Part D 2025

Major changes and market disruption ahead.

Yesterday I attended a very informative webinar on the upcoming impact of the Inflation Reduction Act of 2022 (IRA) (P.L. 117-169), signed into law on August 16, 2022, on Medicare Part D plans structure.

What is Part D going to look like in 2025?

• Will still be initial deductible phase
• No More Donut or Catastrophic
• Then 25% in form of copays
• Capped at $2,000 out of pocket yes this includes the deductible
• Does not apply to Part B prescriptions
• Clients will have the option to enroll in a monthly payment plan to

cover drug costs (does not include premiums) Carriers will

administer this.

More changes.....

• Medicare will pay a much smaller share toward the cost in

catastrophic phase

• Medicare will go from paying 80% of the cost to 20% for brand
• 80% down to 40% for generic (CMS is not paying nor is the client so that onus is on the carriers)

Annual deductible

• The enrollee pays 100% of their gross covered prescription

drug costs until the deductible of $590 for CY 2025 is met.

Initial coverage

• The enrollee pays 25% coinsurance for covered Part D

drugs. The sponsor typically pays 65% of the cost of

applicable drugs and 75% of the cost of all other covered

Part D drugs. The manufacturer, through the Discount

Program, typically covers 10% of the cost of applicable

drugs. This phase ends when the enrollee has reached

the annual OOP threshold of $2,000 for CY 2025.

Catastrophic

• The enrollee pays no cost sharing for covered Part D drugs.

Sponsors typically pay 60% of the costs of all covered Part D

drugs. The manufacturer pays a discount, typically equal to

20%, for applicable drugs.

• CMS pays a reinsurance subsidy equal to 20% of the costs of

applicable drugs and equivalent to 40% of the costs of all

other covered Part D drugs that are not applicable drugs.

Premiums

• Will be a cap on base premium increase of 6% a year but

not on any supplemental premium costs.

• Meaning carriers can increase the premiums on their non

base plans beyond that 6% only the base plan can not be

increased more than the 6%

• Expect carriers to increase premiums and makeup for

losses with medical benefits as well as extra benefits on the

advantage plans.

Carriers Medicare Advantage Plans

• Will have same increase in the Part D portion of Advantage plans
• Little chance they will make up the cost with the drug portion of

the plan only

• Extra benefits (dental, vision, OTC, etc..)
• Medical benefits
• Marketing dollars (going away which will impact or remove the "free" Medicare system you might be using currently)
• All will likely be impacted substantially
• Hopefully, it does not trickle down to commissions
• CMS sets the max allowable, but the carriers do not have to

pay the max

Conclusions

• The 2K cap will be tremendously helpful to those on expensive name

brand medications

• It will be harmful to everyone else however
• What percentage of people on Part D take name brand drugs?
• Answer is....8% (small number of people benefiting from this the rest

will have to pay for them)

• 2023 Kaiser poll (now called KFF)
• The 10 top selling drugs account for almost 30% of spending

Conclusions

? The 2K cap will be tremendously helpful to those on expensive name

brand medications

? It will be harmful to everyone else however

? What percentage of people on Part D take name brand drugs?

? Answer is....8% (small number of people benefiting from this the rest

will have to pay for them)

? 2023 Kaiser poll (now called KFF)

? The 10 top selling drugs account for almost 30% of spending

Source: 5/29/2024 Pinnacle Financial Services Inc. webinar titled "2025 Medicare Part D Changes"