Medicare - A Good Deal That Just Got Better For Me And Perhaps For Employers and Employees

For many employees aged 65+, Medicare is a better alternative when compared to the group health plan both in terms of total cost and coverage. Well, a good deal just got better, primarily in regard to pharmacy costs.

The Medicare pharmacy benefit design is developed by the Centers for Medicare and Medicare Services (CMS). Until now, this design featured four stages of coverage (annual deductible, initial coverage, coverage gap, catastrophic coverage) with a maximum payment by members of $8,000 per calendar year. However, starting on January 1, 2025, there are now only three stages. The coverage gap stage (otherwise known as the "Donut Hole"), in which the consumer pays a substantial co-insurance, is now gone. And the maximum payment by consumers drops from $8,000 to $2,000.

With these positive changes to the benefit design, I had expected my Medicare PDP (Prescription Drug Plan) premiums and co-pays to increase. Although I am another year older, my co-pays for 2025 will be about the same as they are in 2024. And my premiums decreased by 19%.

A note of caution - the above paragraph is my personal experience with a PDP plan and may not be true for other Medicare recipients. Check to make sure that your medications are still on a given carrier's formulary and make sure that your pharmacy of choice is preferred in-network or standard in-network. That could change in 2025.

At a time when employers are grappling with healthcare costs that are expected to be 7 - 9% higher in 2025, Medicare is making changes to improve coverage and the cost of that coverage. Good news for aged 65+ employees and for the organizations that employ them. Medicare for Employers - Shift Costs to Medicare, Not Employees.