This content is sponsored by Astellas Pharma.
Two major changes to Medicare Part D are in effect for 2025 to help seniors manage their prescription drug expenses. Following action from Congress, Medicare Part D Plans now must cap enrollees’ out-of-pocket spending on covered prescription drugs at $2,000 a year. Part D beneficiaries also can spread or smooth their drug costs over a calendar year.
A panel of experts assembled by WTOP and Federal News Network and sponsored by Astellas Pharma discussed the many implications of these new benefits.
Several advocacy groups have developed educational tools to help people stay informed about these updates. Adina Lasser, director of public policy and government affairs with the Alliance for Aging Research, said advocacy groups are trying to make sure people know about critical changes that can affect their health care. Her organization compiled a short video to explain the new facets.
Key Enhancements to Medicare Part D
Capping Out-of-Pocket Costs: All beneficiaries enrolled in Medicare Part D or Medicare Advantage prescription drug plans now pay no more than $ 2,000 per year out of pocket for their medications, including copays and coinsurance.
“Smoothing” Costs Throughout the Year: Beneficiaries also have the option to enroll in the Medicare Prescription Payment Plan, which allows them to spread their annual medication costs into monthly installments. Enrollment is not automatic – beneficiaries must choose to opt in. They can do so at any time in the year by contacting their prescription drug plan.
For more information, check out these resources from the Centers for Medicare & Medicaid Services, the Alliance for Aging Research, and the National Health Council.
As patient advocacy groups work with the government to help spread the word, Lasser noted older adults aren’t the only ones who need to keep pace with the details. Those who take care of parents and grandparents should know about out-of-pocket prescription drug costs, too. “It’s a complex system,” Lasser said. “Wherever we can find inroads to make that easier, I think, it’s important.”
The National Health Council also added resources on its website to help people navigate the changes, said Jennifer Dexter, vice president of policy with the National Health Council. Toni Gingerelli, policy and advocacy director for the National Alliance for Caregiving (NAC), emphasized the importance of such resources for caregivers as they plan and budgets more effectively to avoid upfront financial shocks.
“It’s important to review the plan every year because plans can change,” said Julia Schreiber, program director for the Maryland State Health Insurance Assistance Program. She suggested that, as the year moves forward, people think not only about their medications but also where they are going to get their medications. That’s particularly important as the new option for monthly payments is available for beneficiaries to take advantage of outside the annual period of open enrollment.
Medicare drug cost cap will impact millions
In 2021, at least 4 million people paid more than $2,000 each for prescription drugs, Lasser said. The average was close to $3,300.That makes this new cap “really pretty life changing.” Dexter said. She and others expect it will significantly impact peoples’ lives. “What’s really nice about that is you don’t have to enroll,” Lasser said. “You honestly never really have to think about it. It’s just when you hit that $2,000 threshold, your expenses will end for the year.”
Added Gingerelli: “We always say at the National Alliance for Caregiving that caregiving hits you at moments when you least expect it. So it’s really important that people are aware of the changes that are happening.”
Another major change? The Medicare Prescription Payment Plan lets people spread out their costs, an option commonly referred to as “smoothing.” “What it does is it allows you to spread out your costs evenly every month over the course of the year,” Lasser said. “You can enroll any time throughout the year. But if you enroll in July, you can only spread your costs over six months versus January — 12 months.” For that reason, Lasser and others recommended enrolling in the Medicare Prescription Payment Plan early in the year. To enroll, beneficiaries must contact their Medicare Part D plan because it is not possible to sign up at the pharmacy counter. Experts suggest people enroll at least 24 hours before picking up their first prescription from the pharmacy.
Consider your “smoothing” options
Dexter encouraged people to review their financial situation when considering whether to use the smoothing plan. Online tools can help estimate medication costs throughout the year, allowing beneficiaries and their caretakers to “anticipate what those costs might be month to month — and see if it will benefit you.”
Financial planning is one of the first things that caregivers take on with a loved one, “so having more resources for caregivers, like the smoothing process — to be able to plan budgets more effectively and avoid upfront financial shocks — is really crucial,” Gingerelli said. “We want to make sure that people have the opportunity to opt in” to the Medicare Prescription Payment Plan, she added. Gingerelli also noted that the plan is “a great step forward to making sure that caregivers improve [people’s] medication adherence.”
Healthcare advocates for years have pointed out that many people don’t take their medication — or don’t take it as prescribed — because they feel they can’t afford the expense. Dexter reiterated that it is important to get the word out about payment options because there will be people who have trouble affording the $2,000 before the cap kicks in.
All the panelists said they are optimistic about the latest changes and believe they will make major differences in Americans’ health care. “These are things that we have fought for years and years to make happen, so to see them really happening and to be in this moment is significant,” Dexter said.
More information about the Medicare Prescription Payment Plan is available on the Centers for Medicare and Medicaid Services’ website. Check out additional resources on the Alliance for Aging Research website and NHC’s website.
