A dozen or so women sit around a U-shaped table inside Care Connections for Aging Services, the local Area Agency on Aging in the west central part of Missouri.
They’re all here to listen to Scott Miniea from the Missouri State Health Insurance Assistance Program, or MO SHIP, and to learn about the new changes to Medicare that will be taking effect in 2025.
“Then that out-of-pocket cap — that’s our donut hole,” Miniea said. “So, we have no donut holes on the back table because we don’t have donut holes anymore in 2025.”
The so-called “donut hole” that Miniea is referring to is the gap in coverage that used to exist for Medicare beneficiaries with prescription drug coverage. Essentially, there was a gap between what insurance companies agreed to cover at the start of coverage and where catastrophic coverage began.
For years, this gap led to people spending thousands of dollars of their own money on medication or choosing to go without.
According to the Commonwealth Fund, a private foundation that advocates for affordable healthcare, 14% of U.S. seniors on Medicare in 2022 reported either not filling a prescription because of costs or skipping a dose.
But beginning on Jan. 1, 2025, there will be a $2,000 cap on what Medicare beneficiaries will have to pay out-of-pocket on prescriptions.
The cap comes into effect after a beneficiary meets their deductible — the highest deductible for any of this year’s plan offerings is $590 — and the $2,000 limit only includes in-network and approved care.
Prescriptions at an out-of-network pharmacy or those an insurance company denies won’t be included, and some people could still end up paying more.
“Sometimes going across the street to this other pharmacy can save you thousands of dollars because they’re in-network, or they’re a preferred pharmacy, or your medications at that pharmacy are part of that plan,” Miniea said.
There’s also a new voluntary payment plan option available in 2025, called the Medicare Prescription Payment Plan, where prescription drug costs can be spread throughout the year.
Miniea said this can be helpful because beneficiaries often have larger out-of-pocket payments due earlier in the plan year because they have not yet reached their deductible.
“Kind of like a utility payment plan would be and then they can use that for budgeting,” Miniea said. “So, ultimately, they pay the same amount. It’s just a difference in the way that they have to pay it or the deadlines for payment.”
So instead of paying potentially $2,000 in January, beneficiaries could pay about $170 a month.
Leigh Purvis is the prescription drug policy principal at AARP, which means she’s in charge of the AARP’s policy positions on prescription drugs. She said these changes are a continuation of the improvements to Medicare Part D under the Inflation Reduction Act.
In the past few years, other changes to Medicare Part D have been implemented, such as access to free recommended vaccinations and a $35 cap on monthly insulin costs.
“Just a lot of really important changes that will help reduce out-of-pocket costs for people who were facing some very high out-of-pocket costs for a long time,” Purvis said.
There have been some concerns from beneficiaries that these new measures that will save them money now may end up creating consequences in the future. Those could include fewer medications being covered, higher deductibles and premiums or even a reduction in the number of available plans.
Purvis said she understands these concerns, but she believes that while the market may have some short-term volatility, in the long term things will settle down.
“We’ve taken a look at the long-term projections for what’s going to happen as this law is implemented,” Purvis said. “And what we’re seeing long term is that overall, these changes are going to result in billions of dollars of savings, and that ultimately will come down and help provide savings for the beneficiaries.”
Purvis added that the most important thing a Medicare beneficiary can do, especially as the market adjusts to these new changes, is check their options and ensure that their existing plan still meets their needs. According to the Kaiser Family Foundation, nearly 7-in-10 Medicare beneficiaries didn’t compare coverage options for 2022.
Purvis said that means they could be leaving money on the table.
In Missouri, Miniea said, people who worked with MO SHIP counselors during the 2022 open enrollment period saved on average $2,000.
He said this is because what companies choose to offer and what medications plans cover changes every year based on market factors.
This is particularly on the mind of some Missourians as Anthem Blue Cross Blue Shield and Mercy, one of the largest healthcare providers in the state, have not reached a new agreement. If an agreement is not reached, care from Mercy clinics and hospitals might not be covered by beneficiaries holding Medicare Advantage Plans with Part D coverage.
Luckily, there are some safeguards built into the Medicare system. There is a second enrollment period for those with existing Medicare Advantage plans that runs from Jan. 1 to March 31, 2024.
“That’s a time when you can switch to another Medicare Advantage plan, or you can drop your Medicare Advantage plan and return to Original Medicare and be able to join one of those separate Medicare drug plans,” Purvis said. “If someone does find themselves in that situation, they do have another opportunity to enroll in a different plan.”
Miniea said he and his team have been traveling across the state the last few weeks — from Kirksville to Jefferson City to Cape Girardeau — and are making sure the 200 or so MO SHIP counselors are trained on the new changes.
He said these counselors are often staff at local resource agencies for seniors or volunteers, and while the reported satisfaction rate of people working with the counselors is more than 98%, there are just not enough of them.
“Demand is vastly outstripping our ability to meet what we would call a reasonable turnaround time,” Miniea said. “We’re getting more calls, and we’re not necessarily having equal resources to meet that need.”
And hiring additional counselors isn’t really an option. MO SHIP is federally funded, and the funding is administered through the Missouri Department of Commerce & Insurance. Miniea said the total budget related to MO SHIP work is nearly $1.8 million, which breaks down to about $1.41 to spend on each of the nearly 1.3 million Missourians eligible for Medicare.
MO SHIP assistance is only one of the options available to seniors. They could explore plans on their own or go through an insurance broker, but Miniea said he recommends their help because MO SHIP is free, and counselors don’t make extra money by recommending one plan over another.
“We’re not an instantaneous phone call away, but we do have a structure for how we go about assigning referrals out to our counselors, and those counselors are also not insurance agents,” Miniea said. “They’re not people selling anything. They are people who have agreed to adhere to the rules that the SHIPS follow.”
Medicare open enrollment for Part D plans and Medicare Advantage with prescription drugs coverage runs from Oct. 15 to Dec. 7.
