Medicare Beneficiaries Could Face Shock This Month From Plan Updates

Experts are warning that Medicare beneficiaries could experience shock next month as they receive their annual notice of change.
The annual notice of change arrives every October for Medicare recipients alerting them of adjustments to their health care plans for the following year.
This year, the alert could be a shock to the system because there are key changes occurring both for Medicare Advantage and Part D plans in 2025.
More From Newsweek Vault: The Latest Social Security COLA Estimate: Will It Be Enough to Keep Pace With Inflation?
Due to this, seniors should pay careful attention to the changes outlined in their notifications.
“It may be needed for seniors to take a deeper dive into their annual notice of change,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.
“From year to year, that document may not carry as much weight as it does this year, as there are changes at the federal level, changes with the number of providers, and, sadly, changes to premium costs in the year ahead.”
Premiums for monthly prescription plans are likely to change significantly this year, and many seniors will see their Medicare Advantage plan disappear as several insurers have announced they would be exiting select markets in 2025.
More From Newsweek Vault: Learn About the Best High-Yield Checking Accounts
For example, top insurer Humana said it would be leaving 13 markets across the country. That action will leave around 560,000 Americans in need of finding a new Medicare Advantage plan.
“In most cases, there will still be Medicare Advantage plans available from other companies, even in areas where there might not be any Humana plans,” Louise Norris, health policy analyst for medicareresources.org, previously told Newsweek. “So most enrollees will still be able to be covered by Medicare Advantage if that’s their choice.”
More From Newsweek Vault: Online Banks vs. Traditional Banks: Learn the Differences
While plan information goes out as early as this month, Medicare recipients will be able to make changes during the annual election period, which begins on October 15.
President Joe Biden’s administration approved a $2,000 out-of-pocket maximum for Part D drug costs that starts in 2025, which means seniors will not be forced to pay any more than $2,000 on their prescriptions throughout the year.
And those relying on insulin would pay only $35 a month under the new law.
While this is good news for seniors who have many drugs they have to take, it could raise rates on your Medicare Advantage plan or even reduce coverage as insurers look for a way to retain profits now that the drug cost cap is in place.
Insurance companies are also navigating a lower increase in government payments for 2025, which could push a portion of the costs on patients.
That means drug deductibles, copays and premiums could all be higher for 2025.
The higher costs also arrive as insurers anticipate members will utilize supplemental benefits at higher rates as well, including over-the-counter (OTC) cards and dental services.
“We are anticipating an even higher level of utilization in some of those services in the fourth quarter of 2024, just recognizing the benefit changes we’ve made for 2025,” Humana’s Chief Financial Officer Susan Diamond said during a Wells Fargo Healthcare Conference this month. “If people get visibility to that, knowing that those benefits will be reduced, we do anticipate an even further elevated use of some of those benefits.”
Both UnitedHealth and Mutual of Omaha have noted changes are likely underway due to the government cost differences in 2025.
“Our strategy continues to focus on providing as much stability as possible in the reduced funding environment,” UnitedHealth CEO Andrew Witty said during an investor call.
Mutual of Omaha also said it would end its standalone Medicare prescription drug plans due to the higher costs from the Inflation Reduction Act.
Each annual notice of change should include changes to your in-network provider and pharmacy list as well as updates to the drug list and cost changes.
“Normally, seniors just look at the price tag and may not do an overview of other alterations that can actually have more of a long-term effect on your coverage than the few dollars more you’re going to be paying. This year they need to,” Beene said.