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  • Writer's pictureKen Connolly

Medicare Costs Could Be Going Up! Here’s Why....

Key Points:

  • Changes to Medicare Regulations and Corporate Healthcare Consolidation Could Lead to Higher Medicare Costs

  • The 2025 Part D $2000 Out of Pocket Max May Raise Premiums for People On Lower Cost Prescriptions

  • Private Equity Buying Up Healthcare Systems May Raise Healthcare Costs and Insurance Premiums

  • Medicare Advantage Plans May Offer Fewer Benefits in 2025 To Become More Profitable


2025 will be one of the biggest years in Medicare history. Regulatory changes and shifting market forces may result in the largest changes to Medicare Part D and Medicare Advantage costs in recent history. Generally, Medicare beneficiaries should expect potentially significant increases in their Medicare Part D and Advantage plan premiums and out-of-pocket costs. At NJ Life and Health, we stay on top of the market pulse and can bring you the inside scoop gleaned from the largest Medicare conferences and our constant conversations with carriers, government agencies, and the largest players in the market. In this video, we will share our knowledge with you and what to expect.


1.     Drug Plan Caps May Raise Prices for Everyone


In 2020, Medicare added a $35 monthly insulin copay cap for Medicare Part D enrollees. Now for 2025, Medicare is lowering copay caps overall by way of a new $2,000 out of pocket maximum for all Medicare Part D plans, inclusive of Medicare Advantage plans with prescription drug coverage. This should be great news, but it is not going to affect all beneficiaries equally, especially those with currently lower costs.


These regulatory caps on prescription costs are leading insurance companies to consider raising their monthly premiums on Part D plans across the board. The regulation changes behind the $2,000 cap continues the trend of shifting a larger percentage of expensive prescription claims to the insurance companies. The cost of insulin, weight loss drugs, inhalers, and other expensive brand-name medications is high, and now the insurance companies must cover a larger portion of those costs. Given that insurance companies will still need to profit from these plans, the only way to offset their higher cost share will be to raise premiums and tighten formularies. Therefore, beneficiaries with lower priced plans and lower priced generic medications may feel more of a squeeze as insurance companies raise rates to offset the higher costs they will be paying on expensive medications.


Medicare Part D costs currently have a low floor and a high ceiling. If you’re on a handful of generic medications, you may have a stand-alone Part D or MAPD plan that costs between $0-$30 a month. These plans offer low copays for generic medications and keep premiums low and affordable—that’s the low floor. But if you’re on expensive brand-name medications, you may have to enroll in a plan with a monthly premium somewhere between $80-$150/month. You may also have to pay several thousand dollars out-of-pocket before you finally enter the catastrophic phase of your plan, leading to a high-cost ceiling.


Medicare is effectively lowering the ceiling on drug costs (to $2,000), which may lead to insurance carriers raising the floor on everyone else. Those $0-$10 a month drug plans may suddenly cost $30-$60 for comparable coverage. Plans will release these new numbers on October 1st, but beneficiaries will see these changes sooner when they receive their Annual Notice of Changes letters from their respective plans in September.


2.     Private Equity Is Buying Up Healthcare Systems and Raising the Price


Private Equity companies have been buying up large healthcare systems for years, and the effects have been largely negative. For instance, we have seen situations where people have lost their primary care doctors (https://www.oregonlive.com/business/2024/03/shedding-physicians-buyer-of-eugene-clinic-chain-tells-patients-to-seek-care-somewhere-else.html) and how it’s led to some rural hospitals closing (https://www.businessinsider.com/how-wealthy-investors-got-rich-looting-needy-hospitals-healthcare-system-2024-3). This ripple effect could affect all of our health insurance premiums in the future.


Corporate consolidation is leading people to have fewer options for their healthcare, which means the players in the marketplace can raise their prices. These rising costs hurt insurance companies' bottom lines, leading them to want to raise their premiums. We have been told that everyone with health insurance, between the ages of 19-99 should expect noticeable increases in their monthly premiums. If you are on a Medicare Supplement policy, you need to expect and prepare for a higher-than-normal yearly increase.


3.     Medicare Advantage Plans May Offer Fewer Benefits


Medicare Advantage has grabbed a bigger and bigger piece of the Medicare market over the last few years. They have attracted millions of Medicare enrollees by heavily advertising plans with low monthly premiums, bundling multiple healthcare services, and offering extra perks and benefits Original Medicare doesn’t cover. But that all may change soon.


Medicare Advantage now accounts for 51% of the Medicare market. And many insurance carriers seem to be content with that number. They now want to make their plans more profitable, which may lead to higher monthly premiums, fewer benefits, or both. The CEO of Aetna, Brian Kane, has stated “we are first and foremost focused on recovering margin”. And Centene CFO Andrew Asher has said, “these plans might be a little bit less attractive for seniors”. https://www.wsj.com/health/healthcare/your-medicare-plan-might-not-include-as-many-freebies-next-year-ee7cab0d


Benefits like OTC cards, gym memberships, and maybe even dental and vision could be on the chopping block. If you want to retain the same level of benefits, you could also see the price of $0 Medicare Advantage plans jump.


What To Do


Work with a company that will stay on top of these regulatory changes on your behalf and help you navigate them.


At NJ Life and Health, we keep up with the rapidly changing Medicare market so that you can be assured that you’re fully apprised of the best Medicare plans to choose from for your particular needs.


Contact our Toms River, NJ office at 848-226-6897 or visit our website at www.njlifeandhealth.com to schedule your free Medicare education today.

We are licensed in 24 states and happy to help!

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