Here’s a topline look at what it does and potential next steps for organizations
The Inflation Reduction Act of 2022 was signed into law in August of that year. It includes a section that modifies the Medicare Part D plan by expanding benefits and lowering drug costs with an aim to improve the sustainability of Medicare. These are among the most significant changes to the Part D program ever enacted.
Starting in 2025, the law requires all Medicare prescription drug plans (Part D), including stand-alone plans and Medicare Advantage plans with prescription drug coverage, to offer Part D enrollees an option to pay out-of-pocket prescription drug costs in monthly installments rather than all at once at the time of purchase.
It’s called the Medicare Prescription Payment Plan, and it is intended to especially help people with high cost-sharing earlier in the plan year by spreading expenses over the entire plan year. It’s available to everyone with Part D coverage but may not benefit every enrollee. That’s why it’s recommended that benefits managers work closely with their insurance broker to make sure they’re appropriately maximizing the benefits from the new law.
Here’s an overview of how the new program works, per the details of the new law:
The payment plan (also referred to as “copay smoothing” or “M3P”) may not be the most effective option for members unless their average monthly Part D costs are greater than $167. (That said, the plan is still an option for all Part D members).
Out-of-pocket maximums on prescription drug costs will go down from $8,000 a year to $2,000.
Part D members will have the option to pay prescription costs in monthly installments.
All Part D members are eligible to opt into the program as of 1/1/2025 regardless of low- income status and/or prior challenges with premium payments.
Those opting in will pay $0 at point of purchase and the financed member cost share immediately will contribute to Part D accumulators.
Pharmacy reimbursement doesn’t change. Pharmacies will be paid in full, and the plan sponsor funds the member cost share.
What else will the new law mean for 2025?
In 2024, the new law eliminated member cost share within the catastrophic phase, expanded low-income subsidies to provide full benefits for members up to 150% of the federal poverty level, and limited annual Part D premium increases to 6%.
In 2025 the new law will also provide that:
- Government Reinsurance in catastrophic phase will be reduced from 80% to 20%
- Manufacturers will pay 10% rebate on prescriptions in the coverage period and 20% during the catastrophic phase
It is unclear how insurance carriers will respond to the new law regarding pricing or how this will affect high deductible plans. Again, it is recommended to consult with your insurance broker to better understand the law and its potential ramifications so you can take a more strategic approach to designing your health plans.
Learn More at a Medicare 101 Education Session
Shannon Vogel, Benefits & Medicare Advisor will take you through the basics of Medicare, enrollment time frames, and some of the coverage options available. This educational session is provided at no cost to attendees.
Please note:
We do not offer every plan available in your area. Currently we represent multiple organizations which offer numerous products in your area. Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Program (SHIP) to get information on all of your options.
Marsh McLennan Agency North Dakota is part of the largest insurance brokerage organization in North America with 200 offices serving companies of all sizes in multiple industries. MMA provides business insurance, employee health & benefits, retirement, and private client insurance solutions.
If you are:
A business leader or HR professional with employees nearing retirement age
Nearing your 65th birthday or have a loved one approaching age 65
Wondering about your Medicare eligibility and what your options are
Overwhelmed with all the information regarding Medicare
Then Medicare 101 is for you.
Medicare 101 Webinars
- October 30 at 12:00pm (CT)
- November 2 at 10:30am (CT)
- November 13 at 6:30pm (CT)
To learn more about how to get the most benefit from the new Plan D law, please reach out to the local MMA team to set up a meeting.