2025 Medicare Market Disruption Means Opportunity for Agents

The winds of change are blowing in Medicare and swirling up opportunities for your insurance business! Now’s the time to connect with Ritter about growth.

 

Continued implementation of the Inflation Reduction Act (IRA) of 2022 is bringing big changes to Medicare drug benefits for the 2025 Annual Enrollment Period (AEP), starting on October 15. As a result, beneficiaries will have lots of questions and potentially want to switch plans. That’s where you come in!

Here’s a summary of what’s coming, the resources you need to feel confident, and your next steps to growing your business.

The 2025 Medicare Changes That Will Rattle the Industry

The following changes will significantly impact Medicare enrollees, likely causing confusion, questions, and the desire for different coverage. Familiarize yourself with this information to better assist your clients.

Part D Deductible to Increase

The Centers for Medicare & Medicaid Services (CMS) will raise the maximum annual Part D deductible, like it usually does every year. In 2025, the highest allowable Part D deductible will increase from $545 to $590 — a $45 increase. (For reference, the Medicare Part D deductible increased $25 between 2022 and 2023 and $40 between 2023 and 2024.)

Part D sponsors can’t set a deductible higher than this amount. They may choose to have a lower deductible or even none at all. Part D beneficiaries must pay 100 percent of their gross covered prescription drug costs until the deductible is met (if there is one).

Coverage Gap Phase Elimination & OOP Capped at $2,000

The IRA’s implementation is restructuring Part D coverage phases for 2025, simplifying them from four to three phases and spreading the costs out differently. What does this mean for beneficiaries?

• Annual out-of-pocket (OOP) costs will be capped at $2,000 (a $6,000 decrease from 2024)
• Coverage gap phase will be eliminated (the ultimate end to the donut hole)

The IRA attempts to keep costs for drugs lower for enrollees and the capped OOP costs aim to do just that. KFF reported Part D enrollees taking only brand-name drugs will spend roughly $3,300 of their own money before reaching catastrophic coverage in 2024, so your clients could see savings of about $1,300 in 2025.

With the elimination of the coverage gap phase, your clients will move directly from the initial coverage phase to the catastrophic phase starting in 2025. Carriers will absorb most of the costs in the catastrophic phase.

A New Medicare Prescription Payment Plan

Although your clients’ OOP costs will be lower, they’ll still owe up to $2,000 out of pocket. Starting in 2025, Part D enrollees will have the ability to manage these costs in the form of capped monthly payments. The Medicare Prescription Payment Plan means your clients won’t have to pay upfront and in full at the pharmacy for their covered drugs.

MA & PDP Premium Stabilization

With the cost burden shifting more to plan sponsors, beneficiaries and agents worried premiums would increase substantially in 2025. Good news arrived on September 27, 2024, when CMS announced that MA and PDP plan choices and premiums would improve or remain stable next year.

CMS predicts MA and PDP monthly premiums will decrease an average of $1.23 and $7.45, respectively. CMS attributes the lower Part D premiums to two factors:

• Provisions in the IRA that limit Part D premium growth to a 6 percent annual increase
• The new voluntary Part D premium stabilization demonstration program that helps subsidize the cost for carriers

In a year of change, premium stabilization should come as a welcome relief to Medicare enrollees.

Reduced Supplemental Benefits

Medicare Advantage Prescription Drug plans will be able to absorb increased costs better than stand-alone PDPs. However, we also expect to see carriers offset increased costs by changing and/or decreasing their MA supplemental benefits.

Changes in Broker Commissions

With all the changes happening, of course you want to know what’s happening with your commissions in 2025!

As a result of recent lawsuits regarding their 2025 Medicare Final Rule, the CMS issued revised 2025 Medicare Advantage and Part D broker commissions on July 18, 2024.

Broker commissions are still increasing for the 10^th year in a row; however, the Medicare increases for 2025 now exclude a fixed administrative fee. Additionally, CMS will reinstate the regulatory framework [42 C.F.R. 422.2274(e)] which allows for “Payments other than compensation (administrative payments).” Therefore, payments for services other than enrollment (e.g., training, customer service, agent recruitment, operational overhead or assistance with completion of health risk assessments) are permitted until the lawsuits are resolved.

A final outcome might not come until the first half of 2025 or even into 2026 depending on how court proceedings continue, so stay tuned for updates! As for now, carriers can proceed with doing business similarly to last year.

Whether agents will continue to earn PDP commission in 2025 on Part D plans has been in question. Recently, several large carriers announced all new Part D business, and some renewals, will become non-commissionable.

Modifications to D-SNPs & LIS SEP

With both Medicare and Medicaid at play, navigating Dual Eligible Special Needs Plans (D-SNPs) can be challenging for agents and their clients. With the upcoming changes, CMS aims to better integrate Medicaid and Medicare services for dually eligible individuals, improving care coordination, accessibility, and affordability for enrollees.

Updates include enrollment limits for integrated D-SNPs, a new monthly integrated-care SEP, removal of the quarterly SEP, limits on number of plans in service areas, limits on out-of-network cost-sharing, and lowered threshold on look-alike plans. CMS will implement these changes over a span of the next five years, from 2025 to 2030.

CMS will maintain an SEP for individuals with the Part D low-income subsidy (LIS), also known as Extra Help. Currently quarterly, this SEP will become monthly in 2025, similar to the integrated-care D-SNP SEP. As long as your clients remain eligible for Extra Help, they can switch, drop, or join a Part D plan once a month.

Why Agents Should Follow the Medicare Change

We predict that your clients and community will have lots of questions regarding these upcoming changes and their coverage and will need your help. Imagine if you suddenly didn’t have to pay as much for your prescription drugs or saw a big spike in your premium. They will need the thoughtful responses of a licensed insurance agent, aka you!

We expect a busy AEP. Many beneficiaries will need help from a licensed insurance agent, and you can assist by certifying and contracting to sell Medicare now. We can help you understand these products and how to sell them, ensure your portfolio has the most competitive plans in your market, and get you ready to achieve record-breaking sales.

Ritter Insurance Marketing is here to help you — from contracting to compliance and sales tips and everything in between.

When you fill out the form, your local Ritter sales specialist will reach out to discuss these changes, what it looks like in your local market, and how Ritter can help you capitalize on these growth opportunities.