If you’re unfamiliar with or new to Medicare, let’s look at how Medicare is set up and who is eligible. Medicare is a federal health insurance program designed for people 65 or older and for people with disabilities or end-stage renal disease.

Medicare has four parts:

1. Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
2. Part B applies to outpatient services like doctor visits or preventive care.
3. Part C, Medicare Advantage, is a private health plan offered by companies. These plans provide Part A and B benefits, as well as some added benefits like prescription drug, vision, hearing, or dental coverage.
4. Part D (Prescription Drug Coverage): This part adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans.

• Most people with a work history of at least 10 years are automatically enrolled in Medicare Part A and B when they are 65.

• Premiums, paid by the individual, vary by plan and income for Part B and Part D.

• A Medicare supplement plan, also called a Medigap plan, can help offset some of the out-of-pocket expenses.

Read more about how the specific parts of Medicare works

In April 2024, the Centers for Medicare & Medicaid Services (CMS) announced the upcoming rate changes expected for Medicare Advantage (MA) and Medicare Part D Prescription Drug Plans (Part D) for Calendar Year (CY) 2025.

Let’s take a closer look at how Part D will change in 2025. In 2025, the four phases of Part D will now be condensed into three phases.

1. Annual deductible

During this phase, you’re responsible for the full price of a prescription drug. Deductible amounts change according to the plan. Some plans have no deductible. The out-of-pocket costs will be lower and capped at $2,000.

2. Initial coverage

The Coverage Gap Discount Program (CGDP) from 2024 will be phased out and replaced by the new manufacturer’s discount program. There are also new changes to the liability of enrollees, Part D sponsors, manufacturers, and CMS in the newly defined standard Part D benefit design.

Once you’ve met your deductible amount, a plan will cover some of your prescription drug costs. The length of this phase depends on your plan and drug costs.

3. Catastrophic coverage

The way catastrophic coverage works has changed every year since 2023. In 2025, the catastrophic coverage phase applies when you reach $8,000 in out-of-pocket costs for prescription drugs. There are specific costs that qualify. For instance, monthly premiums aren’t costs that count towards $8,000. Your exact out-of-pocket contribution to reach $8,000 depends on your plan’s benefit design and the mix of brand name and generic drugs you take.

4. Lower costs

With the Inflation Reduction Act, those with Part D drug plans can expect to see potentially more savings and lower costs for prescription drugs. The Final CY 2025 Part D redesign is a result of President Biden’s legislation to keep drugs costs in line.

It’s important to note that insulin is still uniquely priced at $35/month per covered prescription as it was in 2024.

CMS is required to give you enough notice about plan changes, so you have enough time to make any decisions about your healthcare plan. Each year, you should receive a formal notice via email or mail called the Annual Notice of Change (ANOC). This notice tells you specifically about your plan’s changes that will take effect next year. Medicare guidelines require the ANOC to be sent in the fall of each year. If you haven’t received this notice by the end of September, make plans to contact your plan provider.

It’s a good idea to review your plan coverage to make sure it fits your current needs. If you’re considering switching plans, you’ll have the opportunity to change plans during the Annual Enrollment Period (AEP) , which runs from October 15 until December 7.

Medicare Supplement (Medigap plans) aren’t included in any annual benefit changes, so these plans aren’t included in any notices.

CMS sets specific dates that occur each calendar year. Be aware of these key dates as you think about your own plans.

Do Medicare premiums change each year?

Yes. Premiums change each year, which is one reason why it’s important to review your current plan’s cost and coverage.

When do I become eligible for Original Medicare?

You are eligible once you turn 65. You must also be either a U.S. citizen or a legal resident for at least 5 years in a row.

What do I need to be eligible for a Medicare Advantage plan or prescription drug plan?

You must be enrolled in Part A and Part B to apply for a Part C Medicare Advantage plan or enroll in a Part D prescription drug plan.

Where do I find everything I need to know about Medicare?

The Medicare website at www.medicare.gov details everything you need to know about how Medicare works, deadlines, and the changes that happen year to year. Or you can call 1-800-633-4227 24 hours a day, 7 days a week, except some federal holidays.

Whether you have an existing plan or are new to Medicare, we can guide you through all the options and help you feel comfortable with healthcare decisions. Let’s review the key points about Medicare planning.

• You’re not alone on this journey. We have plenty of resources to help you get started or switch plans.

• Be aware of the key annual enrollment dates.

• The Centers for Medicare & Medicaid Services (CMS) detail all the changes and serve as the primary source for consumers.

• If you have a Medicare Advantage plan or Part D prescription drug plan (PDP) in 2024 and intend to enroll in the same or a different plan in 2025, it’s important to know the changes coming in the new year.

• If you have questions or concerns about your coverage, take time to visit with your primary care doctor and family to make sure you’re choosing the right coverage for your needs.

CenterWell Senior Primary Care offers a particular expertise when it comes to caring for seniors of all ages. With home health and pharmacy services, you’ll find everything you need working with our CenterWell doctors and teams. Schedule time to visit with us about your health goals and any concerns about your current coverage and medications. 

If you’re interested in reading the upcoming changes in 2025, you can find more information here.

• CY 2025 Rate Announcement - Fact Sheet and FAQ 
• The Final CY 2025 Part D Redesign Program Instructions  
• Fact Sheet: The Final CY 2025 Part D Redesign Program Instructions 

Sources: 

• Annual Notice of Change (ANOC)

• Medicare Annual Notice of Change Letter

• CMS Finalizes Payment Updates for 2025 Medicare Advantage and Medicare Part D Programs

• Phases of Part D coverage

• The Part D donut hole

• Part D Improvements

• Important Medicare Dates To Remember