Recent changes to Medicare Advantage (MA) and Medicare Part D prescription drug coverage will affect the cost of PERACare health benefits in 2025.

What’s changing

The Centers for Medicare & Medicaid Services (CMS) pays MA insurers a base payment for every enrollee in their plan, as well as additional money for enrollees that have more health issues. CMS will be reducing the base payment amount for 2025. In addition, in 2024 CMS started phasing in changes to how it calculates the additional health status payments. These actions are expected to reduce the amount CMS reimburses insurers.

For 2025, the Inflation Reduction Act adds an out-of-pocket maximum of $2,000 to costs MA enrollees pay for their Part D prescriptions. This means after that first $2,000, enrollees will not have to pay anything for their prescriptions. While this is a positive change for those who take multiple medications, this means more costs for the insurance companies.

While final rates and plan benefits for 2025 are not yet available, MA and Part D carriers have already noted that in response to these changes they are likely to increase MA premiums more significantly than in recent years and may also make benefit reductions. This will impact individual Medicare Advantage plans, individual Medicare Part D plans, and the Medicare plans offered by PERACare.

Other factors affecting cost

PERA’s insurance team uses a competitive bid process to identify carriers and plans that provide valuable health benefits to PERA retirees, and we negotiate the best rates we can. PERACare was able to negotiate a rate guarantee keeping MA premiums unchanged for several years, but that guarantee is now expiring.

PERACare plans offer generous benefits and broad networks of providers across the United States. The plans also cover only retirees, who tend to have more medical needs and use more services than the general population, resulting in higher plan costs. PERA offers a subsidy, based on years of service, to help offset some of the cost of PERACare premiums.

Everyone’s health care needs are different, and we encourage retirees to take a look at all their health insurance options to choose a plan that best fits their budget and needs.

What to know about open enrollment

PERACare staff are working to finalize plans and premiums for 2025, and we’ll be mailing information out in the coming months.

Here are some important dates to keep in mind:

• October 1: 2025 PERACare information available online
• Mid-October: PERACare open enrollment materials mailed to current PERACare enrollees
• October 21 to November 21: PERACare open enrollment
• October 15 to December 7: Medicare open enrollment
• December 15: Last day for PERA to receive cancellation requests for January 1

For more information, visit copera.org/peracare.