Average premiums for Medicare Advantage, Medicare Part D to decrease, CMS says
The lower MA premiums are expected to drive enrollment to 35.7 million by 2025 - about 51% of all Medicare beneficiaries.
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Average premiums for both the Medicare Advantage and Medicare Part D prescription drug programs will decrease next year, driven by regulatory reforms and key provisions from the Inflation Reduction Act, according to the Centers for Medicare and Medicaid Services.
For Medicare Advantage plans, the average monthly premium will decrease from $18.23 in 2024 to $17 in 2025, continuing a trend of declining premiums over recent years, said CMS. This reduction, the agency said, reflects not only its payment policy updates, but also the sustained competition among private insurers that offer Medicare Advantage plans.
Similarly, Medicare Part D prescription drug coverage will see a reduction in premiums. The average premium for standalone Part D plans is projected to drop from $41.63 in 2024 to $40 in 2025, while premiums for Part D plans bundled with MA coverage are expected to decrease from $15.56 to $13.50.
These lower premiums, coupled with stable benefits – including supplemental offerings like vision, dental and hearing coverage – are expected to drive MA enrollment to 35.7 million by 2025, representing about 51% of all Medicare beneficiaries, CMS said.
The agency has also enhanced MA Special Needs Plans (SNPs) in an effort to cater to the unique needs of individuals with chronic conditions and dual Medicare-Medicaid eligibility.
The announcement, made during a press call on Friday, comes just before the Medicare Open Enrollment period, which runs from October 15 to December 7.
WHAT'S THE IMPACT?
In 2025, an important provision of the Inflation Reduction Act will take effect: the introduction of a $2,000 cap on out-of-pocket prescription drug expenses. CMS expects this will alleviate financial pressure on seniors and those with disabilities, who often face high medication costs.
The IRA also introduces the Medicare Prescription Payment Plan, which allows beneficiaries to spread out-of-pocket prescription drug costs over the course of the year. This initiative will be available through all Part D plans starting January 1, 2025, and aims to make prescription drug payments more predictable and manageable.
The new voluntary Medicare Part D Premium Stabilization Demonstration also aims to reduce premium volatility for enrollees as the redesign of the Part D benefit is implemented. CMS expects the initiative will help keep prescription drug plan costs predictable, providing additional stability to the Part D market.
CMS is also ramping up its efforts to protect Medicare beneficiaries from predatory marketing practices and inappropriate prior authorization requirements, saying it aims to curb "improper practices."
With these changes set to take effect in 2025, CMS is encouraging Medicare beneficiaries to carefully review their plan options during the upcoming Open Enrollment period. Medicare.gov and the Medicare Plan Finder tool will be updated with new plan details by October 1 to help beneficiaries compare their options.
CMS is also encouraging individuals to contact 1-800-MEDICARE or their State Health Insurance Assistance Programs (SHIP) for personalized support in navigating their coverage choices.
THE LARGER TREND
The national average bid amount for Part D plans will increase from $64.28 in 2024 to $179.45 in 2025, according to information CMS released in June.
The increase is due to government subsidies changing from being reconciled on the back end to a larger risk adjustment up front, according to CMS.
This redesign of the Part D program is meant to encourage better cost management through a larger risk-adjusted government Part D subsidy payment up front, rather than cost reconciliation on the back end, based on beneficiary costs, or on reinsurance payments.
The preliminary estimated average government subsidy to plans will be $142.67 in 2025.
Changes to the Part D basic benefit are projected to save people with Medicare an average of 30% in annual out-of-pocket prescription drug costs in 2025. This will result in a decrease of approximately $7.4 billion in out-of-pocket prescription drug spending for people with Medicare Part D in 2025, according to a report by the Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
