09/09/2024
There is a change to Medicare prescription plans (Part D) coming for 2025 that you should know about.
Prior to 2025, generally, people over age 65 who had group health insurance and were not on Medicare Parts B (medical) and D (prescription), had what has been called creditable coverage; coverage comparable to or more comprehensive than Medicare’s coverage. As a result of the year 3 phase-in of the Inflation Reduction Act of 2022, which will take effect on January 1, 2025, the level of Medicare prescription coverage will be increasing to a level that many group health plans will not equal, thus leaving subscribers with coverage that is not creditable. Here are the details.
Prior to 2025, Medicare Part D subscribers had no cap on out-of-pocket expenses for prescriptions. In other words, many Medicare Part D subscribers spent $8,000, $10,000, or even more for their prescriptions each year. Most group health insurance coverage had lower maximum out-of-pocket limits rendering those group plans creditable.
Beginning on January 1, 2025, all Medicare Part D prescription plans will have a maximum out-of-pocket of $2,000 (which will be adjusted for inflation from year to year). Because of that new, lower max out-of-pocket, many group health insurance prescription plans will be below the Medicare level and will render those plans not creditable.
The fix for this will be for those individuals who are over age 65 and who are still covered by a group health insurance plan to add a Medicare Part D prescription plan. They will not be required to actually use the Part D plan, just to have one. If they do not purchase a Part D plan, later, when they lose their group health insurance or just want to purchase a Part D plan, they will be subject to a penalty assessed by Medicare.
People who are over age 65 and who still have group health insurance coverage should watch for a letter either from their employer or from their health insurance carrier this fall to see if their prescription coverage is creditable. There is no similar change for Medicare Part B.
