Valenzano Insurance Services

Why this year’s Medicare Annual Notice of Change will be vital reading for beneficiaries

Fortune· Getty Images
Richard Eisenberg
Updated Mon, Aug 26, 20247 min read

If you’re on Medicare, you’ll be getting one or two Annual Notice of Change letters in your mail or email this September about your 2025 coverage and costs. You may be tempted to ignore what looks like junk, as nearly a third of recipients do, according to an eHealth survey.

Don’t!!!!!

“So often, a person who is quite happy with their plan and doesn’t bother to look at their Annual Notice of Change then gets a nasty surprise in January” when the plan’s new costs and coverage kick in, says Danielle Roberts, author of 10 Costly Medicare Mistakes You Can’t Afford to Make and founding partner of Boomer Benefits, which sells Medicare policies.

What is an Annual Notice of Change?
An Annual Notice of Change from your Medicare Part D prescription drug plan or a private insurer’s Medicare Advantage plan lays out how much your premiums, deductibles, and co-pays will differ in the year ahead and whether the plan will even be offered. (Medigap plans don’t send these notices because they don’t change much year to year.)

An Annual Notice of Change from your Part D plan also says whether your prescriptions will be covered and, if so, how much you’ll pay. A Medicare Advantage Notice of Change will tell you if your doctors and hospitals will remain in the plan’s network.

While this information is always essential to make smart choices during Medicare’s eight-week open enrollment period (Oct. 15 – Dec. 7), experts say reading your Annual Notice of Change is especially important in 2024.

“There is an excellent chance that something is changing on your plan,” says Roberts. “This year, more than ever, we can expect big changes in the plans.”

Surprising effect of the $2,000 prescription drug cap
That’s largely due to a major Medicare change coming in 2025: the new $2,000 cap on out-of-pocket costs for prescriptions covered by a Part D plan.

Since Part D health insurers will be on the hook for more prescription costs due to the cap, they’ll be looking for ways to compensate.

That could mean higher premiums (currently $43 a month for stand-alone plans, on average, according to KFF), deductibles, and co-pays—possibly substantially higher than in 2024.

“I have been very, very concerned about what the $2,000 cap was going to do to Part D premiums,” says Roberts.

The prescription drug change in 2025 could also lead to your Part D plan no longer covering certain medications you take or raising prices of ones it will.

Medicare Advantage plans—some facing profit squeezes currently—often include Part D coverage, so they may respond to the $2,000 cap by trimming or eliminating benefits to keep their popular $0 premiums intact, experts expect.

As a result, your Medicare Advantage benefits that original Medicare can’t offer—such as dental, vision, hearing, and gym memberships—could be less attractive than in 2024, or possibly gone entirely.

“It really will be important to understand what’s changing in the coming year in my current plan and does the plan still fit?” says eHealth CEO Fran Soistman. “Does it still provide the value that it did when I elected to go in it in the first place?”

Reading and understanding the Notice of Change
Your Annual Notice of Change will tell you—if you can understand it.

Only 36% of Medicare beneficiaries surveyed by eHealth said their Annual Notice of Change letter is “readily understandable.”

Figure on spending about 30 minutes closely reading your Annual Notice of Change to see exactly what will be different in 2025 and whether you’ll want to switch plans or coverage next year as a result.

During open enrollment, you can switch from your current Part D plan to another, from your Medicare Advantage plan to another, from Medicare Advantage to original Medicare as well as from original Medicare to a Medicare Advantage plan.

But don’t feel compelled to switch plans just because your Annual Notice of Change says your premium will go up a little or a benefit will be trimmed slightly.

“If there’s a modest benefit decrease or premium increase, but they’re satisfied with what the carrier is providing, people shouldn’t make a change,” Soistman says.

However, he added, if a medication you take will no longer be covered or your physician or hospital won’t be in network, that’s an important change that may persuade you to switch coverage.

The Medicare Plan Finder on Medicare’s site (Medicare.gov) will let you compare Part D and Medicare Advantage plans for 2025.

And, as Philip Moeller writes in the forthcoming revised edition of his book, Get What’s Yours for Medicare, if your Medicare Advantage plan won’t include your favorite doctor or hospital in its network in the year ahead, it’s legally obligated to work with you to identify other physicians or hospitals in its network that you’d like.

A new program to help avoid big premium hikes
To help prevent drastic Part D premium increases, the government’s Centers for Medicare and Medicaid Services recently threw a bone to health insurers with a premium-stabilization plan.

Medicare will provide a special subsidy to those insurers for 2025 in exchange for avoiding slapping members with exorbitant premium hikes.

“It should take what might have been a 40%, 50%, or higher premium increase down to probably 25%,” says Soistman. “It’s still going to be a bit of sticker shock when some people see how their premiums changed.”

Roberts says, “I’m still somewhat concerned about premiums, but I feel a little better after the stabilization program announcement.”

Getting help if your Medicare plan will change
After reading your Annual Notice of Change, you may want to get help deciding on the right Medicare plans for 2025 and to understand the implications of coming changes to your plans.

You can ask a Medicare broker or agent for assistance; there’s a directory at the National Association of Benefits and Insurance Professionals site. The sooner you do, the better, since agents and brokers will be swamped near the end of open enrollment.

“At Boomer Benefits, we have to stop taking new requests after Thanksgiving,” says Roberts.

If one of your prescriptions won’t be covered by your Part D plan in 2025, call your doctor to see if another covered medication would be okay or if you should find a new plan that includes it, Roberts advises.

For information about Part D and Medicare Advantage plans without purchase recommendations, try your State Health Insurance Assistance Program or visit Medicare’s site or call Medicare’s toll-free number, 800-633-4227.

More time for open enrollment?
Soistman believes all the changes coming to Part D and Medicare Advantage plans for 2025 will push back the arrival of the Annual Notice of Change documents to the last two weeks of September.

If so, this will give people with the plans less time than normal to read the notices before open enrollment.

The eHealth agency has asked the Centers for Medicare and Medicaid Services to extend open enrollment by about five days to give beneficiaries, insurers, and Medicare brokers more time. Boomer Benefits favors the extension, too.

So far, the government hasn’t responded to eHealth’s proposal.

Could the 2025 open enrollment become Medicare’s equivalent of the Department of Education’s FAFSA financial-aid form fiasco of chaos and confusion?

“I don’t think it will be quite as drastic. I think it is going to be a year of change, though,” says Soistman. “And change is hard for people.”

This story was originally featured on Fortune.com

HEALTH REPORTING IN THE STATES
California tries but fails to fix a major Medicare loophole for seniors
JULY 25, 20249:19 AM ET
By

Kate Wolffe

Judith Dambowic, a multiple myeloma patient, on her porch in Oakland, CA, right before shaving her head in preparation for a stem cell transplant in May. Dambowic wanted California to pass a law regulating Medigap insurance policies. The reform, which ultimately failed, would have made it easier for her to switch her coverage from Medicare Advantage to traditional Medicare.
Judith Dambowic, a multiple myeloma patient, on her porch in Oakland, CA, right before shaving her head in preparation for a stem cell transplant in May. Dambowic wanted California to pass a law regulating Medigap insurance policies. The reform, which ultimately failed, would have made it easier for her to switch her coverage from Medicare Advantage to traditional Medicare.
Judith Dambowic
Many seniors are grateful when they turn 65 and become eligible for Medicare. But to get enrolled they first have to make a big decision — choosing a Medicare plan.

The initial choice is whether to go with traditional Medicare or Medicare Advantage.

This story was produced in partnership with KFF Health News.

Traditional Medicare has deductibles, co-pays, and co-insurance, and the extra costs can add up. To fill in the gaps, people often buy a private supplemental plan, called Medigap insurance.

“One of the main benefits of Medigap is that it provides people on Medicare predictable expenses, because people pay monthly premiums to avoid unpredictable expenses if they get sick,” said Tricia Neuman, Executive Director for KFF’s Program on Medicare Policy.

This combination also gives people the most options in choosing doctors, because most accept traditional Medicare.

The other option a newly-eligible senior can choose is Medicare Advantage. This plan, sold by a private insurance company, streamlines the upfront costs, making a separate Medigap plan unnecessary.

Insurance companies often heavily market their Medicare Advantage plans, and offer extra benefits like dental and vision insurance.

Because of the initial appeal of Medicare Advantage plans, over half of people eligible for Medicare opted for a Medicare Advantage plan in 2023.

But there’s a major drawback to Medicare Advantage plans: they lock patients into a preferred network of doctors and hospitals, narrowing options for treatment.

“They might be, 65, 66, 67 — in the scheme of things, they’re at their healthiest, but it could be that over the course of several years, they develop a serious illness,” said Neuman.

The limited nature of the Advantage plans, Neuman added, means seniors might not be able to go to the specialists they want.

Sometimes seniors decide they’d rather have the flexibility and choice of providers available under traditional Medicare, and try to switch back.

But they might be stuck. If they try to switch back after the first 6 months of enrollment in Medicare, there’s no guarantee they can get a Medigap policy to pair with traditional Medicare.

That’s because private insurers who issue Medigap policies have the power to refuse coverage or set a high price, once the six-month window is closed.

“People can be denied a policy because they have a pre-existing condition, or they can be charged more, or they can get the policy — but not for the particular condition that will require medical attention,” Neuman said.

These coverage denials and price hikes were common in the individual health insurance market before reforms under the Affordable Care Act. But the ACA’s regulations don’t apply to seniors seeking Medigap plans after the six-month window.

California takes a stab at opening Medigap enrollment

A bill that would have changed that was introduced in the California legislature this year.

Driving the effort was concern among legislators that California seniors on Medicare Advantage plans were facing fewer and fewer choices in their networks.

In 2023, Scripps Health, a major San Diego hospital system, stopped accepting Medicare Advantage plans, saying the plans paid less than other insurers for the same treatments, and required doctors to navigate prior authorization protocols that were burdensome and time-consuming.

The move sent seniors in the San Diego region scrambling to sign up for traditional Medicare, supplemented by Medigap plans. The high numbers of people who found Medigap plans unaffordable drew the attention of State Senator Catherine Blakespear, who put forward a Medigap reform bill.

Four states reformed Medigap in the 1990s — Connecticut, Maine, Massachusetts, and New York. The rest, including California, allow Medigap insurers wide leeway in setting prices and issuing denials.

California’s bill would have created a 90-day open enrollment period for Medigap, every single year. That would allow seniors to opt-in or out each year and not be denied — or face exorbitant premiums due to pre-existing conditions.

Insurance industry representative Steffanie Watkins testifies April 24 before the Senate Standing Committee on Health, in opposition to a bill that would have created an annual open enrollment period for Medigap insurance. This could have allowed seniors greater flexibility in switching from Medicare Advantage plans to traditional Medicare.
Insurance industry representative Steffanie Watkins testifies April 24 before the Senate Standing Committee on Health, in opposition to a bill that would have created an annual open enrollment period for Medigap insurance. This could have allowed seniors greater flexibility in switching from Medicare Advantage plans to traditional Medicare.
Senate of the State of California
The Leukemia and Lymphoma Society became a major supporter of the effort to pass the bill.

“Cancer or any chronic illness is very, very expensive, and that's why having supplemental coverage is important,” said Adam Zarrin, a policy analyst for the Society. “The second part is about making sure that patients have access to the best health care available.”

Zarrin says leukemia and other blood cancers are more commonly diagnosed in older adults, after age 55.

That was the case for Oakland resident Judith Dambowic.

Dambowic was 58 and working as a physical therapist when she found out her swollen and painful eye was a symptom of multiple myeloma, a cancer of the bone marrow.

Ten years after being diagnosed, Dambowic has become a patient advocate in the effort to reform Medigap in California.

“It's the options. It's the choice that matters,” she said.

Dambowic has a Medicare Advantage plan, and for the moment, she is satisfied with her network choices. But with her cancer, traditional treatment options often stop working to manage the disease.

Dambowic wants flexibility in the future to seek out different clinicians, or even experimental trials.

“These slots are highly coveted and it's very hard to get in from an Advantage plan. And the Advantage plans aren't really running these cutting edge clinical trials,” Dambowic said.

But unless the regulations change, Dambowic will have to stay in Medicare Advantage. She thinks it’s unlikely she could get a Medigap policy that would allow her to return to traditional Medicare.

There’s some evidence that indicates cancer patients may have fewer options in Medicare Advantage.

A recent study in the Journal of Clinical Oncology found “[Medicare Advantage] beneficiaries have significant barriers in accessing optimal surgical cancer care,” when compared to people with traditional Medicare.

Insurance rates would increase, industry fights back

As the bill was being debated in the state Capitol this spring, Steffanie Watkins spoke to lawmakers on behalf of the insurance lobby.

If more sick Californians are able to move onto Medigap plans, Watkins argued, insurance companies would have to raise premiums for everyone.

“We are concerned with the potential devastating impacts this bill could have on the 1.1 million seniors who, by no fault of their own, would experience significant rate increases if this bill were to pass,” she said.

A state budget analysis of the proposed bill found the average Medigap premium would increase by 33 percent, about 80 dollars a month.

That’s a valid concern, according to KFF’s Tricia Neuman.

“For people with modest incomes, people [on]of the sort of lower end of the income scale who have Medigap, they might feel priced out of the market,” she said.

In the end, the bill failed to make it out of the appropriations committee to advance to a full vote in the Senate.

Zarrin blamed legislators for siding with the insurance companies, but said his group will keep pushing for this reform in future sessions.

Judith Dambowic was also disappointed.

For now, she’ll continue to focus on educating friends and other cancer patients about their Medicare options, so they know what they’re signing up for from the start — and how difficult it might be to change.

This story comes from NPR's health reporting partnership with CapRadio and KFF Health News.