Janell Sluga Medicare & Individual Health Insurance Account Executive View Bio

Lawley Medicare Solutions Learning Center:

Ask Janell!

 

QUESTION:  I know what my medications cost me this year, but how will I know how much it will be next year?

 

ANSWER:  Each year we have insurance, the cost structures change. It doesn’t matter if we have employee health insurance, retiree coverage, Medicare coverage or a Marketplace plan. Insurance almost always changes year to year. As we approach the last quarter of 2024, we all begin looking to 2025 with anticipation.

I want to focus on Medicare, since that is my specialty. In 2025 there are some major changes to Medicare Part D Standard Coverage. These changes have been widely anticipated and I hope will save many of those on Medicare a significant amount of money.

In 2025 Medicare Part D standard coverage moves from four phases of coverage to just three phases over the calendar year. You start off the year with a $590 deductible. Plans can offer a lower deductible, but the deductible cannot be any higher than $590. Once that deductible has been met, your medication coverage moves into the Initial Coverage phase. During this phase of coverage, most plans offer a Tiered system. The medications that each plan covers (listed in each plans’ formulary) are divided into Tiers. Usually there are 5 Tiers, but some plans offer 6 Tiers. The lower the Tier, the lower your copay structure is. Some plans offer a dollar figure in the Tier, like $0, or $5 or $45 or $90, and some plans offer a percentage in their Tiers, like 28% or 33%.

One significant change coming in 2025 is that there is no more Coverage Gap (sometimes called the “donut hole”). In 2025, when your medication copays reach $2000, you automatically move into the Catastrophic phase of coverage and all your copays for the remainder of the year are $0. In 2024, moving into that Catastrophic phase of coverage required spending closer to $3400.

For those individuals who take expensive medication, this will be a significant cost savings.

The second significant change in 2025 is that each plan is required to offer all those who take medications a “Medicare Prescription Payment Plan” (sometimes called M3P). Each individual can decide whether they want to enroll in this option. If you do enroll, you will not pay for your medications at the pharmacy, but instead you will receive a monthly bill (payment plan) from your Part D plan that reflects your spending at the pharmacy, spread across all 12 months of that year. Note that you will be able to apply for M3P online, over the phone, or by mail – and if you can benefit from M3P you should sign up using one of these methods early, as you will NOT be able to apply in person at the pharmacy.

M3P will be a significant benefit to those individuals who take expensive medications, because they won’t have to shell out that $2000 in January & February – instead they’ll pick up their medications at the pharmacy and spread out that $2000 bill over the year. If you don’t enroll into the payment plan until later in the year, then your copays will be paid at the pharmacy until you opt to enroll into the Medicare Prescription Payment Plan, and then any further medication copays will be spread over the remaining months of the year according to the amount of your copays.

To illustrate this in dollars, if you enroll in M3P in January and you spend up to your catastrophic amount of $2000 immediately, your monthly payment will be $167 ($2,000 divided by 12 months). There is NO interest paid on this debt. If you enroll in March with a $2000 copay, your monthly payment would be $223 ($2,000 divided by 9 months). Those numbers are much easier to meet in monthly budget, than $2000 immediately. Also, many individuals were putting this really high copay charge in past years on a credit card and then paying significant interest for the amount of time it took to pay it back, which put many of those in Medicare into financial hardship through no fault of their own!

You all know how much I look forward to learning what Medicare coverage will become each year! We are fast approaching the Annual Enrollment Period, when you get to evaluate your coverage for the coming year, 2025!! It is already here! I am getting excited. Watch your mail for your Annual Notice of Change (ANOC). That is the document that tells you how YOUR product will be changing for 2025. I will be talking about it a lot in the coming months. You will be seeing commercials, and getting mail, getting phone calls, and emails. All of these will encourage you to switch to another product. You don’t HAVE to switch, but you are allowed to switch, between October 15 and December 7.

 

Read all Inside Medicare articles HERE.

 

LAWLEY HAS A TEAM DEDICATED TO MEDICARE INSURANCE!

Our licensed Medicare & Individual Health Insurance team can help clients understand the details of Medicare insurance plans, assist with choosing the right benefits and coverage, and provide guidance when life events that affect health coverage occur.

For questions, concerns, or to reach Lawley Medicare Solutions, fill out the contact form below or call 716.849.1540.