Inflation Reduction Act Be Prepared This AEP

As Medicare agents, it seems like we are getting accustomed to CMS making new rule changes, and this year is no different. The Inflation Reduction Act enacted in 2022 will have a major impact on this AEP. We anticipate that we will see Medicare Advantage plans change, reduce their service areas, and start trimming back some of their extra benefits that have become so inflated over the last few years. We will also see major changes to the Part D plans as well as the Inflation Reduction Act, which will have some major implications for 2025 plans.  The good news is that you have us in your corner and are here to help you navigate this turbulent AEP.

Let’s look at the CMS Final Rule for 2024; as of now, carriers and marketing organizations are still reviewing the language in the CMS Final Rule and will likely make any official announcements later that sooner. I hope that the 2025 AHIP testing will have all the updated information as certification gets underway here in the next few weeks.

Now, in looking at the Inflation Reduction Act, here is what we know so far:

The Inflation Reduction Act (IRA) was signed into law by President Biden in 2022. 2025 is going to be the first plan year in which these major changes will become effective. These changes are designed to lower overall costs, stabilize premiums, and enhance plan benefits.

Below are some of the key changes for the 2025 plan year:

• There will be a $2000 annual out-of-pocket maximum on prescription drugs. During the catastrophic phase, you will no longer have to pay cost-sharing.

• In addition to the annual cap, Medicare beneficiaries will have the option of “smoothing” their Part D out-of-pocket costs starting January 1, 2025. Under the law, each Part D plan sponsor shall provide to any plan enrollee the option to elect to pay their cost-sharing in monthly amounts that are capped based on a maximum monthly cap determined for each month they are enrolled in the smoothing program.

• Consumers will continue to pay only $35 for a monthly supply of covered insulins (make sure their insulin is on their plan formulary)

• Expands the Low-Income Subsidy, also referred to as LIS, to 150% of the Federal Poverty Level

This is just an overview of some of the major changes that will affect how you do business with this AEP. HHS also released a report in 2023 projecting that nearly 19 million seniors will save approximately $400 per year on prescription drug costs when the $2,000 out-of-pocket prescription drug spending cap from the Inflation Reduction Act. This sounds good, but what is the catch? Here are some anticipated changes you can also expect:

• Carriers are getting squeezed due to lower reimbursement rates and increasing medical costs.

• MAPD plans may see a significant reduction in the “extra benefits” we have been accustomed to providing our clients over the past few years.

• Carriers may drop plans or plan areas altogether and may see a reduction in networks as well.

What could we see when looking at the Part D plans? Here is what I think we might see:

• We could see PDP plans merge into higher-premium plans since premium increases are capped at 6% per year.

• Creation of new PDP plans with an initial higher premium.

• See lower premium plans become non-commissionable.

 We will have to wait and see what the MAPD and PDP market looks like when the first looks are released over the next few months. Producers XL will continue to monitor new developments and will update you when anything new comes along. Please keep an eye on our Medicare Toolbox for the latest information on the 2025 plans.

 Please reach out to me if you have any questions regarding this upcoming AEP, the CMS Final Rule, or the Inflation Reduction Act. We would love the opportunity to work with you and help expand your Medicare business during these ever-changing times. Now is the time to develop your plan for the upcoming AEP season. We can help you with ideas for marketing, technology systems, and staying CMS-compliant. Remember, we are here to help!

Rick Roberts

Medicare Marketing Manager

800-541-6705

rick.roberts@producersxl.com