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Humana tells KRS board Medicare changes lowered retiree out‑of‑pocket but raised plan costs
Summary
Humana representatives told the board the Inflation Reduction Act’s change to maximum out‑of‑pocket for Medicare Advantage (to about $2,100) reduced retirees’ pharmacy out‑of‑pocket spending but increased plan PMPM costs an estimated 15–25%; the committee asked Humana for ongoing utilization and cost reporting.
Humana representatives briefed the Kentucky Retirement Systems board June 16 on how federal changes to Medicare Advantage have affected retiree pharmacy and medical utilization and plan costs.
Joe Coles of Humana said the Inflation Reduction Act reduced the typical Medicare Advantage maximum out‑of‑pocket from roughly $8,000 to about $2,100, producing materially lower member out‑of‑pocket costs while increasing plan per‑member‑per‑month costs. "It was a great benefit to members, but it does have put some cost pressure on the plan," Coles said, explaining that utilization rose and plan PMPM costs increased by an estimated 15–25% in 2025.
Committee chair Connie said the retiree health plan committee asked Humana to provide ongoing reporting on utilization and performance guarantees so trustees can monitor the financial effect as the change phases in. Trustee Mary Eaves asked whether specialty drugs were the primary driver of increases; Coles said specialty drugs are a significant contributor and described Humana’s steps—formulary updates, biosimilars and reliance on CMS negotiation of prices for several high‑cost drugs—to mitigate long‑term cost growth.
Staff noted that the full renewal and additional data would be available later in the year and that the committee would revisit the issue as Humana reports new utilization and cost data.
