Experts warn that Medicare enrollees could be in for a shock next month when they receive their annual change notice.

The Annual Change Notice is sent to Medicare recipients each October, informing them of adjustments to their health insurance plans for the following year.

This year, the warning could come as a shock to the system because there will be important changes in 2025 for both Medicare Advantage and Part D plans.

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For this reason, seniors should carefully consider the changes outlined in their notices.

“It may be necessary for seniors to delve deeper into their annual notice of change,” said Alex Beene, a financial literacy lecturer at the University of Tennessee at Martin Newsweek.

“From year to year, this document may not carry as much weight as it did this year because of changes at the federal level, changes in the number of providers and, unfortunately, changes in premium costs in the coming year.”

Monthly prescription plan premiums are expected to change significantly this year, and many seniors will see their Medicare Advantage plan disappear as several insurers have announced they will exit select markets in 2025.

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For example, top insurer Humana announced it would exit 13 markets across the country. This measure will result in approximately 560,000 Americans having to find a new Medicare Advantage plan.

“In most cases, Medicare Advantage plans from other companies will continue to be available, even in areas where Humana plans may not be available,” Louise Norris, health policy analyst at medicareresources.org, said previously Newsweek. “So most enrollees can continue to be covered by Medicare Advantage if they choose.”

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While plan information will be released as early as this month, Medicare recipients can make changes during the annual election period, which begins October 15.

Important changes

President Joe Biden’s administration has approved a $2,000 cap on Part D drug costs starting in 2025, meaning seniors won’t have to pay more than $2,000 for their prescriptions year-round.

And those who rely on insulin would pay just $35 a month under the new law.

While this is good news for seniors who need to take a lot of medications, it could result in higher rates for your Medicare Advantage plan or even a reduction in coverage as insurers look for a way to keep profits after the drug cost cap comes in strength is.

Insurance companies also expect a smaller increase in government payments in 2025, which could pass on some of the costs to patients.

That means drug deductibles, copays and premiums could be higher in 2025.

The higher costs also arise because insurers assume that members will also receive additional services at higher rates, including over-the-counter (OTC) cards and dental services.

“We expect to see even greater usage of some of these services in the fourth quarter of 2024 as we recognize the performance changes we have made for 2025,” Humana Chief Financial Officer Susan Diamond said during a Wells Fargo healthcare conference this month. “As people realize this and know that these benefits are being cut, we expect to see even greater use of some of these benefits.”

Both UnitedHealth and Mutual of Omaha have noted that changes are likely afoot in 2025 due to state cost differences.

“Our strategy remains focused on providing as much stability as possible in an environment of reduced funding,” UnitedHealth CEO Andrew Witty said during an investor call.

Mutual of Omaha also said it would end its standalone Medicare prescription drug plans due to higher costs caused by the Inflation Reduction Act.

Each annual change notice should include changes to your in-network provider and pharmacy list, as well as drug list updates and cost changes.

“Typically, seniors only pay attention to the price tag and may not consider other changes that may actually have a greater long-term impact on your insurance coverage than the few extra dollars you will pay. “This year they need to,” said Beene.