may not even be available in your area in 2025 – essentially forcing you onto a different plan.
This year, maybe more than ever, it will be important to review your ANOC and decide if you will want to or need to change plans during Annual Enrollment.
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