Drug prices are changing this year

As Medicare’s open enrollment season gets underway on Tuesday, analysts are urging seniors to review their health insurance plans with a particular eye on their prescription drug policies.

Why? For the first time, lawmakers have put a cap on how much seniors will have to pay out of pocket for drugs, and it has prompted warnings that insurers will respond by increasing premiums or excluding more drugs from their plans.

“The moving target in Medicare usually is the drug plans,” said Dane S. Mihlon, a health insurance broker based in Shrewsbury. “The formularies change.”

Medicare’s enrollment, open from Oct. 15 through Dec. 7, gives seniors 65 and older a chance to choose their health insurance policies for 2025.

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This year’s sign-ups come as more components of the federal Inflation Reduction Act, a sweeping law passed in 2022, are rolled out. Last year, insulin was capped at $35. Next year, seniors won’t pay more than $2,000 out of pocket for prescription drugs. And in 2026, Medicare’s negotiated prices of 10 commonly used drugs will go into effect.

For seniors, Medicare’s open enrollment can be a confusing time.

Helen Sheehan, 80, of Wall, and a retired sociology professor, was diagnosed with lymphoma — a disease she manages thanks to new medication she began taking in 2023.

She keeps insurance as simple as possible; her former employer provides traditional Medicare and a supplemental plan from Aetna to help pay for costs Medicare doesn’t cover.

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But even then, she has mistakenly received letters alerting her to changes in her physician network. And she has found herself on the phone with her doctors, trying to iron out billing glitches,

“As I need more health care, I realize how critical (understanding your insurance) is as you get older, especially if you have a serious condition,” Sheehan said.

What to know about Medicare’s open enrollment:

1. Original Medicare

Original Medicare is in part made up of Part A, which covers in-patient hospital stays and skilled nursing care; and Part B, which covers doctors visits, outpatient care, preventative care, medical supplies and mental health care.

• Pluses: Seniors have relatively modest premiums and out-of-pocket costs, and they don’t need to worry if their provider is in a network; they can see anyone. So it is recommended for seniors who travel frequently or spend part of the year living outside of New Jersey, health insurance brokers say.
• Minuses: The plan doesn’t cover dental, eye care or hearing aids. And Medicare Part B only covers 80% of the visit, meaning patients could be on the hook for steep out-of-pocket costs. Unlike private plans, there is no cap. It means consumers choosing traditional Medicare should also buy a supplemental insurance plan, known as Medigap.
• Cost: The Centers for Medicare and Medicaid Services hasn’t yet released the cost of the plans. Part A typically doesn’t have a premium (the monthly charge) in 2024. And it had a deductible (the amount consumers pay out of pocket before insurance kicks in) of $1,632 last year.

For Part B, Mihlon said, analysts predict the deductible will be $257, up from $240, and the premium will be $185 a month, up from $174.70.

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2. Medicare Advantage

Medicare Advantage plans, administered by private insurers, have made inroads in New Jersey. They accounted for 45% of the market in 2024, up from 17% in 2014, according to Kaiser Family Foundation.

• Pluses: The plans can include prescription drug coverage, dental visits, eye care and gym memberships. Some have no deductible. They all have out-of-pocket limits. But seniors still pay Medicare Part B’s monthly premium.
• Minuses: The plans are more restrictive. Beneficiaries need to ensure their providers are in the network. Also, insurance companies can exit the market. In Ocean County, for example, residents can choose from among 39 plans, down from 43 plans last year. Humana, which offered four plans in 2024, will offer just one plan in 2025.

Consumers who receive what’s known as a termination letter won’t be automatically enrolled in another plan; they need to be proactive, said Toby Stark, of Stark Associates Insurance Agency in Tinton Falls.

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3. Prescription drug plan

Seniors who choose either original Medicare or Medicare Advantage can select a prescription drug plan, as well.

Experts say insurers have been changing the plans in the wake of the Inflation Reduction Act in a move that will require consumers to pay closer attention.

In some cases, consumers might find a plan that has higher monthly premiums, but lower overall costs.

For example, a senior who takes the anticoagulant Eliquis would pay $86.40 a month in premiums for a Horizon Blue Cross Blue Shield of New Jersey plan, and $9.90 a month for a Cigna Healthcare plan. But the Horizon plan could save them $300 in the long run when they factor in the plan’s deductible and the pharmacy’s cost.

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To search for an individualized drug plan, go to Medicare.gov.

Seniors might have received notice from their drug plans of changes ahead. “You can never be kicked out,” Stark said. “But the question would be, if you stay, is that the best plan for you?”

Michael L. Diamond is a business reporter for the Asbury Park Press. He has been writing about the New Jersey economy and health care industry since 1999. He can be reached at mdiamond@gannettnj.com.

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