Practical Implications of Current and Upcoming Medicare Part D Changes

Coming in 2025 and 2026, there will be some significant changes to Medicare Part D that may affect you. While these changes are mostly positive, there are some potential challenges to be aware of as well. As part 2 of a two-part series on Medicare Part D changes and the Inflation Reduction Act, Accessia Health welcomed William Sarraille, JD, Founder of Sarraille & Associates, to discuss the IRA’s key provisions, timelines, and practical steps to maximize benefits and minimize out-of-pocket costs. The information below includes highlights and potential pitfalls that you should consider during the 2025 open enrollment.

Automatic Plan Updates

While there are a number of plan updates that are optional for next year, some changes to the Medicare plans will be automatic and will not require opt-in. While you don’t have to opt in, with these changes also come some challenges, particularly related to insurers’ potential use of utilization management techniques like prior authorization and step therapy. These barriers can make it harder for you to access certain medications. We encourage you to work closely with your healthcare providers to navigate these challenges and ensure that you receive the medications that you need.

$2,000 Cap on Out-of-Pocket Expenses for Medicare Part D

As we covered in part 1 of the webinar series, an exciting update is that starting January 1, there will be a $2,000 cap on out-of-pocket expenses for Medicare Part D. While there’s no need to opt into this benefit—it will be automatically applied by Medicare plans, there is a possibility that some plans may increase costs elsewhere, such as raising deductibles, to offset the $2,000 cap. It’s important to review plan options carefully for the upcoming year to ensure that you are making the best decision for your unique needs.

Premium Stabilization

Despite concerns over potential premium hikes, a new demonstration program introduced by CMS will provide additional subsidies to Part D plans to stabilize premiums for the upcoming year. This should prevent significant premium increases for standalone Part D plans (PDPs).

No-Cost Vaccines and Insulin Cap

Two provisions already in effect include no-cost vaccines (such as for shingles and RSV) and a $35 monthly cap on insulin products under Medicare Part D. These changes are designed to make essential treatments more affordable for you. You can find more information here: Medicare – Insulin

Price Negotiations for Prescription Drugs

Medicare has begun its first round of negotiations with drug manufacturers to lower drug prices as part of the Inflation Reduction Act. This should eventually lead to lower co-payments for certain high-cost drugs, but there is a risk that insurers may try to switch patients to more profitable alternatives. If that happens, you will have the right to file grievances or appeals if this occurs. At this point, no action is required as the lower prices will not go into effect until 2026.

Plan Options to Consider When Enrolling for Benefits

In addition to some of the blanket updates that are automatic to all plans, a few additional changes are unique to individual plans and are optional. It’s important to carefully consider each plan to make the best choice during open enrollment. Resources like the Medicare Plan Finder and support tools on Medicare.gov can help you evaluate whether some of these programs are right for you.

Extra Help Program

A significant benefit for Medicare beneficiaries next year is the expansion of the Extra Help program, which now offers more generous support to those who qualify. This program can substantially reduce Medicare Part D costs, including premiums, deductibles, and co-payments, allowing you to pay as little as $4.50 for generic drugs and $12 for brand-name medications. Importantly, individuals with incomes up to 150% of the federal poverty level are now eligible for this assistance. While approximately 300,000 people have already benefited from this expanded eligibility as of January 2024, nearly three million eligible individuals have yet to enroll. Those enrolled can access Medicare plans with no deductibles, no premiums, and fixed low costs for certain medications. You can visit Medicare – Extra Help for more information on this program as well as check for eligibility.

Smoothing (Medicare Prescription Payment Plan – M3P)

Another new option called the Medicare Prescription Payment Plan, or simply “smoothing,” will now allow you to spread your out-of-pocket expenses throughout the year, rather than paying large sums upfront. This could be particularly helpful for individuals with high medication costs early in the year, as it enables more manageable monthly payments. However, this is a voluntary program and requires you to actively opt in each year. More information on this option can be found at Medicare – Monthly Payment Option.

Take Action

These Medicare Part D changes offer substantial benefits for many, but they also require careful attention and planning. We encourage you to explore your options, understand the impact of these updates, and take advantage of available resources to make the most of your coverage.

For more information on any of these new updates, you can visit Medicare.gov or call 1-800-Medicare. You can also seek in-person counseling from your local State Health Insurance Assistance Program (SHIP). You can view the full webinar with all of this information or tune in to Part 1 of the webinar series, focused on some of the finer details of these updates and how CMS can help you navigate these changes.