The Inflation Reduction Act brings big changes to Medicare plans starting January 2025. Knowledge is key.

Ninety percent of Medicare beneficiaries with prescription drug plans and Medicare Advantage plans will be affected. There is both good news and disruptive news. First, the good news:

Starting in 2025, prescription medication costs will be capped at $2,000. Additionally, vaccines recommended by the Centers for Disease Control will be free to patients, and covered insulin costs will be capped at $35 per month. A new program called “Smoothing” offers Medicare beneficiaries the ability to spread out payments on expensive medications throughout the year. Also, the most expensive phase of Medicare prescription drug coverage, otherwise known as the “donut hole,” goes away.

Here’s the disruptive news:

Prescription drug plans may see increases in premium and higher deductibles. And Medicare Advantage plans may see increases in copays, coinsurances, provider network changes, formularies and deductibles. Plans that had $0 premium in 2024 may have a premium in 2025.

These changes might cause confusion for Medicare beneficiaries, so here are some helpful tips:

Read your Annual Notice of Change carefully. The ANOC is mailed to beneficiaries in late September – in advance of the annual election period, which runs from Oct. 15 to Dec. 7.  The ANOC informs beneficiaries of changes in their plan in the new year. Medicare beneficiaries should be vigilant in reading this notice; it is estimated that 90% of Medicare beneficiaries will receive a “negative ANOC,” which means your plan will be changing coverage and benefits in a negative way.

Although it has nothing to do with the Inflation Reduction Act, Medicare Supplement/Medigap policyholders will also be receiving a notice of monthly premium price increases estimated to be 12%-18%.

Important things to consider

Most Medicare beneficiaries either have a Medicare Advantage plan or a Medigap plan, plus a stand-alone prescription drug plan. Based on what you have, here’s what you should consider:

Medicare Advantage plan beneficiaries should check:

1. Are your doctors and medical facilities still in network?

2. Are your medications in the plan formulary?

3. Have you been happy with your current plan?

Once beneficiaries have reviewed the ANOC, confirmed medications and doctors are in formulary and network, and have been happy with their current insurance carrier – consider the old adage: If it isn’t broke, don’t fix it. Their plan will automatically roll over – they don’t have to do anything.

Medigap policyholders with a stand-alone prescription drug plan should ask themselves:

1. Can I afford the premium increase in my Medigap policy?

2. Are my prescriptions in formulary in my current plan?

Medigap policyholders concerned about the affordability of rising premiums may consider:

1. Switching to a Medicare Advantage plan, which can be done during the annual enrollment period.

2. Switching from a Medigap Plan F or G to a Medigap Plan N. (Switching Medigap plans can take place anytime.)

I cannot emphasize this enough, but for stand-alone prescription drug plan members, switching prescription drug plans can only be done during the annual enrollment period. So make sure you read your ANOC carefully.

Change isn’t easy, but there’s no reason to panic. Be wary of 1-800 phone lines, email solicitations and internet ads. It costs nothing to have a trusted, local insurance agent.

Karen Vachon, owner of The Vachon Agency in Cape Elizabeth, is a licensed insurance agent specializing in Medicare insurance. She is not affiliated with or endorsed by Medicare or any government agency.