The Inflation Reduction Act (IRA) of 2022, signed by President Biden, introduced significant changes to Medicare drug pricing that will take effect in 2025. While these changes were designed with the goal of reducing costs for Medicare beneficiaries, they also bring financial shifts that will impact Medicare Part D enrollees and carriers. Below is an overview of the key changes and their broader effects.
As a result of these industry-wide changes, The Elfand Group has adjusted our services for 2025:
Due to the changes brought about by the Inflation Reduction Act, all Medicare Part D policies will now have a $2,000 out-of-pocket cap. With these standardizations in place, insurance companies have shifted toward a direct-to-consumer model.
The Elfand Group wants to assure you of good guidance during this transition and will be providing important information to help you easily navigate your options during this transition.
We strongly encourage our clients to use Medicare.gov to compare and select their Part D plans during open enrollment. The website offers easy-to-use tools that help you find the best plan based on your current medications.
If you're considering moving to a Medicare Advantage plan, The Elfand Group can provide guidance and information to help you explore your options and make an informed decision.
To learn more about moving to a Medicare Advantage Plan below:
While we won’t be conducting reviews, The Elfand Group is still here to support you. We will send out important information as we approach open enrollment to guide you through the changes and ensure you have the resources you need to make informed decisions.
$2,000 Maximum Out of Pocket Cap
Beginning in 2025, annual out-of-pocket expenses for Medicare Part D beneficiaries will be capped at $2,000, down from approximately $3,300 in 2024. This cap is expected to benefit about 2.5% of beneficiaries who face high drug costs, while the vast majority of enrollees will experience little to no impact from the change.
Medicare Prescription Payment Plan (MPPP)
Also in 2025, a new Medicare Prescription Payment Plan will be introduced, allowing beneficiaries to spread their drug costs throughout the year. If your prescription copays have been significant at the pharmacy, you will now be able to setup a monthly payment with your Part D RX plan to smooth your copays throughout the year, rather than in one lump sum.
Part D Premium Increases
Shifting additional costs to Medicare Part D carriers, along with the administrative requirements of the new payment plan, is expected to result in premium increases for most Part D plans. Although a small percentage of beneficiaries will benefit from the out-of-pocket cap, the remaining 97% will likely face higher premiums to cover these costs.
Recognizing this issue, the Centers for Medicare and Medicaid Services (CMS) announced a voluntary premium stabilization program on July 29, 2024. This program offers subsidies to Part D carriers that agree to limit premium increases. However, it is estimated to cost tens of billions of dollars, effectively shifting the financial burden to taxpayers. Some members of Congress have requested an expedited review of the program, citing concerns over its lack of transparency and budgetary analysis.
Limited Agent Support Due to Industry Changes
In recent years, The Elfand Group has supported Medicare beneficiaries by reviewing and recommending Part D prescription drug plans, helping them choose cost-effective options.
However, starting in 2025, most Part D carriers will stop compensating agents for assisting with enrollments. Previously, agents received a small commission (around $3–$4 per plan per month) to support this service, but without it, many agencies, including The Elfand Group, will reduce their involvement with Part D reviews. Beneficiaries will need to rely more on resources like Medicare.gov for plan comparisons during open enrollment.
The good news is that with standardized Part D policies and a $2,000 out-of-pocket cap, re-shopping your drug plan each year is less necessary, as plans are now more balanced.
While you can shop your Medicare Supplement at any time Open Enrollment is the only time to move to a Medicare Advantage Plan
If you're considering moving to a Medicare Advantage plan, The Elfand Group can provide guidance and information to help you explore your options and make an informed decision. When you enroll in a Medicare Advantage plan, your Medicare coverage becomes privately managed by the plan you select. It is important to compare your options with us as these plans have networks and potentially higher out-of-pocket costs.