If you’re a Medicare beneficiary, you’ll receive one or two annual notices of changes in the mail or email in September about your coverage and costs for 2025. You might be tempted to ignore the seemingly nonsensical, as nearly a third of recipients do, according to an eHealth survey.
Not.
“So often, a person who is quite happy with their plan and doesn’t bother to look at their annual change notice gets a nasty surprise in January” when the plan’s new costs and benefits take effect, says Danielle Roberts, author of 10 Costly Medicare Mistakes You Can’t Afford and founding partner of Boomer Benefits, which sells Medicare policies.
What is an annual change notice?
An annual notice of change from your Medicare Part D prescription plan or a private insurer’s Medicare Advantage plan will determine how much your premiums, deductibles and copayments will change in the coming year and whether the plan will be offered at all. (Medigap plans don’t send these notices because they change little from year to year.)
An annual notice of change from your Part D plan will also tell you whether your prescriptions are covered and, if so, how much you’ll have to pay. A notice of change for Medicare Advantage will let you know whether your doctors and hospitals will remain in the plan’s network.
While this information is always important for making smart decisions during Medicare’s eight-week open enrollment period (October 15 – December 7), experts say it’s especially important to read the annual change notice in 2024.
“There’s a good chance your plan will change,” says Roberts. “This year, more than ever, we can expect major changes to plans.”
Surprising effect of the $2,000 cap on prescription drugs
This is largely due to a major change in Medicare that takes effect in 2025: the new $2,000 cap on the out-of-pocket cost of prescription drugs covered by a Part D plan.
Because Part D health insurers will have to pay for higher prescription drug costs due to the cap, they will look for ways to offset this.
This could mean higher premiums (currently an average of $43 per month for standalone plans, according to KFF), deductibles and copayments – possibly significantly more than in 2024.
“I was very, very concerned about what impact the $2,000 cap would have on Part D premiums,” Roberts says.
The prescription drug plan change in 2025 could also cause your Part D plan to stop covering certain drugs you take or increase prices for the drugs it does take.
Medicare Advantage plans – some of which are currently struggling with profit losses – often include Part D coverage, so experts say they may respond to the $2,000 cap by cutting or eliminating benefits to maintain their popular $0 premiums.
As a result, your Medicare Advantage benefits that Original Medicare can’t offer — such as dental, vision, hearing, and gym memberships — may be less attractive than they will be in 2024, or may be eliminated entirely.
“It will be really important to understand what is changing in my current plan in the coming year and whether the plan is still a good fit,” says eHealth CEO Fran Soistman. “Does it still provide the same value as it did when I originally chose it?”
Reading and understanding the change notice
Your annual change notice will tell you – if you understand it.
Only 36% of Medicare beneficiaries surveyed by eHealth said their annual change notice was “easy to understand.”
Plan to spend about 30 minutes carefully reading your Annual Change Notice to see exactly what will be different in 2025 and whether you want to change plans or coverage next year because of it.
During open enrollment, you can switch from your current Part D plan to another, from your Medicare Advantage plan to another, from Medicare Advantage to Original Medicare, and from Original Medicare to a Medicare Advantage plan.
However, don’t feel pressured to change plans just because your annual change notice says your premium is going up a little or a benefit is going down slightly.
“If there is a small reduction in benefits or a small increase in premiums, but people are happy with what the carrier is offering, they should not switch,” says Soistman.
However, he added that it is an important change that could cause you to switch insurers if a medication you take is no longer covered by your insurance or your doctor or hospital is no longer in the network.
You can use the Medicare Plan Finder on the Medicare website (Medicare.gov) to compare Part D and Medicare Advantage plans for 2025.
And as Philip Moeller writes in his forthcoming book: Get what you deserve for Medicare: If your Medicare Advantage plan does not include your preferred doctor or hospital in its network in the coming year, it is required by law to work with you to find other doctors or hospitals in its network that may be a good fit for you.
A new program to avoid large premium increases
To prevent drastic premium increases for Part D, the government’s Centers for Medicare and Medicaid Services recently gave health insurers a bone to pick with a premium stabilization plan.
Medicare will provide these insurers with a special subsidy through 2025 in exchange for not imposing exorbitant premium increases on their members.
“The premium increase of 40, 50 or more percent is likely to come down to 25 percent,” says Soistman. “It will still be a bit of a shock for some people when they see how their premiums have changed.”
Roberts says: “I’m still a little worried about the premiums, but after the announcement of the stabilization program I feel a little better.”
Help with changes to your Medicare plan
After reading your Annual Notice of Change, you may need help deciding on the right Medicare plans for 2025 and want to understand the impact of upcoming changes to your plans.
You can ask a Medicare broker or agent for help; you can find a directory on the National Association of Benefits and Insurance Professionals website. The sooner you do this, the better, as agents and brokers will be overloaded toward the end of open enrollment.
“At Boomer Benefits, we won’t have to accept any new requests after Thanksgiving,” Roberts says.
If one of your prescription drugs isn’t covered by your Part D plan in 2025, call your doctor to see if another covered drug would be OK or if you should find a new plan that covers it, Roberts advises.
For information about Part D and Medicare Advantage plans without a purchase recommendation, contact your state Health Insurance Assistance Program, visit the Medicare website, or call Medicare toll-free at 800-633-4227.
More time for open enrollment?
Soistman believes that due to the upcoming changes to Part D and Medicare Advantage plans for 2025, the receipt of the annual change notice will be delayed until the last two weeks of September.
If this is the case, people with the relevant plans will have less time than usual to read the notices before open enrollment.
The eHealth agency has asked the Centers for Medicare and Medicaid Services to extend the open enrollment period by about five days to give beneficiaries, insurers and Medicare brokers more time. Boomer Benefits also supports the extension.
So far there has been no response from the government to the eHealth proposal.
Could Medicare open enrollment in 2025 become the equivalent of the chaotic and confusing fiasco of the Department of Education’s FAFSA financial aid form?
“I don’t think it will be quite that drastic. But I do think it will be a year of change,” says Soistman. “And change is hard for people.”
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