Medicare annual enrollment period 2025 changes: Premium increases will not be as high as previously expected

Medicare annual enrollment period 2025 changes: Premium increases will not be as high as previously expected


The Medicare Annual Enrollment Period is HERE – Oct. 15 through Dec. 7. You can review your plan and make any changes for next year. Most people this year will NOT NEED TO CHANGE.  The originally anticipated upheaval to Medicare due to the Inflation Reduction Act has mostly been thwarted by the Premium Stabilization Demonstration rolled out at the end of August. The government is going to subsidize the Insurance Companies to NOT raise premiums as was initially proposed.

In June and July of 2024 the Insurance Companies submitted their 2025 plan proposals to CMS (Centers for Medicare and Medicaid) due to the Inflation Reduction Act and the increased costs the Insurance companies are responsible for next year, along with the $2,000 cap on drug expenses for Medicare Beneficiaries, the national average for a Drug Plan Premium was set to be $179 a month (up from the 2024 average of $35). The current administration decided to increase the government subsidy to the Insurance companies from $29.58 this year to $142.67 in 2025. (This is a per member, per month subsidy, see left graph below.) This has worked to some degree to soften the premium increased on Part D Prescription drug plans for 2025.

For instance, in Colorado we have seen Aetna consolidate to one Part D plan for 2025 that will carry a $55 a month premium, up from $19 this year. Premiums with most carriers on their stand-alone prescription drug plans did increase. On the Medicare Advantage side, we have seen maximum out of pockets increase, co-pays go up and ancillary benefits like dental, vision, hearing and over-the-counter decrease as a result of the Inflation Reduction Act. These changes are not unique to one carrier, but across the board the insurance companies have had to decide what benefits they can maintain while covering increased costs next year and still remain profitable.

The other piece of the puzzle is who is now responsible for the costs in 2025. The headline you hear is the $2,000 cap on prescription medication costs for Medicare Beneficiaries, but what they are not explaining is who is going to be picking up those costs. As you can see in the graph on the bottom right, the top 4 bars lay out the 2024 costs share, the bottom bars lay out the removal of the Coverage gap and the new cost share. You can see that the Insurance companies are set to shoulder approximately 25% more in 2025 compared to 2024. Most insurance companies are FOR PROFIT, so in order to remain profitable they are going to have to increase premiums or find other ways (reducing benefits) to absorb these additional costs and remain profitable next year.

For the most part I am not seeing a need to move between plans unless there has been a change, to doctors, medications or your overall health. Frankly, it is not worth the brain damage of moving plans, for little to no benefit.