The Centers of Medicare Services (CMS) is reporting that 2025 IRMAA and Medicare Costs will fall in line with the projections of the Board of Trustees.
This is extremely good news as health insurers will have the correct pricing for coverage during the Annual Enrollment Period which will help many retirees.
That bad new, however is that if the trend continues to match the Trustees of Medicare going forward costs will increase significantly in just a few years.
Here is the Breakdown of each Part of Medicare
Medicare Part A:
- Inpatient deductible: $1,676.00 per incident.
- Skilled Nursing: $209.50 per month.
- Daily hospital co-insurance (61 to 90 days) $419.00 per day.
Each expense in Part A will increase by only 2.70% from 2024 which is slightly lower than the Board’s projections in this year’s report.
Medicare Part B:
- Monthly premium: $185.00.
- Annual Deductible: $257.00.
The Part B premium will increase by 5.90% while the Annual Part B Deductible will inflate by 7.08% from 2024.
These two rates of inflation are right on track with what the Board is projecting in its previous report.
Part D Plans:
For 2025 Medicare Part D will be slightly different from previous years as the differences between the 2 types of Part D plans (Basic and Enhanced) will become more significant.
Basic Part D Plans typically have much lower premiums than the Enhanced Part D Plans, but also may come with much smaller formularies (medications that the Plans will cover).
- Basic Part D Plans: lower premiums but smaller drug coverage
- Enhanced Part D Plans: higher premiums but typically more drugs are covered.
Basic Part D Plans:
Number of Plans:
In 2025 there will be 342 Basic Part D Plans being made available to retirees with each state only having between 5 to 8 Plans for retirees to choose from.
This is a 22.62% decrease in Part D plans from 2024.
The Premium:
The good news for the Basic Part D Plans in 2025 is that the average monthly premium will be less than last year as it will drop by 13.15% to $46.08 a month.
This large drop in premium comes from the fact that 60 of the more expensive Part D Plans in 2024 will no longer exist in 2025.
When it comes to the existing Plans from 2024 the average premium will only decrease by 3.30%.
So, if your Basic Part D Plan from 2024 is still active in 2025 there is a good chance that the premium will be a little lower.
The Annual Deductible:
In 2025 the Annual Deductible will increase by 8.25% to $590.00.
Every Basic Part D Plan will have an Annual Deductible in 2025.
The Total Cost:
When factoring the Basic Part D Plan premium and the Annual Deductible on a national average the cost will decrease by 2.26% to $94.90 a month.
Enhanced Part D Plans:
When it comes to the Enhanced Part D Plans for 2025 there is really no good news at all as everything appears to be increasing by significant amounts with the exception of the total number of plans.
The one bright spot is that there are a couple of individual Enhanced Part D Plans in each state that will thankfully, drop in price, but again it will be only one or two per state.
To give an example Humana’s Value Rx Plan (PDP) id #5884:
- On a nationwide average the Total Cost will decrease 0.38% from 2024 to 2025.
- The states of Michigan, Virginia and Wisconsin will see over a 20% drop from 2024.
- The sates of California, Hawaii and New York will see increases by over 29.00% from 2024.
The Number of Plans:
In 2025 there will be only 447 Enhanced Part D Plans throughout the country with each state having between 7 to 10 plans for retirees to choose from.
This is a 33.28% decrease in the total number of available plans from 2024.
The Premium:
On a national average the monthly Premium for Enhanced Part D Plans will be $74.89. This is a 20.99% increase from 2024.
One of the reasons for such a drastic increase in the premium from 2024 to 2025, besides the “Supplemental Premium”, is that the majority of the 271 plans from 2024 that no longer exist are much less expensive than the ones that are remaining.
The Annual Deductible:
In 2025 the national average Annual Deductible for Enhanced Plans that have one will increase by 21.29% to $501.88.
Please note that not every Enhanced Part D Plan has an Annual Deductible.
The Total Cost:
Due to the significant increases in both the Premium and Deductible for Enhanced Part D Plans the Total Cost per month in 2025 is $105.70.
This is a 19.71% increase from 2024.
KEEP IN MIND: That the Social Security benefit is only going to increase by 2.50% in 2025.
What about IRMAA in 2025?
When it comes to IRMAA in 2025 there is some good news.
CMS is reporting that the Thresholds (Income Amounts) will increase by federal regulations while the surcharges will also match the projections of the Trustees.
The IRMAA Thresholds and Surcharges should, barring any Congressional changes prior to the end of the year, will be:
|
Individual MAGI |
Couples MAGI |
Part B |
Part D |
|
< $106,000 |
< $212,000 |
$185.00 |
Premium (varies) |
|
$106,000 to $133,000 |
$212,000 to $266,000 |
$259.00 |
$13.70 |
|
$133,000 to $167,000 |
$266,000 to $334,000 |
$370.00 |
$35.30 |
|
$161,000 to $200,000 |
$334,000 to $400,000 |
$481.00 |
$57.00 |
|
$200,000 to $500,000 |
$400,000 to $750,000 |
$592.00 |
$78.60 |
|
> $500,000 |
> $750,000 |
$629.00 |
$85.80 |
The other considerations for IRMAA:
As stated above the IRMAA Threshold and the Part D Surcharges are in line with the Trustees projections.
If the same projections from the Trustees continue over the next 8 years, the IRMAA surcharges will grow annually by 6.21% for Part B and an average of 10.41% for Part D.
With a CPI-U averaging 2% over the same period the IRMAA Thresholds and Surcharges in 2033 may be:
|
Individual MAGI |
Couples MAGI |
Part B |
Part D |
|
< $120,000 |
< $240,000 |
$299.80 |
Premium (varies) |
|
$120,000 – $154,000 |
$240000-$308,000 |
$419.70 |
$34.70 |
|
$154,000 – $189,000 |
$308,000 – $378,000 |
$599.50 |
$71.70 |
|
$189,000 – $228,000 |
$378,000 – $456,000 |
$779.40 |
$108.70 |
|
$228,000 – $500,000 |
$456,000 – $750,000 |
$959.20 |
$145.60 |
|
> $500000 |
> $750000 |
$1,019.20 |
$158.00 |
Retirees reaching the 1st IRMAA Threshold in 2033 should expect to pay $454.40 a month for just Part B premiums and IRMAA-D surcharges if projections remain constant.
If they reach the 3rd IRMAA Threshold the cost will be $888.10 a month per person and again these are simply projections by the Trustees of Medicare of what needs to happen for Medicare to remain solvent.
With Medicare Part D Total Costs inflating at over 7.00% historically the costs associated to healthcare coverage and IRMAA will eventually impact the bottom line of many retirees.
In the very near future, and it is starting to happen today, retirees will have to tap into their savings to maintain their lifestyle which will in turn decrease the AUM of many in the financial industry.
Health costs are going to disrupt the financial future of many people going forward.
If we can be any help on this subject, please contact us at 617-894-8043 or by email a [email protected]
