Comparing Plans is Especially Important This Open Enrollment Season Due to Changes in Part D Protections and New Options

Key components of the Inflation Reduction Act’s Part D reforms will be fully implemented for plans offered in 2025. These changes, including the total elimination of the “coverage gap” coverage period, the establishment of a $2,000 cap on beneficiary out-of-pocket costs, and the creation of an optional payment plan program, together with reforms already in effect like the $35 cap on out-of-pocket costs for insulin products and the expansion of the Low Income Subsidy program (also called Extra Help), mean that it is especially important for beneficiaries to carefully compare their coverage options for next year during this year’s Medicare Open Enrollment Period. 

Medicare Open Enrollment, which runs from October 15 through December 7, is when people with Medicare can preview the Part D and Medicare Advantage plans offered in their area and choose the coverage that best suits their health and financial needs and preferences. While all Medicare Advantage plans must cover all services covered by Original Medicare, and all Part D plans must provide coverage for all medically necessary Part D drugs, the costs and structures associated with plans can vary greatly and dramatically impact beneficiary access to care and financial burden.

The marketplace for Medicare Advantage and Part D plans operates on the premise that people with Medicare will compare plans during the open enrollment period to select the best coverage for their individual needs and circumstances.

KFF notes in a recent issue brief examining beneficiary behavior during open enrollment, “coverage and costs vary widely among both Medicare Advantage plans and Part D prescription drug plans and can change from one year to the next, which could lead to unexpected and avoidable costs and disruptions in care for beneficiaries who do not review their options annually. For example, changes in Medicare Advantage provider networks could mean beneficiaries lose access to their preferred doctors, while changes in the list of covered drugs and cost-sharing requirements could result in higher out-of-pocket drug costs. Further, beneficiaries’ health care needs can change from one year to the next. Even without a change made by their plan or a change in health status, beneficiaries may be able to find a plan that better meets their individual needs or lowers their out-of-pocket costs.”

Despite the importance of careful shopping and the fact that Medicare beneficiaries in 2024 will be able to choose among, on average, 43 Medicare Advantage plans and 21 Part D stand-alone prescription drug plans, the KFF analysis finds that nearly 7 in 10 beneficiaries did not compare their current source of Medicare coverage with other options in their area in 2021. Only about half of beneficiaries even checked their current plan’s coverage for changes in the upcoming year.

The structural changes brought about by the Inflation Reduction Act, especially the establishment of the $2,000 out-of-pocket cap and the simplification of the Part D coverage phases, are critical updates to limit the unpredictable, previously limitless, out-of-pocket cost burden many beneficiaries faced in previous years. These changes also highlight the importance of considering all aspects of plan design and costs throughout the year when evaluating plan options. Premiums alone may not indicate whether a particular plan is the right fit or even the least expensive option.

Changes to Extra Help implemented last year mean more people with limited incomes and assets are eligible for premium and cost-sharing assistance. Improvements to the Plan Finder tool make it easier to see plans designed to coordinate Medicare and Medicaid for those enrolled in both programs.

Additionally, the new, optional Medicare Prescription Payment Plan (MPPP) allows people to spread their Part D out-of-pocket costs over the calendar year. The availability of this program, which will likely benefit those who expect to reach the out-of-pocket cap or who take high-cost medications for limited durations, may also impact which Medicare Advantage or Part D plan is the right choice for some beneficiaries. CMS’s Plan Finder tool can show projected month-to-month costs if the MPPP is chosen.

People who need help comparing their coverage options can contact Medicare directly by calling 1-800-MEDICARE (1-800-633-4227), utilizing the online Plan Finder tool at medicare.gov, downloading Medicare Rights’ 2024 Open Enrollment Guide, or reaching out to local assistance through a State Health Insurance Assistance Program (SHIP).