By Mark Miller
(Reuters) – I have been enrolled in traditional Medicare for a couple of years now, and one professional benefit is that I receive the same direct marketing pitches that my readers get every year from health insurance companies during the annual fall enrollment season.
Much of it encourages me to enroll in Medicare Advantage – the commercially offered managed-care alternative to the traditional program. And this year, Advantage plan marketers have a new enticement: the changes that take effect next year in Medicare’s Part D prescription drug coverage. If you are enrolled in traditional Medicare, this pitch should throw up a big red flag, because shifting to Advantage is something you might later regret – and it can be difficult to reverse.
The Part D reforms are important, and generally positive. The big change for 2025 is a hard cap on out-of-pocket prescription costs. This reform was phased in under the Inflation Reduction Act of 2022 championed by the Biden administration and Democrats in Congress. Previously, there was no limit to what you might pay if you needed high-cost drugs for conditions like cancer and multiple sclerosis.
This year, the cap is $3,300; the final step is a $2,000 cap in 2025. This will provide thousands of dollars in relief to seniors – about 4.6 million Medicare Part D enrollees had already reached $2,000 or more in out-of-pocket drug costs by the end of June this year, according to federal government data. It also will give seniors greater predictability in planning their healthcare spending.
But health insurance companies are revising their offerings to a greater extent than usual for next year because of changes required by the Act. If you are enrolled in traditional Medicare with a standalone Part D plan, you may find your premium jumping, or changes in deductibles or cost-sharing arrangements. That means it is important to re-check your coverage this autumn if you are in a standalone plan. The same is true if you have a Medicare Advantage plan with drug coverage wrapped in with no extra premium – the terms of that drug coverage may be changing, too.
Health insurance companies are using these changes to convince traditional Medicare enrollees to shift into Advantage. I received a letter recently from my own current prescription drug plan provider, which I am dropping because the premium and projected total costs are jumping sharply. “Since your plan premiums are increasing in 2025, now is the time to explore your plan options,” the letter states. “(Our Medicare Advantage plan) may be a better fit for you. Plus, switching to (our Advantage plan) could lower what you pay for prescriptions and monthly premiums next year.” The letter goes on to pitch the usual Advantage enticements, such as dental coverage, gym membership and the like.
This is a very compelling pitch – no wonder Medicare Advantage enrollment has been growing so quickly in recent years. More than half of eligible Medicare beneficiaries (54%) are enrolled in Medicare Advantage in 2024, a figure projected to hit 64% by 2034, according to KFF, a healthcare policy research organization.
But here are a few things the letter does not say:
– Instead of switching to Advantage, another option that I have is to simply search the Medicare Plan Finder for a less costly Part D plan. That is what I did – instead of a $35 increase, my premium actually will fall about $25 per month in 2025, as will total projected annual costs including the deductible and cost-sharing.
– I might need to look for new doctors. If I join this Advantage plan, I will need to restrict myself to in-network healthcare providers in order to access the cost savings described in the letter, possibly causing disruption to my current healthcare.
– I probably cannot go back later. Enrollees in traditional Medicare (such as myself) usually pair their Part A, B and D coverage with a Medigap supplemental policy. If I drop that now in order to join a Medicare Advantage plan, I may not be able to get a Medigap down the road if I decide to go back to traditional Medicare. Medigap insurance providers are required to sell me a policy when I first sign up for Medicare, but down the road they can use pre-existing conditions to turn me away, unless I live in one of four states that have some amount of protected access rights for this critical supplemental coverage (New York, Connecticut, Massachusetts and Maine).
– The drug coverage might not fit my needs. The drug coverage wrapped into an Advantage plan may – or may not – be the best fit for me, depending on the medications I take. It is important to evaluate not only the healthcare provider network, but the drug coverage.
– Here is the big thing the letter does not say. Medicare Advantage might work just fine for younger and healthier retirees. But the highest rates of dissatisfaction in Advantage are reported by the oldest and sickest enrollees in the program. Consumer advocates who work with Medicare enrollees often report that the highest rates of Advantage disenrollment are among the oldest and sickest patients, who encounter problems with denial of care or extra red tape in the form of requests for prior authorization.
During annual enrollment, the ad blitz for Medicare Advantage is intense, and it lacks any context about what it can mean to give up your traditional Medicare coverage.
Annual enrollment ends on Dec. 7. It is always a good idea to review your Part D or Advantage plan coverage, so start by consulting the federal government’s Medicare Plan Finder. If you need assistance help, consult your State Health Assistance Program.
The opinions expressed here are those of the author, a columnist for Reuters.
(Writing by Mark Miller; Editing by Matthew Lewis)
Comments