I’m Christie Wilbert, Senior Vice President of the Medicare Offerings Department at URL Insurance Group. Before we get started, let’s take a quick look around your screen. At the top right, you’ll see a Handouts button—go ahead and click that. You’ll find several CMS handouts and a link to an article with detailed information about the current changes. Please rely on our resources at URL for accurate information and education. There’s a lot of misinformation online and in Facebook groups, so make sure you’re getting updates directly from us.

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Let’s begin with a little background on Medicare Part D. Before 2003, there was no prescription drug coverage—people paid out of pocket. In 2003, the Medicare Modernization Act was created to subsidize prescription drugs, allowing people—especially those with lower incomes—to afford their medications. Many were skipping prescriptions due to cost, which remains an issue today.

When I started at URL ten years ago, agents quoted plans on Medicare.gov using the Medicare Plan Finder. You had to enter each drug—limited to 25 per person—and save a unique code to revisit the quote. If you lost that code, you had to start over. It was a frustrating process, and as a result, many agents avoided selling Part D plans, instead advising clients to self-enroll.

Over time, this has changed. More agents now handle Part D enrollments, especially during the Annual Enrollment Period, because these plans must be reviewed every year. Although it’s time-consuming, clients rely on us for clarity and support.

We’ve seen a lot of changes in the Part D market. Carriers have come and gone, commissions have been removed and reinstated, and even large Medicare Advantage carriers have exited or sold their Part D portfolios. In the marketplace today, we’re seeing vertical consolidation—companies joining forces. Pharmacy Benefit Managers (PBMs) such as Caremark, Express Scripts, and Optum are acquiring retail pharmacies like CVS. While this integration can have advantages, it also raises concerns about conflicts of interest since the same entities that negotiate drug prices now own the pharmacies dispensing them.

Insurance carriers are also acquiring pharmacy operations—Aetna’s relationship with CVS is one example. This directly influences drug pricing and formulary placement, raising additional concerns.

The Inflation Reduction Act (IRA), also known as the Prescription Drug Law, focuses on controlling costs, especially for specialty drugs. Specialty drugs are extremely expensive, and the IRA aims to lower those prices. PBMs negotiate prices with drug manufacturers and are supposed to share rebates with consumers. For example, when a manufacturer provides a 40 percent rebate, that money should reduce costs for beneficiaries—but it often doesn’t. CMS is now working to ensure those rebates are passed back to the plans to reduce premiums and out-of-pocket costs. Pharmacies, meanwhile, often lose money on brand-name prescriptions and must rely on generics to stay profitable.

The IRA is designed to improve the Medicare Part D benefit and reduce out-of-pocket costs for beneficiaries. It’s projected to save Medicare enrollees an average of 30 percent annually on prescription drug costs in 2025—about $7.4 billion in total savings. This reform began in 2022. In 2023, all vaccines, including shingles, became available at a $0 copay, and insulin costs were capped at $35 per month. In 2024, the catastrophic phase for enrollees dropped to $0 out-of-pocket, with costs shifted to the carriers.

In 2025, there will be a $2,000 annual out-of-pocket maximum for beneficiaries. The government is also changing how it subsidizes Part D plans—moving from a back-end reimbursement model to a more upfront payment structure. This means carriers will take on more financial responsibility, incentivizing better cost management. Most carriers haven’t yet released full benefit details for 2025. Based on early previews, plan designs appear similar to previous years, though premiums are expected to rise due to carriers’ increased liability.

Under the new system, manufacturers will be required to provide discounts during both the initial coverage and catastrophic phases. This replaces the old coverage gap, often called the “donut hole.” The government hopes this will make plans more affordable and fair. The Extra Help program eligibility has also been expanded. Beneficiaries who qualify for Extra Help, LIS, or PACE will continue to receive additional assistance beyond what the IRA provides.

Looking at the coverage changes over time, in 2023 and 2024, the structures were very similar, with enrollees paying 25 percent during initial coverage and 5 percent in the catastrophic phase. In 2025, after reaching the $2,000 out-of-pocket maximum, enrollees will pay nothing, while the plan covers 60 percent, drug manufacturers 20 percent, and Medicare 20 percent. This is a major shift, increasing carrier responsibility and likely contributing to higher premiums.

Previously, carriers had an incentive to move clients quickly into the donut hole to reduce their own share of costs. Now, they’ll want to keep beneficiaries below that $2,000 threshold since they’ll bear most of the costs afterward.

Looking ahead, we can expect increased use of step therapy, which encourages the use of lower-cost generic drugs. There will likely be stricter formulary restrictions to control expenses and possible reductions in the number of brand-name drugs covered, especially those with large manufacturer rebates. This may require more flexibility from clients and open discussions with their doctors about switching to covered alternatives.

Premiums are also expected to rise. CMS recently announced the Premium Stabilization Demonstration for Part D, aiming to control costs. The base premium for 2025 will be $36.78, about $2.08 higher than in 2024. Remember, that’s just the base premium. Plans with enhanced coverage—such as lower copayments and broader formularies—will include a supplemental premium on top of that. While the base increase is limited to about $2, total premiums may still vary depending on the plan’s additional benefits.

This demonstration program will be voluntary and designed to offer meaningful protection to consumers while encouraging all standalone Part D sponsors to participate. The goal is to create stability across the entire Part D market. Participation will last three years, so if a Medicare carrier does not opt in for 2025, they will not be able to join in the following two years.

The demonstration consists of three key elements. First, CMS will apply a uniform $15 reduction to the base premium. For example, if a plan’s base premium is $25, and $15 of that is base pay with $10 as supplemental, CMS will reduce the base by $15. If the reduction brings the base premium below zero, it will stop at zero. Carriers can still charge supplemental premiums. The second element sets a year-over-year increase limit of $35 for total premiums, meaning we shouldn’t see premiums rise by more than that amount annually. The third element changes the risk structure to allow greater government risk sharing for potential plan losses, which should provide added financial stability.

Since participation is voluntary, carriers have until August 5 to decide whether to join. Carriers might choose to participate because it reduces financial risk, helps attract new enrollees, and demonstrates their commitment to keeping premiums stable while improving drug coverage. The potential for government risk sharing can also provide financial support for offering more generous supplemental benefits. On the other hand, some carriers may opt out due to financial uncertainty, dependence on government reimbursement, or the administrative burden that comes with additional CMS requirements.

CMS has added many new administrative tasks this year, and carriers are already managing heavy workloads, including adjustments tied to the FMO litigation delay until January. These new education and reporting requirements for beneficiaries, combined with upcoming prescription drug changes, may discourage some carriers from joining. Others might already have strong market positions and prefer to maintain their existing strategies rather than participate in the demonstration.

We expect fewer plan choices in the upcoming year, and some plans may become non-commissionable. More beneficiaries may move toward Medicare Advantage plans because those plans typically have larger formularies, receive rebates, and can absorb many of the basic Part D costs within their overall structure. This design results in lower cost sharing for beneficiaries, and the total cost of a Medicare Advantage Prescription Drug (MAPD) plan is usually lower than the combined cost of a standalone Part D plan and a Medigap policy.

There has also been discussion about how these changes could affect creditable coverage for group health plans. Group plan sponsors must determine whether their prescription coverage is as good as or better than Medicare’s standard coverage. This process, known as a creditable coverage determination, ensures that employees transitioning to Medicare won’t face penalties. Carriers such as Capital Blue Cross have confirmed that their method for determining creditable coverage will remain the same. They evaluate each plan—such as PPO, HMO, HSA, or high-deductible options—using a simplified calculation to see if it meets or exceeds Medicare’s standards. Some plans will continue to be non-creditable. Employers are required to communicate the creditable status of their plans to their employees before October 15 each year and report this information to CMS within 60 days of the plan’s start date.

Currently, there are no penalties for employers that offer non-creditable coverage, but Medicare-eligible employees can face penalties if they fail to enroll in Medicare when eligible and remain on a non-creditable group plan. Anyone with questions about this process can reach out to the group benefits team at URL for further clarification. Employers can also take advantage of the retiree drug subsidy under Medicare, which allows them to continue supporting retirees with drug coverage that is often more generous than standard Medicare coverage.

Beginning in 2025, the Inflation Reduction Act will require all Medicare prescription drug plans, including Medicare Advantage plans that include drug coverage, to offer enrollees the option to pay their out-of-pocket prescription costs through capped monthly installment payments instead of paying the full cost upfront at the pharmacy. This new payment option, referred to as the Medicare Prescription Payment Plan or “M3P,” allows beneficiaries to pay $0 at the pharmacy and instead receive a monthly bill from their carrier for their share of the cost, up to the $2,000 annual out-of-pocket maximum.

For example, if someone pays a $4 copayment for a tier one drug in January and later fills a specialty drug with a 40 percent coinsurance that reaches the $2,000 cap, they can opt into the program to divide that amount into monthly payments for the rest of the year. The insurance carrier—not the pharmacy—will handle the billing.

Before each plan year, Part D carriers are required to assess their current enrollees to identify those who are likely to reach the $2,000 cap and proactively inform them about the M3P program so they can sign up early and avoid unexpected costs at the pharmacy.

If a participant fails to make payments, the plan cannot terminate their overall Part D coverage—only their participation in the payment program. There is a two-month grace period before termination, ensuring the enrollee’s prescription drug coverage remains active.

Beneficiaries can sign up for the M3P program before the plan year begins or at any time during the year. If they choose to enroll midyear, for example after experiencing a large prescription expense, they can contact their Part D plan and enroll at that time. Carriers must process beginning-of-year enrollments within 10 days and midyear enrollments within 24 hours to ensure that members can continue accessing their prescriptions without interruption.

Customer service for most carriers will remain outsourced, as staffing limitations prevent many from bringing these services in-house. This is another reason why agents and FMOs remain essential for helping clients navigate questions quickly and accurately.

Applications for 2025 have not yet been released, so it is unclear whether questions about the M3P program will be included on them. While premium increases are expected, the structure of the 2025 Part D benefit indicates that carriers will likely try to keep beneficiaries within the initial coverage period as long as possible. Since the carrier’s share of costs increases significantly after the $2,000 out-of-pocket limit is reached, it’s in their best interest to maintain manageable copayments and deductibles.

Thank you so much for joining me today. I hope you found this information helpful and gained valuable insight into the changes coming to Medicare Part D in 2025. I appreciate your time and attention, and I’ll be available throughout the day if you have any additional questions. Have a great day.