Several major changes to Medicare Part D prescription drug plans are coming in 2025. andreswd/Getty Images In 2025, a $2,000 annual cap on out-of-pocket caps will keep costs low for Medicare enrollees on drugs covered by Part D plans. Plan Payment would allow Medicare enrollees to pay for their medications in set monthly installments rather than paying the full cost up front at the pharmacy. Decrease in Number Stand-alone Part D drug plans will mean fewer options for enrollees, which could simplify the process of choosing a Medicare plan.
Several changes will be introduced to Medicare Part D prescription drug plans in 2025 that will likely affect enrollees’ benefits and costs, including changes in premiums, a new cap on out-of-pocket expenses, and a reduction in the number of drug plans offered.
“Overall, these 2025 changes provide a good balance between managing costs and adding protections for Medicare beneficiaries,” said Brandi Burch, CEO of BenefitBay.
“For most people, these updates will provide more stability and predictability to their health care expenses,” Burch told Healthline, “which can make a big difference when it comes to planning for next year.”
Here’s a summary of the top five upcoming changes in Medicare Part D prescription drug plans.
The Medicare Part D primary beneficiary premium will increase in 2025 from the previous year. However, this does not mean that Medicare enrollees will pay more out of pocket each month for Part D drug benefits.
The inflation control law also provides a mechanism for stabilizing insurance premiums. This limits actual premium increases for Part D plans to about $2 per month on average.
The base premium is not what Part D enrollees pay each month. This is the basic amount allowed for premiums.
However, a recent analysis by ValuePenguin found that total Medicare Advantage premiums will increase 4% for 2025 over the previous year — from $24 to $25 per month. This rate varies by state.
These are average changes, so your plan premiums may change by a different amount — up or down. It’s important to shop around during Medicare’s open enrollment period, which runs from October 15 to December 7, to find the best plan that fits your budget and needs.
You may have heard about the “donut gap” — or the gap in prescription drug coverage — with respect to Medicare Part D.
You enter this gap once your Medicare Part D plan pays a certain amount for your prescription drugs during one coverage year. At this point, you will pay more out of pocket for your prescription drugs until you reach the annual limit.
Depending on your plan, when you reach your annual limit, the plan may help pay for your prescription drugs again.
If this sounds confusing, don’t worry. The donut gap will disappear after 2024 and be replaced by a new $2,000 cap in 2025. This change, due to the Inflation Reduction Act, affects all Medicare plans.
Once you pay $2,000 out of pocket for covered drugs within a calendar year, you automatically get “catastrophic coverage.” As a result, you won’t have to pay out of pocket for drugs covered by Part D for the rest of the year.
An estimated 1.4 million Medicare Part D enrollees without low-income subsidies are expected to benefit from the $2,000 out-of-pocket cap, KFF reports. These people had annual out-of-pocket spending above this limit.
Burch said the $2,000 out-of-pocket cap would have a significant impact on Medicare enrollees.
“For people who rely on expensive medications, having this cap means they can finally plan their healthcare budget without worrying about unexpected high costs,” she said. “It’s a big step in providing peace of mind and knowing that once they reach the $2,000 limit, they will be covered for the rest of the year.”
Not only will this change reduce enrollees’ drug costs — especially those taking multiple or expensive medications — but it will also likely help them take their medications as prescribed, which can improve their health outcomes.
Also coming in 2025 is an option for Part D enrollees to pay for prescription drugs in set monthly installments instead of all at once at the pharmacy.
Medicare Prescription Reimbursement is available for all plans at no cost, including Medicare drug plans and Medicare Advantage plans with drug coverage. However, participation is voluntary.
If you choose this option, instead of paying for your drugs at the pharmacy, you’ll get a monthly bill from your Medicare drug plan or Medicare Advantage plan.
“this [payment plan] It makes cost [of drugs] “You feel more manageable by breaking it down over time,” Burch said. “It’s like having a little breathing room, rather than facing a big payment all at once. This flexibility can be a relief to those on a limited budget.”
People on a Medicare prescription payment plan can’t be sent to a credit collector for not paying their bills, noted Gene Kerfoot, chief strategy and growth officer at DUOS. However, the plan could kick them off the payment plan if they don’t pay their bills, she told Healthline.
KFF projects that in 2025, there will be 26% fewer stand-alone Part D plans than the previous year and 5% fewer Part D plans for low-income subsidy (LIS) recipients.
These declines are due to changes resulting from the inflation cap, which will take effect in 2025, including the $2,000 out-of-pocket cap. Part D plans and drug manufacturers would also have to pay a larger share of drug costs above the cap, and Medicare would get paid less for drug costs.
However, KFF said enrollees in each state will still be able to choose from at least a dozen standalone plans and several Medicare Advantage drug plans.
While some people may end up losing their current plan, having fewer plans overall can help simplify things for people during Medicare open enrollment.
“Less choices mean people won’t have to spend so much time evaluating and comparing endless options, which can be overwhelming,” Burch said. “For many seniors, a simplified set of options can make the process easier and help them focus on finding what works best for them, without all the guesswork.”
Since the donut gap will disappear because of the new $2,000 pocket cap, the coverage gap discount program is no longer needed.
It will be replaced starting in 2025 by a manufacturer rebate program. Under this program, a manufacturer will typically pay a 10% rebate on branded drugs and biologics during the initial Part D coverage phase, CMS said.
When a beneficiary reaches the catastrophic stage—beyond the $2,000 out-of-pocket cap—the manufacturer typically offers a 20% discount on these drugs and biologics.
“This change may change how drug rebates are implemented, especially for brand-name drugs,” Burch said. “But the good news is that the relief is financial [for enrollees] Because the prescriptions must still be there.
“It is important for enrollees to double-check how this update affects their specific medications during open enrollment,” she added. “This way, they can avoid any surprises when it comes to costs.”
Kerfoot recommends that people consider several things when shopping for a Medicare drug plan this year, including whether their plan from 2024 is still offered, whether their current plan reduces their benefits, and whether the medications they take are no longer Still covered by the plan, and whether the premium changes.
Burch also suggests that people keep in mind the five major changes that will happen in the coming year.
“With adjustments to out-of-pocket expense limits, payment options, and plan options, it is important to choose a plan that best matches their health care and financial needs,” Burch said. “Taking a little extra time now to understand the new landscape can help avoid a lot of anxiety, and potentially a lot of money, throughout 2025.”
Several changes will be made to Medicare Part D prescription drug plans in 2025 that may affect drug costs and plan coverage. One change is an annual cap of $2,000 out of pocket. Once enrollees reach this threshold, they will not have to pay out of pocket for their medications for the rest of the year.
A new payment plan will also begin in 2025 that will allow enrollees to pay for their medications in set monthly installments rather than in one lump sum at the pharmacy. This free option is available to all Part D plans, including Medicare Advantage plans with drug coverage. Participation is voluntary.
In 2025, there will be 26% fewer stand-alone Part D plans than in 2024 and slightly fewer Part D plans for low-income seniors. However, at least a dozen stand-alone plans are available in each state, so enrollees will still have options.
