5 Actions to Take for 2025 During Medicare Open Enrollment

Tips for choosing a Medicare Advantage or Part D prescription plan in a year of historic change

Kimberly Lankford,

AARP

Comments

Published October 04, 2024

Chris Gash

Key takeaways

Prescription plans will have big changes.
Your plan’s annual notice of change has all the details.
Plan costs are laid out in Medicare’s Plan Finder. Some rules will change.
Medicare Advantage enrollees can compare with their own tool.
Help is available to make these important decisions.

Be prepared for one of the biggest changes to the Medicare prescription drug program ever: In 2025, out-of-pocket costs for covered drugs will be limited to $2,000 annually.

The new cap applies to stand-alone Part D and Medicare Advantage (MA) plans with drug coverage. But the change is rippling down to other costs and coverage.

Your options for 2025 may look very different from before. Comparing available plans in your area during open enrollment Oct. 15 to Dec. 7 is essential.

The Centers for Medicare & Medicaid Services (CMS) announced that average monthly premiums in 2025 will be $40 for stand-alone Part D plans, a decrease of $1.63, and $17 for Medicare Advantage plans, down by $1.23. But that’s only part of the picture.

“Formularies, pharmacy networks and cost sharing for prescriptions may change even if the premiums do not,” says Gretchen Jacobson, vice president of the Medicare program at the Commonwealth Fund. The New York–based nonprofit finances health policy research. She stresses taking a close look to see if your present plan will still provide the best coverage for your prescriptions at your preferred pharmacy next year.

Some plans are raising premiums, adding prior authorization requirements for more medications, and increasing deductibles and copayments before you reach that $2,000 cap. The cap applies to out-of-pocket costs for covered prescription drugs, not premiums or costs for drugs not on the plan’s formulary.

Medicare Advantage plans may make other subtle changes:

Increased copayments for specialist visits and hospital stays.
Different providers participating in their networks.
Less coverage for extras such as dental care.
Higher out-of-pocket maximums for medical care.

You also could see new benefits like special coverage for chronic conditions, a move that should lower overall health care costs in the long run.

About 60 percent of Medicare Advantage enrollees who stay in their current plan will have no MA premium next year beyond the Part B, and perhaps Part A, monthly fees that apply to people in original Medicare as well as Medicare Advantage plans, CMS officials say.

But coverage details can vary a lot among plans. This is not the year to keep your present policy on autopilot.

Here are five steps to help you choose the best plan for your needs.

1. Review your plan’s annual notice of change

This mandatory document should have arrived from the insurer by the end of September. In it, you’ll find changes to your plan’s premium, deductibles, copayments, other out-of-pocket costs, provider network and preferred pharmacies.

It also will identify any new benefits. If your plan will be more expensive, you don’t have to stay.

2. Compare options in the Medicare Plan Finder

This tool on the Medicare.gov website makes comparing all of your area’s plans easy. Type in your zip code, drugs, doses and preferred pharmacies to find each plan’s premiums, deductibles and medication costs.

The range in monthly premiums alone could be large. For example, stand-alone Part D plans run from zero to $125.80 in Chicago; in Tampa they are zero to $167.

Look at the 2025 complete costs for your present plan along with its competitors in the Plan Finder. Click on Lowest drug + premium cost to sort plans by lowest total costs, including premiums, deductibles and copayments.

If you take only a few low-cost medications, you may be interested in a low premium. You won’t reach the cap because the premium isn’t included in the $2,000 calculation.

If you have expensive medications, you may get to the cap quickly, but a low premium still should figure prominently in your decision.

If you’re between the two extremes, compare all costs and make sure your drugs are in a plan’s formulary. If not, the $2,000 cap calculation won’t include them.

If you take Enbrel, an expensive medication for rheumatoid arthritis, and live in Chicago, expect the zero premium plan to charge the maximum $590 deductible. But once you reach the $2,000 cap, you will pay no more for the rest of the year.

If you choose a plan with a $102 premium, your total annual costs will be more than $1,200 on top of the cap.

By contrast, choosing a $20.90-a-month plan that doesn’t cover Enbrel, you would pay around $84,480 in premiums and medication costs, the Plan Finder estimates.

“Some beneficiaries could be facing material premium increases or have their plan terminated or shifted into another,” says Kevin Pierce, senior consulting actuary for Seattle-based Milliman consultants. “Other beneficiaries could see no premium change or a premium reduction.”

A KFF analysis found that in California, enrollees in eight of 16 national Part D plans offered in 2024 will see their premiums increase by $35 if they don’t switch to a different plan in 2025, while enrollees in six other national plans in 2024 will see a premium reduction. Almost all stand-alone Part D plans participated in a voluntary program in which CMS offered plan sponsors extra money if they would agree to cap premium increases at $35 or less for 2025. The program is scheduled to last at least three years.

3. Find out any coverage restrictions

If a drug is part of a plan’s formulary, it may not be covered automatically.

Even if your doctor gives you a prescription, you may face extra hurdles if your plan has prior authorization requirements, common with Ozempic and Mounjaro because these drugs may be covered for diabetes but not when prescribed for weight loss. Or you could be subject to step therapy, when you must first try a less expensive drug for your condition.

4. Dig into details for Medicare Advantage plans

Medical copays. If you have an all-in-one Medicare Advantage plan rather than original Medicare, use its Plan Finder to compare prescription costs and find more information about medical coverage. Click on Plan Details to find copayments for doctor and specialist visits, common medical expenses and hospital stays.

Your payment limits. Also compare plans’ out-of-pocket spending maximums. This applies to Part A and Part B medical coverage, not Part D prescription drugs or extra benefits.

Copays for extras. A list of other coverage could include dental, hearing, transportation and vision. But check a plan’s summary of benefits on its website, linked under the plan’s ID in the Plan Finder, for details. Look for copayments and annual coverage maximums.

Chronic disease management. If you have chronic conditions, you may be eligible for additional benefits, such as a grocery allowance and nonmedical transportation.

Your providers. Confirm that doctors and facilities you use are in a plan’s provider network. Find out how much you’ll pay for using an out-of-network provider, if it’s covered at all.

Ask your doctors if they participate in the plans you’re considering. Use a plan’s specific name; some companies have several in a region with different provider networks. You also may be able to find the provider list on the plan’s website.

5. Get help with your decision

Several resources can help you navigate your options during open enrollment.

Call 800-MEDICARE (633-4227), or use the chat feature at Medicare.gov.

For one-on-one assistance, reach out to the State Health Insurance Assistance Program (SHIP) or call 877-839-2675. A SHIP counselor can review options in your area and special rules that may apply to your state. They can also guide you through the pros and cons of switching between original Medicare and Medicare Advantage.

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Kimberly Lankford is a contributing writer who covers Medicare and personal finance. She wrote about insurance, Medicare, retirement and taxes for more than 20 years at Kiplinger’s Personal Finance and has written for The Washington Post and Boston Globe. She received the personal finance Best in Business award from the Society of American Business Editors and Writers and the New York State Society of CPAs’ excellence in financial journalism award for her guide to Medicare.

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