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Medicare Prescription Drug Plans

Effects of the 2025 Medicare Drug Cap

All Medicare Part D prescription drug plans will have a $2,000 out of pocket max in 2025. This includes the Part D benefit in Medcare Advantage plans.  The cap will benefit the roughly 9% of people on Part D plans that take name brand drugs.  Their co-pays will be capped at 2K for the year. The effects of the 2025 Medicare drug cap on stand-alone Part D and Medicare Advantage plans will be positive for some but may have negatives for the majority.

Click Here if you prefer to watch a recorded webinar on the 2025 Medicare drug cap

How the 2025 $2000 Medicare drug cap will be implemented

The change is fairly simple.  Drug plans will continue to have a deductible phase like they do currently.  After that phase will be the copay phase.  The “Donut Hole” will be gone, and the member will be limited to $2,000 out of pocket max. The catastrophic phase will already have no cost share in 2024 and not be part of the Part D lingo by 2025.  Pretty straight forward.

Review of changing drug plan benefits 2023 through 2025

Benefits of the $2,000 cap

As agents, we have all likely run medications for clients on Connecture, Sunfire or a carrier portal that have yielded some terrible looking results.  $3,000, $4,000, $5,000 out of pocket results and higher.  The 2025 $2,000 Medicare drug cap will certainly benefit these people which is roughly 9% of the population and that percentage is increasing.  How can the use of expensive name brand drugs not increase when we have so many commercials with fancy jingles these days?  Besides losing a few pounds it is impossible to get the Ozempic song out of your head OH, OH, OZEMPIC    Everyone is dancing and having fun when they take Jardiance (Time to sing and dance with Jardiance) so why not get in on the fun?

Unintended negative consequences

While the cap is good for roughly 9% of Medicare drug plan enrollees it will have some negative impacts on everyone else.  The first will be on the premiums of stand-alone drug plans.   Insurance companies are taking on a great deal of additional cost with the cap.  It is estimated Part D plans costs will be nearly 45% higher once members hit the cap.   To compensate for this there will certainly be substantial increases in part D premiums.  CMS is limiting carriers’ ability to raise Part D premiums in 2025 and beyond by 6% a year.  That is only on the base premium however and not on the supplemental component of the rate in drug plans.  Is it not far-fetched to imagine average Part D drug plan premiums of $120 – $140 per month by 2026.

Medicare Advantage plan trouble

The other negative of the $2,000 drug cap in 2025 will be the impact on Medicare Advantage plans.  The insurance companies will have substantially higher costs on the drug portion of the plans in 2025.  The most obvious place for them to make up for this additional cost is by adding premiums to plans, increasing copays on medical services and reducing extra benefits such as dental, vison, OTC, Flex cards and any other crazy extras out there today.   Does this mean we can say goodbye to $0 premium plans? Hard to say but maybe. How much will they reduce extra benefits?  Will they start paying commissions below the CMS Max allowable?  Keep in mind, carriers do not have to pay at the max. They can pay any level below it they think the agent and broker community will tolerate.

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Guaranteed Issue Killing Medicare Supplements

All states have guaranteed issue opportunities on Medicare supplements for reasons such as being new to Medicare or losing employer coverage. When I say “guaranteed issue killing Medicare Supplements”, I am referring to states offering GI on a year-round basis.  Technically the 4 states offering all time GI are NY, CT, VT and MA.  Of those 4, NY and CT are the ones that have no stipulations.  Members can move from Medicare Supplement to Medicare Supplement or from a Medicare Advantage to Medicare Supplement through any election method and never be subjected to underwriting.  It is for exactly this reason the Medicare Supplement market is falling apart in CT and NY.

More on all time GI vs. GI in most states

As stated above, Medicare supplements are guaranteed issue in all states for certain situations.  All states must give members a GI opportunity to enroll in a Medicare supplement when they are first eligible for Medicare.  Those who delay part B enrollment have a GI opportunity when they enroll in Medicare part B.  There are other GI periods in all states such as losing group/employer insurance, Medicare Advantage Trial right, moving to another state and some others. However, once someone is enrolled in Medicare and have gone past their Trial Right period, they cannot move to a Medicare supplement without underwriting in most cases.  There are states that have annual opportunities to move on a GI basis through birthday rules and anniversary rules. 

How are states with all time guaranteed issue killing Medicare supplements?

The problem with all time guaranteed issue Medicare Supplement states is the adverse selection they create.  It is very common for someone in NY or CT to enroll in a Medicare Advantage plan when they are first enrolled in Medicare.  The member will stay on the advantage plan while they are healthy and then move to a Medicare Supplement when they start to have health conditions and are paying substantial annual amounts in copays.  As a result, the Medicare supplement plans in NY and CT are more often than not taking on members that have multiple health conditions and are utilizing high amounts of care.  In many cases, the people moving to Medicare supplements have severe health conditions generating substantial cost for the Medicare Supplement plan. This level of adverse selection has led to very high prices for Medicare supplements in both states.

Rate comparison in all time GI states vs. states that allow underwriting

A plan G Medicare supplement in Putnam County, NY cost $266.50 a month.   A plan G in CT is cost $226 a month. How does that compare to states that allow underwriting on Medicare supplements? Some examples:  A plan G for someone turning 65 in Ardmore PA cost $125 a month, Washington, DC is $116 a month, Dallas Texas is $109 a month.  Look up rates in any underwritten state and they will be substantially lower than NY and CT

Guaranteed Issue Killing Medicare Supplements: What is the end result?

The rates in both CT and NY will continue to climb.  Insurance carriers will stop offering them in NY and CT and and/or stop paying agents commission to sell them.  There are only a few major carriers in lower NY and one of them stopped offering Medicare supplements in July of 2023. Inevitably, carriers will stop paying agents’ commissions to sell Medicare supplements.  This is already happening in upstate NY with most plans being non commissionable. Carriers have also started to reduce and will ultimately eliminate them in the entire state. Connecticut will not be far behind. The other states offering most time guaranteed issue (VT and MA) will trend towards the same outcome.

The solution

The fix is very simple.  NY and CT should allow underwriting on Medicare supplements outside of the normal GI situations.  It would resolve the issue very quickly. New carriers would come into the state and rates would go down over time.  The unfortunate reality is this will likely never happen.  All time guaranteed issue will stay in place and Medicare supplements will become unaffordable to most.

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Social Security increase 2024

Each year beneficiaries receive an increase in their Social Security benefit payments.  This is called a COLA.  In 2024, the Social Security increase 2024 will be 3.2%.  This is much less than the 2023 COLA of 8.7%.

The COLA is calculated by the U.S. Bureau of Labor Statistics with data they get from the CPI (Consumer Price Index) the CPI tracks the costs of goods & services.  The CPI stated that there was an increase in the inflation rate of 3.7% from last year.

An annual increase in Social Security benefits is provided to give seniors a little help against the high cost of inflation on their budgets and give them a little more purchasing power year after year.  This in turn helps the overall economy.

What this means to beneficiaries:

The 3.2% COLA increase means that beneficiaries should receive an increase in their Social Security benefit checks.

In most cases, when there is COLA increase, there will also be an increase in Medicare Part B premiums. Because Medicare premiums are deducted from Social Security benefit checks, The slight increase in COLA may not be noticed at all.  This results in very little financial relief.

It is important to note, the federal law has a hold harmless clause that states, “no increase in Part B premiums can reduce a Social Security recipient’s monthly check below what it was in the previous year.”  At least this protects Social Security recipients to some extent.

When will the Social Security payments increase:

The annual payment increase will be received in January of 2024.  Beneficiaries should receive notification in December with their specific benefit details.

If you are a beneficiary whose birthday falls on the 1st through the 10th of the month, you will receive your benefit on the 2nd Wednesday of each month. Beneficiaries whose birthday falls on the 11^th through the 20^th, payments will be received the 3rd Wednesday of each month.  Anyone whose birthday is between the 21^st and 31^st receives their benefits the 4th Wednesday of each month.

Note: An increase to Social Security may impact eligibility for drug help (Medicare Savings Program)

How to find out your benefit amount:

The fastest and most convenient way to keep track of your social security benefit is by creating a my Social Security account.  Use your account to check your Social Security statement, report your wages or change your address and more.

Click here to create an account

As of December, most beneficiaries can access their Social Security COLA notice online. Just go to the message center in your account to view payment details. Notices will still go out in the mail.

You must create an account by November 24,2023 to view the COLA notice online.

Once you have an account, log on and manage your notification preferences.  Just go to “Message Center Preferences” and choose your message options.  You can receive courtesy messages either in your email or by text message.  Once you sign up for courtesy notifications, Social Security will send notifications to the Message Center inbox in your account.   You will get an email or text to tell you there is a message in your account.

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Learn the differences between Medicare HMO vs. PPO Plans

The differences between Medicare and Medicaid

When we explain the differences between Medicare and Medicaid, we have to start with the fact that these are two very different programs.

Both programs provide an important service to the group that it serves.  Each of these programs receives funding and is run by different parts of the government.

To sum it up:

1. Medicare is a program put in place by the federal government to provide health coverage for individuals 65 and over as well as qualified individuals with disabilities.
2. Medicaid is a program that is provided by both state and federal governments for qualified individuals who have limited income and little financial means.

Medicare AEP vs. OEP

Because the Medicare enrollment periods can be so confusing, in this post we will explain the difference between Medicare AEP vs. OEP.    It is helpful to understand the different enrollment opportunities available to make any plan changes to help optimize your Medicare coverage.

Please note:  no one is required to change plans during either enrollment period.  It is purely optional.  It is however a good idea to review your plan benefits and consider all your options during AEP.

We will start with the AEP (Annual Enrollment Period):

In Medicare, these two enrollment periods have 2 different windows of time to enroll in a plan. To differentiate between the two, you need to know the dates available to make changes for each enrollment period.  The AEP runs from October 15 through December 7 each year.  During this period, Medicare enrollees have the opportunity to make many types of changes to their Medicare coverage.  These changes allowed during the AEP include:

1. Changing from one Medicare Part D (prescription drug plan) to another.
2. You can change from Original Medicare which may include enrollment in a Medicare Supplement and or a Prescription Drug Plan into a Medicare Advantage Plan.
3. If you are in Original Medicare, you may want to add a Part D (prescription Drug) plan.
4. Change from one MA/MAPD (Medicare Advantage Plan) to another.
5. Disenroll from a MA/MAPD (Medicare Advantage) Plan and enroll in Original Medicare.  This gives you the opportunity to enroll in a Supplement Plan as well as a Part D (Prescription Drug) Plan. (Medicare supplements may be subject to underwriting)

More information about AEP:

During the AEP, Medicare plan providers use the enrollment period to announce plan updates and changes to their benefits for the following year.  These changes may include plan costs, deductibles, co-pays and coinsurance amounts. The carries send out their ANOC (annual notice of change) to their beneficiaries in hopes that they can add beneficiaries and grow the strength of their plan.  Once enrollees get their ANOC, they can decide whether to keep their current plan or consider making a change.  The AEP is the best time to compare plans and make sure you are enrolled in the plan that provides the coverage options you are looking for.

AEP allows you to make several plan changes.  Keep in mind, the last plan change you make is the one you will be enrolled in.  The plan you enroll in during AEP will begin January 1st of the following year.

Now we will discuss the OEP (Open Enrollment Period):

The OEP (Open Enrollment Period) is sometimes referred to as the MAOEP or Medicare advantage Open Enrollment Period., This enrollment period runs from January 1 through March 31 each year. The OEP differs from the AEP because only members of MA/MAPD (Medicare Advantage Plans) are able to make plan changes during this enrollment period. Member cannot change Original from Original Medicare/Medicare Supplement plans or switch from one PDP plan to another. Only changes to Medicare Advantage plans is permitted.

Enrollees of Medicare Advantage plans can make the following changes:

1. Switch from one Medicare Advantage plan to another one that provides the coverage you need.
2. Dis-enroll from you current Medicare Advantage plan and enroll in Original Medicare (this may include a supplement and PDP plan).

One important difference between the AEP and OEP is that; you may make one plan change during the OEP and that is all.  OEP is also a good time to correct any MA/MAPD plan changes you made during AEP that you are not happy with.  Any changes made during OEP will go into effect the month after your application is submitted.

Be aware that once you make a plan change during OEP/MAOEP you will not be able to make changes until the next AEP.  This rule does not apply to individuals with an SEP.

Learn more about the Medicare Advantage Open Enrollment Period

Please note:

Beneficiaries of Medicare Supplement (Medigap) plans are not subject to either of these enrollment periods.  They have their own enrollment rules.

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Assisted Living FAQs

Because many people have questions about assisted living, we are providing answers to the most asked Assisted living FAQs in the post below.

What is an assisted living facility:

Assisted living facilities provide individuals assistance with the ADLs (activities of daily living).  These activities include; meal preparation, bathing, dressing as well as medication management to name a few.  All these activities are categorized as custodial care.

Click here to learn more about the activities of daily living

What is the difference between Medicaid and Medicare in assisted living coverage:

There are definitely difference in how Medicare and Medicaid provide coverage for assisted living.

1.  Medicare does not provide any coverage for assisted living facilities. Although it does short-term stays in a skilled nursing facility for rehabilitation purposes as long as specific requirements are met.  This criterion includes the exclusion of the need for long-term care.
2. In some states, qualified Medicaid enrollees may receive help from a waiver program they provide with the costs for personal care as well as some other support services beneficiaries receive in an assisted living setting.  This assistance can reduce the total cost of assisted living quite a bit.  However, Medicaid does not offer help with the costs of room and board in an assisted living facility.

Click here for more details on Assisted living coverage

Is there a way to get financial assistance for assisted living:

As stated above, several states provide help with assisted living costs for anyone who has limited financial resources and qualifies for help such as Medicaid.

Veterans may qualify for help through programs offered through their local VA.  These programs and VA benefits may offer help with the costs of assisted living.

Although Medicare does not cover assisted living facilities, it will cover cost for medical treatment provided by doctors or hospitals as well as some approved skilled nursing facility care. If prescription drugs are needed, they are covered by Medicare Part D.

Medicare agent application checklist

If you are a Medicare agent, you know there are some things you need to do to prepare before taking an application from a client.  Take a look at the suggestions in the Medicare application checklist below. are currently taking as well as their doctors. This is all important information that you need to run an accurate Medicare quote.

You can easily run a quote using one of our free online quoting and enrollment tools such as Sunfire or Connecture.  Both of these tools have a built in CRM that is free to use to our contracted agents.

Learn more about how to quote Medicare Advantage plans with our free quoting tools

Before you take the application

Be sure you get a signed SOA.  There are CMS guidelines agents must follow when taking a SOA.  Agents must take the SOA (Scope of Appointment) 48 hours before you meet your client to sign up for a Medicare plan.  Please note; a scope is good for 12 months from the date the client signs it.  After a 12-month period, you need a new scope signed before any Medicare enrollment discussions can take place.  You must keep a scope of appointment on file for 10 years weather or not you made a sale. per CMS guidelines.

Watch our YouTube video on Scope of Appointment rules starting 10/1/23

Click here to download a generic scope

It is important that the SOA is filled out correctly with the plan type that you are discussing during your meeting checked of or initialed.  There are a few ways to collect the SOA.  You can collect it on the phone, via voice recording, online by sending a link either by email or text and you can also collect a paper SOA.  This all depends on the client’s preference.

Using a paper application

It is important to write legibly in either black or blue ink.  This ensures what you submit is processed without delays.

1. If your client is enrolling in an MA/MAPD plan, be sure to include their PCP name and ID information requested on the enrollment form.  This is extremely important if they are applying for an HMO.  You should always check the client’s list of providers before enrolling them in any MA/MAPD plan.
2. In the event your client has to answer health questions, make sure they provide detailed explanations for any health questions they answer yes to.
3. If the client is enrolling during an SEP, be sure to include any necessary or required information.  If you try and skip this, it will only delay the processing and can result in a denial or enrollment.
4. Be sure the that not only the client signs wherever required but that you sign where needed as well. This goes for the scope of appointment too.
5. Submit the application on time.  Know the carrier rules for how long after you receive the application it must be submitted by.
6. Before submitting the application check everything over one last time so that there are not delays in processing and the client gets the coverage they need on time.  If you send you r application through Pinnacle, they will scrub it for you, but it is always better to double check before submitting it to them.

Submit the application electronically

One way to be sure the application is done correctly is to use one of our free online enrollment tools and submit the application electronically.  This will ensure that all information is provided, and that the application is filled in legibly.

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Medicare Advantage open enrollment period

Everyone has probably heard about the Medicare annual enrollment period, but there is another opportunity to change your MA plan.  This is opportunity is available during the Medicare Advantage open enrollment period or the MAOEP.

The MAOEP basics:

1. This enrollment period starts on January 1 and ends on March 31 each year.  During this time MA/MAPD enrollees can make plan changes.
2. During this time MA/MAPD enrollees may switch to a different Medicare Advantage plan or back to Original Medicare.
3. If you make a change during this period, it will go into effect the first day of the following month after your application is submitted.

A few details about the Medicare Advantage open enrollment period:

Beneficiaries who switch from a Medicare Advantage plan to Original Medicare are eligible to purchase Prescription Drug Plan (Part D) coverage.

It is important to note; beneficiaries who have Original Medicare and Part D coverage cannot use this enrollment period to change their coverage.  This Enrollment period is exclusively for Medicare Advantage enrollees.

Another important thing to understand is; if you want to change from a Medicare Advantage plan to Original Medicare during this time, you may not have guaranteed issue rights for Medicare Supplement coverage. This depends on the state you reside in (there are only 4 guaranteed issue states) or how long you have had a Medicare Advantage plan.

Learn more about Medicare Supplement plan guaranteed-issue rights.

Most beneficiaries make plan changes during the AEP that runs from Oct 14 through Dec 7 each year.  It is the best time to change plans.  If you change during this time and you are not happy the MAOEP gives you a chance to change back or to another plan.  If you wait until the MAOEP, you cannot change plans again until the following AEP.

It is important to consider all your options carefully.  A licensed insurance agent can help you see all your options side by side and make an informed decision.

Keep in mind; making a plan change during AEP and having your new plan start in January is really the best way to keep your annual out-of-pocket cost down.  If you start the year with one plan and then change plans a few months later, you will have to start over with a new deductible and out-of-pocket maximum.

Watch some of our free training videos on YouTube

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Does Medicare pay for assisted living

Many people have asked the question; does Medicare pay for assisted living.  The answer to this question differs depending on the type of Medicare coverage you have.

Original Medicare:

Medicare A & B (Original Medicare) does not cover the costs of assisted living.  Because assisted living is not considered medically necessary, it is not covered by either Part A or Part B.  Although, Medicare will provide coverage for approved short-term stays in skilled nursing facilities after inpatient hospital stays. Once the patient has reached 20 days in skilled nursing, there is a $200 a day coinsurance charge.  After 100 days, the beneficiary is responsible for 100% of the cost.

Original Medicare does cover some home health care services as well as hospice care.  Although Original Medicare does not cover assisted living, it does cover all approved medically necessary services under Parts A and B.  This includes hospital stays, medical procedures, screenings and visits to the doctor.

Medicare supplement plans:

Medicare supplement plans are used with Original Medicare. In general, they help cover the deductibles, co-pays and co-insurance that remain after Original Medicare pays its portion. It is in place to supplement Original Medicare.  Therefore, it does not cover assisted living or long-term-care.

Medicare Advantage Plans:

Medicare Advantage plans provide the same coverage as Original Medicare, Parts A and B.  MAPD plans are offered through private health insurance companies.  Most of these plans include prescription drug coverage as well as additional benefits.

Medicare Advantage plans do not cover assisted living costs. However, there are some plans that cover specific services that are similar to assisted living facilities.  These services may include providing coverage for assistance with the activities of daily living, such as transportation to doctors’ appointments and even meal delivery.

Assisted living coverage for dementia patients:

People who have dementia, are eligible for help from Medicare to pay for hospital stays, home health care, skilled nursing home care, hospice care, cognitive assessments and necessary medications. Some eligible patients with Alzheimer’s and dementia may receive payment assistance for care planning. Original Medicare does not provide payment for dementia care however, both Medigap and Medicaid may provide help paying for it.

Ways to pay for assisted living:

The cost of assisted living varies greatly depending on where you live and what the facility provides as well as what each individual requires in terms of care.

1.  One of the best ways to pay for assisted living is through a long-term care policy.  Unfortunately, by the time most people think about it, they are older may not be easily affordable for most individuals. If you are fortunate enough to purchase it while you are young enough that the prices are reasonable, there are many options to choose from.  Look carefully at all the rules and conditions before choosing a policy.
2.  Some people have the foresight to put a large sum aside for such instances.  You may have access to funds from savings, pensions of other sources.
3. Many states provide Medicaid waiver programs that can help pay for medication management, on site therapy or support services in a residential setting.  Medicaid does not pay for the cost of room and board.
4. Eligible veterans may receive assisted living benefits through their local VA.  This benefit may also be available to veterans through some approved non-VA facilities.
5. One more option is through funds obtained through a reverse mortgage.  Unfortunately, if you stay in an assisted living facility for over a year and your home is vacant, the reverse mortgage has to be paid back, this is often done by selling your home.  It is best to speak with a qualified financial counselor before taking this step.