Notification of Medicare Legislative Change 2025
Recent changes to Medicare Part D, due to the Inflation Reduction Act, will introduce a $2,000 out-of-pocket cap starting in 2025. This raises the bar for what Medicare considers “creditable coverage under Part D.”
Why is this Legislative Change Important?
Medicare-eligible clients who have waived Medicare Part D because they retained coverage on employer-sponsored plans may no longer have credible coverage through work. Those without creditable coverage may face lifetime penalties when eventually joining Medicare Part D.
What are the Next Steps for your clients?
Clients working past age 65 should confirm with their employer that their 2025 drug coverage is considered credible by Medicare. If they have not received a Part D 2025 status notification from their employer. they should contact their HR department. If their Drug coverage is not considered credible for 2025, they should purchase Part D coverage from PlanEnroll or Medicare.gov.
Need assistance? Call Chris Mihm at 800-930-7956 x713 or email mihm@senior65.com
Important Medicare Issues for Financial Advisors to Know
The high cost of medical bills is the number one reason why people over 65 file for bankruptcy. Financial Advisors should have a general understanding of how Medicare works and what issues are important to their clients. Below is an outline of important dates and issues. If you are unfamiliar with Medicare, please read this overview: What is Medicare and how does it work?
When to Enroll in Medicare Insurance
Medicare Part A: (Hospital Coverage)
Begins 3 months before your client turns 65 and ends 3 months after the month they turn 65. Those with certain disabilities may be able to enroll in Medicare A and related insurance products below before age 65.
Medicare Part B: (Medical Coverage)
Begins 3 months before your client turns 65 and ends 3 months after the month they turn 65 (unless still covered by credible work coverage- see below).
Medicare Part D: (Prescription Drug Coverage)
Begins 3 months before your client enrolls in Medicare and ends 3 months after you get Medicare. Must have Medicare Part A OR Part B to enroll. There are big changes to Medicare Part D in 2025. Learn more here.
Medicare Advantage: (MA)
Begins 3 months before you get Medicare and ends 3 months after your client enrolls in Medicare. Must have Medicare Part A AND Part B to enroll.
Medigap: (Medicare Supplemental Insurance)
Begins 3 months before and 6 months after the first day of the month your client is 65 or older AND signed up for Part B.
Here is a quick and easy Medicare deadline calculator.
Medicare Part A Premiums
Most seniors aged 65 and older who are eligible for Medicare won’t pay the Part A premium. Clients typically qualify for premium-free Part A if they (or their spouse) have worked and paid taxes for 10 years.
Those who haven’t satisfied the Part A work requirements will have to pay the Part A premium. See below for details:
| Worked and paid taxes for 40 quarters (10 years) | Worked and paid taxes 30 – 39 quarters | Worked and paid taxes less than 30 quarters |
|---|---|---|
| $0 | $278 | $505 |
Medicare Part B and D Premiums
The Medicare Part B premium must be paid every month and can be paid by HSA, direct bill or deducted from social security (if SS receiving retirement benefits). If your client’s modified adjusted gross income (as reported on the IRS tax return from 2 years ago) is above a certain amount, they may pay an Income Related Monthly Adjustment Amount (IRMAA).
Medicare Part D Drug coverage varies by insurance provider. Prices can vary from $.40 to $100 a month based on their drug needs. We can help clients figure out which plan is right for them. Clients with higher incomes may also be subject to IRMAA fees for Part D or a Medicare Advantage that includes prescription drugs (MAPD). See chart below for the 2024 Part B and Part D costs (based on 2022 tax filing). Read this article about important changes to Part D in 2025.
| Beneficiaries who file individual tax returns with income | Beneficiaries who file joint tax returns with income | Part B Monthly Premium | Part D/MAPD Monthly Premium |
|---|---|---|---|
| Less than or equal to $103,000 | Less than or equal to $206,000 | $174.70 | Premium (varies) |
| $103,000 to $129,000 | $206,000 to $258,00 | $244.60 | Premium + $12.90 |
| $129,000 to $161,000 | $258,000 to $322,000 | $349.40 | Premium + $33.30 |
| $161,000 to $193,000 | $322,000 to $386,000 | $454.20 | Premium + $53.80 |
| $193,000 to $500,000 | $386,000 to $750,000 | $559.00 | Premium + $74.20 |
| Greater than or equal to $500,000 | Greater than or equal to $750,000 | $594.00 | Premium + $81.00 |
Medigap and Medicare Advantage Premiums
Monthly premiums for Medigap and MA vary by carrier. We can help them understand plans and pricing over the phone at 800-930-7956 x713
Medicare Late Enrollment Penalties
Late for Medicare Part A Enrollment:
There is no penalty for late enrollment if your client or spouse has paid into Medicare for 10 years. If they haven’t worked the 40 quarter minimum, they may have to pay a one-time 10% penalty based on their calculated Part A fee (see chart below).
Late for Medicare Part B Enrollment
Your client will pay 10% of the standard premium ($174.70 in 2024) for each year your client could have signed up for Part B, but didn’t. They will pay this penalty each year for as long as they are on Medicare Part B.
Late for Medicare Part D / MAPD
Clients will pay 1% per month not covered on Part D based on that year’s national base beneficiary premium. The 2024 Part D national base beneficiary premium is $34.70. A client who was one year late would have to pay 12% or $4.16 in penalties each month for as long as they have a Medicare Part D plan. This same rule applies to those who enroll late on a Medicare Advantage with a PDP plan (also known as MAPD).
Late for Medigap:
There is no financial penalty for late enrollment in Medigap. Those who apply outside their initial enrollment window may be required to go through medical underwriting and could be turned down or charged more. Missing the Medigap deadline may mean your client may never qualify for Medigap.
Delay Medicare Due to Insurance Through Work
Clients over 65 may be able to delay Medicare Part B enrollment if they have “Credible Coverage as deemed by Medicare” through their or their spouse’s work. This rule can be tricky. Some work coverage will require employees over 65 to enroll in Medicare Part A and B and COBRA does not count as credible coverage. We can help work with your client to determine if they can delay coverage. Watch out! Part D now has a $2000 out-of-pocket maximum so many work plans drug coverage will no longer be considered credible.
Once your client’s work health insurance ends, they will have an 8-month Special Enrollment Period (SEP) to sign up for Medicare. We can work with your client to ensure that their Medicare start date begins the day their work coverage ends. Once again, COBRA coverage doesn’t count as work coverage for this SEP.
Delay Medigap/Part D/ MA Due to Insurance Through Work
Your client may have the option to have Medicare A and B plus credible work coverage. In that case, they would delay Medigap and Part D until they ended their work coverage. Leaving work would trigger a Special Enrollment Period where they would have 2 full months to enroll in Medigap, Part D or Medicare Advantage plans.
Annual Election Period (AEP)
October 15-Dec 7 is the annual election period where your clients can switch drug plans or Medicare Advantage plans for the upcoming new year. If they do nothing, their current plan should automatically renew. If they switch during this time, they will be approved on their new plan at the best rate regardless of their health history. Senior65.com can help them with their annual review.
There is no Annual Election Period for Medigap in most states. Clients can switch Medigap plans at any time but may have to go through medical underwriting to get approved on the new plan. Many states have special laws for switching (see below).
- Alaska
- Alabama
- Arkansas
- Arizona
- California
- Colorado
- Connecticut
- District of Columbia
- Delaware
- Florida
- Georgia
- Hawaii
- Iowa
- Idaho
- Illinois
- Indiana
- Kansas
- Kentucky
- Louisiana
- Massachusetts
- Maryland
- Maine
- Michigan
- Minnesota
- Missouri
- Mississippi
- Montana
- North Carolina
- North Dakota
- Nebraska
- New Hampshire
- New Jersey
- New Mexico
- Nevada
- New York
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Virginia
- Vermont
- Washington
- Wisconsin
- West Virginia
- Wyoming
Medigap by State
In general, Medigap plans are standardized nationwide. This means that a Medigap plan G in Kansas will usually have the exact same benefits, access to doctors, and switching rules as a Medigap G in Florida. The prices, however, will be very different from state to state.
Additionally, some states have made local laws that have changed what Medigap covers and how/when you can switch plans. Use the interactive map below or the dropdown state list to see how Medigap works in your client’s state.
While Medigap plans are standardized nationwide, some states have made local laws that have changed what Medigap covers and how/when you can switch plans. Use the dropdown state list to see how Medigap works in your client’s state.