What's Happening to Medicare Advantage Benefits in 2025?

Medicare Advantage plans change every year. Carriers inform members about what will happen to their costs and benefits by mailing a document called the Annual Notice of Change (ANOC) in September. Based on that information, you can weigh your options and decide whether it’s time to switch to a different plan. 

Heading into 2025, you might see more significant differences than in the past few years. Let’s consider the reasons why and what you can do about it. 

Why Medicare Advantage Plans Are Changing 

Private insurance carriers offer Medicare Advantage plans to substitute for Original Medicare, which is administered by the federal government. The government pays the carriers for taking over the costs of insuring each person they enroll. The Centers for Medicare and Medicaid Services (CMS), the government agency responsible for Medicare, set a benchmark rate every year and adjust that amount for each individual depending on their personal health risks.  

Medicare Advantage plans are required to match the coverage provided by Original Medicare. As of 2023, data from the healthcare policy nonprofit KFF showed that most people enrolled in Medicare Advantage plans had additional benefits beyond what’s covered by Original Medicare like Medicare Part D prescription drug coverage, dental, and vision. 

To manage the resulting expenses and coordinate care, insurance carriers take steps such as establishing provider networks. On Original Medicare, you can visit any participating healthcare provider who accepts the Medicare-approved amount as payment. To take full advantage of Medicare Advantage plan coverage, on the other hand, you often must see in-network providers. Plans can also require prior authorization, a process in which they work with your doctor to verify that certain services are medically necessary before agreeing to pay. 

Even with those measures, a few big shifts are affecting the financial calculations for plans: 

• CMS announced a .16% cut in the benchmark rate to carriers for 2025. While CMS claims the average payment amount to plans will increase by 3.7% after considering certain adjustments, insurance companies say the reduced rate does not take into consideration all the costs associated with offering Medicare Advantage plans and will negatively impact their business.  
• A $2,000 cap on costs will become effective for patients’ out-of-pocket spending under Medicare Part D prescription drug plans. This rule applies to the Medicare Advantage plans that include Part D prescription drug coverage. 
• Since the COVID-19 pandemic, insurance companies report that patients are using more care in general, including both outpatient doctor visits and hospital stays.  

What Could Happen to Your Medicare Advantage Plan Benefits? 

Some insurance carriers have warned that the changes in the Medicare Advantage market might mean they can’t provide the same level of coverage they have in the past. Your plan may respond in ways that affect your costs or access to certain benefits, starting on January 1, 2025.  

When you receive your ANOC in September, check whether: 

• Your monthly premium is set to increase. 
• The annual deductible, the amount you pay before insurance kicks in, is going up. 
• You’ll need to pay a larger portion of the costs for specific covered services and items through copays or coinsurance. 
• Your preferred healthcare providers or pharmacies are no longer in the plan’s network. 
• Any of the medications that you take will either no longer be covered or will cost you more for a regular supply (if you receive drug coverage through your Medicare Advantage plan).  
• Some of the additional benefits your plan may have included in the past such as dental, vision, hearing, and fitness memberships have been eliminated or reduced. 

If you spot any of these issues, this is an excellent time to start exploring your other plan options.  

What To Do If Your Medicare Advantage Plan Isn’t Renewed

Insurance carriers may decide to end certain Medicare Advantage plans altogether. If that happens, you should be notified by October 2. Your coverage will continue through the end of the year, but you must choose a new plan for 2025. 

You are protected against losing coverage if you qualify for Extra Help (also called the Low-Income Subsidy or LIS), the program that makes Medicare Part D prescription drug coverage more affordable for people with limited income and resources. As of 2024, you’re eligible for Extra Help if you are: 

• Single and have an income below $22,590 and less than $17,220 in resources (such as money in bank or retirement accounts, stocks, and bonds). 
• Part of a married couple with a combined income below $30,660 and less than $34,360 in resources. 

If you meet the requirements for Extra Help, you may be on a dual eligible special needs plan (D-SNP), a type of Medicare Advantage plan designed specifically for people with low enough incomes to qualify for Medicaid. Whether you’re enrolled in a SNP or an individual Medicare Advantage plan, qualifying for Extra Help means that if you don’t enroll in a new Medicare Advantage plan by the time your old coverage lapses, you will be returned to Original Medicare and assigned a Medicare Part D plan at the start of the new year. 

To maintain control over your own coverage and benefits, make your choices during the Medicare Annual Enrollment Period. 

Ensure You Have the Right Coverage for 2025 and Beyond

The Annual Enrollment Period runs from October 15 to December 7 every year. This is your opportunity to examine the plan choices available in your area for 2025 and pick the one that best suits your medical needs and financial situation.  

During this period, you can: 

• Switch from one Medicare Advantage plan to another. 
• Leave your Medicare Advantage plan and go back to Original Medicare. 
• Add or drop prescription drug coverage. 

As insurance carriers react to broader conditions in the market by striving to reduce their costs, it will be more important than ever to set priorities and get a clear sense of what each plan has to offer. Think about which benefits are most valuable to you, whether you’d be willing to switch doctors, and what medications you expect to take regularly. A licensed insurance agent can help to review your options and figure out which one works best for you. 

If you miss your chance to start a new plan during the Annual Enrollment Period, your current coverage will end as of January 1, 2025 but you’ll still be eligible for a Special Enrollment Period that lasts from December 8 through the last day of February to enroll in new coverage. However, you should keep in mind that going without insurance for any period is risky.  

In addition to being responsible for any medical costs while you are not covered, you may become subject to the Part D late enrollment penalty if you do not elect new coverage that is effective by the end of February, permanently increasing how much you pay for drug coverage. You receive this penalty if, any time after the Initial Enrollment Period (up to three months after the month of your 65th birthday for most people), you go without a Part D plan or equivalent coverage for at least 63 days in a row. 

Sorting out your health insurance can be complicated in any year, but 2025 may present unusual challenges for people on Medicare Advantage plans. If your current plan is discontinued or no longer fits your needs, don’t panic. Contact a licensed insurance agent to figure out your next move. 

About GoHealth 

GoHealth is a leading health insurance marketplace and Medicare-focused digital health company. Enrolling in a health insurance plan can be confusing for customers, and the seemingly small differences between plans can lead to significant out-of-pocket costs or lack of access to critical medicines and even providers. GoHealth combines cutting-edge technology, data science, and deep industry expertise to build trusted relationships with consumers and match them with the healthcare policy and carrier that is right for them. Since its inception, GoHealth has enrolled millions of people in Medicare plans and individual and family plans. For more information, visit GoHealth.com.