Lessons Learned From The Most Recent Medicare Open Enrollment.

The Open Enrollment Period (OEP), a time for making changes to Medicare Part D drug coverage, ended on December 7. Heading into the OEP, there was considerable excitement because the Inflation Reduction Act (IRA) was going to save seniors millions of dollars. But how did that play out in real time?

As I do every year, I studied the 2023 OEP reviews for 65 Incorporated clients. I found that 65% had at least one significant reason to change drug plans.

Increased premiums

The Centers for Medicare and Medicaid Services (CMS) projected that the average total monthly premium in 2024 would decrease 1.8%. Just about everybody likely expected their premiums to drop. What happened was a different story because CMS’ average total monthly premium is not the one you pay.

Almost 30% of our clients switched plans because their premiums were going up, anywhere from $200 to $1,400 this year. On average, they are going to save $505. During the 2022 OEP, 12% switched plans, with the maximum savings of $360.

Noncovered insulin

The IRA capped all covered insulin at $35, with the operative word being covered. In October, I discovered that a client’s insulin was being dropped from her plan’s formulary. Digging into plan formularies, I found that 10 plans will cover fewer drugs next year than they do this year, something that I had not seen before.

All but one of our diabetic clients discovered one or two of the insulins they need would not be covered this year. By switching plans, the average savings was over $9,000. There were zero plan changes in 2022 because of noncovered insulin.

Noncovered drugs

Over a third of clients changed plans because one or more of their non-insulin drugs would not be covered. If they had not changed, their out-of-pocket costs in 2024 would have ranged from $700 to $15,000.

This was not a new issue during the 2023 Open Enrollment Period; it is an annual concern, and one of the main reasons we encourage everyone to pay attention.

There were a few clients who complained that their copays were really high for a drug they started taking during 2023. Unbeknown to them, their plans did not cover those drugs. Going forward, they will confirm that it’s covered before they pay.

Don’t put Part D on autopilot

Once again, my disclaimer. This OEP postmortem was not a scientific study but rather a review to identify trends and problems. What’s happening with Part D drug coverage is not limited to our clients. Those who did not check out the changes to their drug coverage during the 2023 OEP may be surprised because their costs have gone up or drugs are not covered.

The OEP will be even more important this year. Effective January 1, 2025, the IRA will cap out-of-pocket costs for all Part D members at $2,000. The Department of Health and Human Services estimates that will reduce out-of-pocket spending by about $7.4 billion annually in 2025, nearly $400 per person. There will likely be more changes in costs and coverage as drug plans adapt to paying a bigger share of the costs.

Given what happened as a result of the first wave of IRA changes, it seems clear none of this will get any easier. But if you know roughly what to expect down the road, you won’t feel the rush to panic. Excuse the broken record but circle October 15, the start of the 2024 Open Enrollment Period on your calendar, and pay attention.