ROSIE’S DEEP DIVE INTO 2025 DRUG PLAN CHANGES
To fully appreciate the 2025 Changes to Medicare Prescription Drug Plan Coverage let's review prescription drug plan coverage as it is currently structured.
In the year 2024 - There are 4 payment stages in a Medicare Prescription Drug Plan. It doesn't matter if the drug coverage is provided in a standalone drug plan or a drug plan rolled into a Medicare Advantage plan. The drug plans are structured the same way.
Stage 1 - The Deductible Payment Stage
The maximum deductible in 2024 is $545.
In Arizona, many of the standalone drug plans apply the deductible only to Tiers 3 - 5. Other plans apply the deductible to all stages. Some plans offer a lower deductible amount than the maximum allowed.
In 2024 in Pima County, most Medicare Advantage plans that offer drug coverage do not have a Deductible Payment Stage.
Stage 2 - The Initial Payment Stage
In 2024, while in the Initial Payment Stage the member pays plan copays until and unless the retail cost of all their medications reaches $5,030. The retail cost is the price the plan has negotiated with the pharmacy NOT the copay the member pays.
Although the member may have only paid $47 for a 30-day supply of a drug that retails for $1,000, they will find themselves in the coverage gap after 5 months because the total retail cost of all their medications reached $5,030.
Stage 3 - Coverage Gap aka the “Donut Hole”
In 2024, when the retail cost of medications adds up to $5,030 the member falls into the coverage gap and must pay 25% of the retail cost of all their medications until and unless the annual TRUE OUT OF POCKET AMOUNT (TROOP) adds up to $8,000.
Because of the way TROOP is calculated in 2024, a member's share of that $8,000 TROOP is approximately $3,300.
In 2024, the TROOP is calculated by adding together the total of what the member pays and the plan pays and the manufacturer pays and any other entity pays towards the cost of medications during the calendar year. The plan premium is not included in the calculation.
If the TROOP amount of $8,000 (2024 figure) is met, the member enters the Catastrophic Payment Stage.
Stage 4 - Catastrophic Payment Stage
Prior to 2024 members in the Catastrophic Payment Stage paid either 5% of the retail cost of their drugs or Extra Help copays in effect for that year (approximately $4 for generics or $11 for brand name drugs). The member would pay the greater amount of the two.
As part of the Inflation Reduction Act of 2022, there are zero copays due in the catastrophic stage in the year 2024 and 2025.
2025 MEDICARE PRESCRIPTON DRUG CHANGES
Courtesy of the Inflation Reduction Act
EFFECTIVE JANUARY 1, 2025
The Annual True Out-of-Pocket Expense (TROOP) is Capped at $2,000
You will not pay more than $2,000 prescription drugs copays in 2025.
THE WAY THE TROOP IS CALCULATED IN 2025 YOU MAY REACH THE TROOP
& STOP PAYING COPAYS BEFORE YOU SPEND $2,000.
In 2025 the TROOP is calculated as follows The copay or 25% of the retail cost of the medication (whichever is greater) will be credited towards the annual TROOP amount. For example:
Let's assume you only take one drug. It's a Tier 3 drug with a $47 copay and a retail cost of $1,000.
25% of the $1,000 retail cost is $250. $250 is greater than the $47 copay. So...
$250 will be credited to the TROOP every month.
When your TROOP hits $2,000 in August ($250 x 8 months) zero copays for the rest of the year even though you only paid $376 in copays ($47 x 8 months).
Caution: This example doesn't take into consideration the maximum annual deductible in 2025 ($590).
Your drug plan may offer a lower annual deductible and the deductible may only apply to Tier 3-5 drugs.
Remember: A deductible is what the member pays before the plan starts to pay. The deductible is credited towards the TROOP and
THE WAY THE TROOP IS CALCULATED IN 2025 YOU MAY REACH THE TROOP AND STOP PAYING COPAYS BEFORE YOU SPEND $2,000.
EFFECTIVE January 2025
No Coverage Gap/ “Donut Hole” on Medicare Prescription Drug Plans
In the new plan design, members will meet the deductible if there is one and pay applicable copays or coinsurance in the Initial Payment Stage until and unless the $2,000 TROOP is met when they slide right into the Catastrophic Payment Stage.
EFFECTIVE JANUARY 2024 and continuing into 2025
Zero Copays in the Catastrophic Stage
Three payment stages in 2025 - The Deductible Payment Stage, the Initial Payment Stage & the Catastrophic Stage. Zero copays for the remainder of the year if the CATASTROPHIC STAGE is met.
EFFECTIVE January 2025
A Medicare Prescription Payment Program (M3P)
This is an opt-in program and will benefit people that typically fall into the Donut Hole early in the calendar year. The NO INTEREST payment program will help people that are taking expensive brand name medications. Members may opt into the program at any time during the year. If your current prescription drug expense makes you a suitable candidate for the payment program, your current health insurance plan will send you a notice about the payment program in October of this year.
The program will not lower the cost of your medications but it will spread out the cost.
[If you think the way TROOP is calculated is mind blowing wait to see how M3P calculates payments.]
EFFECTIVE January 2025
Insulin Copays Continue to be Capped at $35 per Insulin per 30-day Supply
Only the copay will be credited towards the Troop not 25% of the retail cost of the insulin.
EFFECTIVE JANUARY 2026
MEDICARE DRUG PRICE NEGOTIATION
Medicare has successfully negotiated the cost of 10 prescription drugs and will continue to negotiate the price of selected drugs every year. We are told Medicare recipients will begin to enjoy the results of those negotiations in 2026 and every year thereafter. This FACT SHEET dated August 2024 lists the first batch of drugs and the anticipated costs for those drugs in 2026.
