Essential Medicare Updates You Need to Know for 2025
Anne Holmes hosts Pam Sams, a trusted financial advisor, to discuss the key points about Medicare, enrollment, updates for 2025, and factors to consider when reviewing coverage. Pam Sams aims to provide Clarity on Medicare’s complex system, changes, and strategic advice to avoid common mistakes.
Introduction to Medicare
Pam Sams begins by explaining the basics of Medicare:
- Medicare is a federal health insurance program primarily for individuals aged 65 or older, and some younger individuals with disabilities.
- Medicare Open Enrollment runs from October 15 to December 7 each year. This period allows beneficiaries to select a new Medicare Advantage plan, update their Part D prescription drug plan, or switch between Original Medicare and Medicare Advantage. Changes made during this period become effective on January 1 of the following year.
Medicare Parts Explained
- Part A (Hospital Insurance): Covers inpatient hospital care, Hospice care, and some home healthcare services. It is typically premium-free as it’s funded through payroll taxes, but deductibles apply.
- Part B (Medical Insurance): Covers doctor visits, outpatient care, medical equipment, and ambulance services. This part has a premium that varies based on the individual’s income.
- Part D (Prescription Drug Coverage): Helps cover the cost of prescription medications. This part has a separate premium, determined by private insurance companies.
- Part C (Medicare Advantage): An alternative to Original Medicare offered by private insurance companies. These plans combine Part A, Part B, and often Part D, along with additional benefits like vision, hearing, and dental care.
Medicare Supplement (Medigap) Plans
Pam elaborates on Medicare Supplement plans, which cover costs not paid by Original Medicare, like co-insurance and deductibles. These plans vary by state and are regulated at the state level, and premiums depend on factors like age and location. Importantly, one cannot have both a Medicare Advantage plan and a Medigap plan simultaneously.
Choosing Between Original Medicare and Medicare Advantage
Pam highlights key factors to consider:
- Medicare Advantage is suitable for those comfortable with provider networks, lower premiums, and added benefits like vision and dental.
- Original Medicare with Medigap might be better for those wanting broader access to healthcare providers, especially those who frequently require medical services.
Changes for 2025
- Elimination of the Donut Hole: The infamous coverage gap in Part D prescription drug plans, known as the “donut hole,” will be eliminated. Beneficiaries won’t spend more than $2,000 on drug co-pays and co-insurance.
- Flexible Payment Options for Drugs: Beneficiaries can now opt to spread their drug payments over a period, which will help manage high-cost medications.
- Increased Access to Mental Health Services: Medicare is expanding the list of mental health professionals who can enroll as Medicare providers, improving access to these services.
- Notices for Unused Benefits: Medicare Advantage plans will issue mid-year notices to remind beneficiaries of unused benefits like vision and dental, encouraging them to take full advantage of their plans.
Important Enrollment Dates and Penalties
Pam emphasizes the importance of enrolling during the correct time frames:
- Initial Enrollment Period: Seven months around an individual’s 65th birthday (three months before and after, plus the birth month).
- Annual Enrollment Period: October 15 to December 7, where changes to plans can be made.
- Penalties: Not enrolling in Part B or Part D when eligible could result in permanent financial penalties.
Appeals for Higher Income Premium Adjustments (IRMAA)
Pam explains how Medicare premiums for Part B and D can be higher based on income. She advises appealing this if the higher income was due to a one-time event like selling a home.
Reviewing Medicare Plans
Pam advises beneficiaries to review their Medicare plans and formularies each year. Plans may change what drugs they cover, and failing to review this could result in costly surprises in January. She stresses not ignoring notifications from Medicare or insurance providers, even if the information is online.
