How Payers Changed Medicare Advantage Benefits In 2025

Editor’s note: This is the second article in a series analyzing changes to Medicare Advantage plans for 2025. The first article examined plan closures and exits from markets around the country. This series explores what disruption to the Medicare Advantage market means for insurers going forward.

Significant shifts in Medicare Advantage market dynamics are creating concerns for insurers for 2025 and beyond. Those shifts resulted in several carriers discontinuing products or exiting markets entirely for 2025, requiring more than 1.8 million individual, non-SNP Medicare Advantage members — approximately 9% of all enrollees from 2024 — to choose a new plan.

While some seniors have made their coverage decisions for the upcoming year, millions are continuing to shop during the Medicare Annual Enrollment Period (AEP) which ends in early December. A few critical trends have emerged in individual, non-SNP MA & MAPD plans:

• Insurers generally protected core medical benefits, meaning there are overall minimal changes in premiums and essential cost-sharing elements such as primary care provider copays
• Pharmacy benefits were a target of more substantial changes, including the introduction of a pharmacy deductible by many plans
• Significant changes have been made across supplemental benefits. While a diverse array of strategies was employed, there will be meaningful reductions across flex cards, dental benefits, and over-the-counter (OTC) allowances

We expect these changes and others to result in increased consumer shopping during the 2025 enrollment period. Many consumers will have to make tougher tradeoffs than in past years across their coverage options — and how that translates to actual switching rates during is yet to be seen.

Let’s dive into the benefit changes. Note that all membership figures mentioned reflect 2024 enrollment. Final enrollment decisions for 2025 will not be available until next year.

Changes to monthly premiums

Overall: Out of the nearly 21.1 million seniors enrolled in individual, non-SNP MA/MAPD plans last year, the majority who remain in their products will have no change in their monthly premiums:

• 71% — about 14.9 million individuals — will see no change in their premiums from 2024 to 2025
• 9% are enrolled in plans that will decrease their premiums
• 11% will face premium increases if they choose to remain in their current plans
• 9% will be shopping for new coverage due to plan closures

The 11% of individuals experiencing a premium increase is fairly similar to the 13% of individuals who faced premium increases when entering 2024. Approximately two-thirds of those facing premium increases will see premiums rise $10 or less. Notably, UnitedHealthcare had the highest representation of premium increases with over 850,000 individuals impacted, representing roughly 18% of its membership.

$0 Premium Plans: Zero-dollar premium plans have become undeniably popular among Medicare Advantage members. As of May 2024, approximately 75% (15.8 million) of all individual non-SNP members were enrolled in $0 premium plans, up from 61% in 2020. Looking ahead to 2025, most $0 premium plans will remain stable:

• 90% of seniors in $0 premium plans will see no change to their premium
• 8% will be facing plan closures
• 2% will experience premium increases ranging from $2 to $41

The 2% represents a significant rise from the 0.4% of $0 premium plan enrollees who faced premium increases in 2024 and is indicative of the sustainability challenges many payers face in these rich $0 plans. Most of premium increases were concentrated in non-zero-dollar plans, where 40% of plans experienced hikes vs. 2% of $0 plans.

This premium analysis does not consider the potential addition or removal of Part B premium buybacks, which could also influence monthly costs for members.

Big shifts in Supplemental Benefits

This is where we are seeing the most significant changes in 2025 benefits, with reductions and even removal of entire benefit allowances. While strategies vary widely by carrier, market and plan, flex card, over-the-counter and dental allowances are levers being utilized by many to adapt to market headwinds.

Flex Card Allowance: Flex cards are a unique supplemental benefit that allow payers to offer coverage amounts across multiple benefits in one flexible spending card, often including dental, vision, hearing out-of-pocket costs, OTC items, and/or transportation services. More than 16 million individuals were enrolled in a product with a flex card allowance in 2024. Heading into 2025, over 50% will face negative actions to their flex card allowance or a plan closure in 2025:

• 8% will face plan closures
• 7% will face a removal of the flex card allowance altogether
• 38% will face a decrease in their card allowance, with a weighted average change of over $1,000 in reduction in card allowance per member, per year
• 47% will see either no change, or increase, to their allowance

OTC Allowance: Over 10.5 million (59%) of the 18.0 million individuals with OTC allowance in 2024 are going to see negative changes going into 2025:

• 25% will face a decrease in the OTC allowance amount
• 34% will face a total removal of the OTC benefit
• 8% will be shopping for new plans in 2025
• 33% will see either no change or an increase in their OTC allowance

OTC benefits and flex cards are costly benefits for insurers. OTC allowances and some flex card allowances also do not impact Total Benefit Change (TBC) calculations, meaning these are two benefits where payers could make significant reductions and not hit Centers for Medicare and Medicaid Services’ caps on how much change is allowable in a single year. Given this, it’s not surprising that these were key targets in 2025. Payers should watch how consumers respond though since OTC and flex cards are benefits that influence their shopping behaviors.

Dental Allowance: Roughly 37% of the 16.9 million individuals benefits with a dental allowance on their MA plans in 2024 will see either a decrease in or removal of the allowance:

• 25% will face a decrease in dental allowance
• 11% will face a removal of the allowance
• 8% will be affected by a plan closure
• 41% will experience no change to their dental allowance
• 14% will experience an increase in dental allowance

While this is less pervasive than negative changes to flex card and OTC allowances — likely due to risk selection impacts, shoppability, and TBC impacts associated with dental benefits — the disruption to dental benefits is still meaningful.

Modifications to supplemental benefits could be impacted by strategic changes made to other benefits. For example, some insurance companies may offset a decrease in dental allowance with an increase in flex card allowance. Regardless, member shopping will likely be more difficult as seniors navigate their plan options.

Targeted changes to Medical and Pharmacy Benefits

Medical and pharmacy benefits experienced more targeted shifts than supplemental benefits designed. Some significant changes were made to specialist copays, maximum out of pocket, and prescription drug deductibles, while primary care physician (PCP) copays and medical deductibles remain largely unaffected.

PCP and Specialist Copays: There are limited changes to PCP copays for 2025. In fact, 99% of members will either see no change or a decrease in their PCP copay. That’s partly driven by insurers focusing on helping their members maintain strong relationships with their primary care providers.

Specialist copays, on the other hand, will see more disruption. Approximately 3.6 million members — approximately 20% — from 2024 will see an increase in their specialist copays if they stay in the same product in 2025. Of these, over 160,000 individuals will move off a $0 specialist copay. Increases in specialist copays may impact risk selection and payers should be actively reviewing whether these changes lead to switching behavior in their markets as they gear up for the 2026 bid season.

Maximum out of pocket costs: Over 40% of individuals, more than 8.4 million, will face an increase in their in-network maximum out of pocket limit. Approximately 4 million of these individuals will experience an increase of more than $500. Notable increases are being made by Humana in select plans, such as an increase of $6,450 in the Humana Gold Plus H6622-004 (HMO). These changes could significantly increase member cost-sharing for higher utilizing members, which might impact risk selection for plans.

Medical Deductible: Most Medicare Advantage beneficiaries in 2024 – 19.9 million – had a $0 medical deductible. Approximately 5% of this group, slightly over one million, will transition off a $0 medical deductible. While this is relatively small compared to some other changes, given 94% of seniors had a $0 deductible, this is a trend worth watching going forward.

Pharmacy Deductible: A more notable trend for 2025 is the rise in prevalence of prescription drug deductibles. Of the 16.5 million individuals enrolled in a $0 Part D deductible MAPD plan in 2024, more than 45% (over 7.4 million) will face the addition of a drug deductible in 2025. This is likely in part due to payers managing increased plan liability following the Inflation Reduction Act's Part D Benefit Redesign. Many of these new Part D deductibles are limited, applying only to prescription drugs found on higher formulary tiers.

More to come in a future blog post on other 2025 Part D benefit and formulary changes.

Preparing for the 2026 bid season

Beyond tracking and analyzing how seniors respond to new plan designs, insurers should evaluate changes their competitors made for 2025.There will likely be a catch-up effect heading in 2026 that could lead to further negative benefit changes for many carriers. On the other hand, some financially stable payers who have optimized other Medicare Advantage success levers may seize this opportunity to position themselves advantageously in the market and capture target membership while others continue product pullbacks in 2026. Overall, the 2026 product decisions made over the next six months will be critical for growth, risk selection, and ultimately driving long-term sustainability in Medicare Advantage.