Key Medicare Changes that Will Affect 2025 Prescription Costs
Written by TYE Medical on Dec 6th 2024
As a new year approaches, be aware of these notable changes to Medicare that will change Part D prescription benefits and costs in 2025. Exactly how this will shake out, no one knows for sure, and it seems the effects on your wallet may be mixed. In the coming weeks, you will see changes in premiums, fewer drug plans offered, and a new out-of-pocket cap. Some say these changes simplify the plan selection process and will keep costs low. Here is a checklist of what you need to know.
Increase in the Medicare Part D Base Premium
You will see an increase in the Part D premium over last year but you won’t necessarily pay more out of pocket for drug benefits. Due to the Inflation Reduction Act, the increase has a 6% cap, which keeps premiums from rising too much, too often. The increase averages to only about $2 per month on your base premium. Most enrollees pay more than the base premium but may notice a tiny bump in their overall monthly payments.
Even though the base premium will rise slightly, the average total monthly premium will decrease by about 4% in 2025 thanks to the government’s premium stabilization mechanism that is part of the Inflation Reduction Act.
What does this mean for you? Total monthly premiums will range from $0 to $100 or more. If your income is over $103,000 (for individuals) or $206,000 (for couples), you will pay an income-based premium surcharge in addition to your regular premium.
For 2025, the Centers for Medicare and Medicaid Services (CMS) projects a 13% drop in the average monthly premium for Medicare Advantage plans that include prescription coverage. But other sources claim Medicare Advantage premiums will increase by 4% over 2025, although it varies by state.
With these changes and possible outcomes in mind, it’s important to check plans and pricing during the Medicare Open Enrollment period that runs through December 7, 2024.
$2,000 Out-of-Pocket Max
In 2025, all Medicare plans will have a new $2,000 out-of-pocket cap, which means that once you have paid this amount for covered prescriptions during a calendar year, “catastrophic coverage” will automatically kick in and pay the costs for your remaining prescriptions. After this, you won’t have to pay out of pocket for Part D covered drugs for the rest of the year.
This will benefit you even if you don’t receive a low-income subsidy, which means it will affect a broad number of people who often must spend over this limit to cover their prescriptions for the year. This change will help many who can’t afford to pay out of pocket and therefore aren’t able to take their medications consistently or as described. This is especially true for those with high-cost prescriptions.
Prescription Payment Plan Managed by Medicare Plans
Another safeguard that is new this year allows enrollees to pay for their prescriptions in capped monthly payments instead of up front at the pharmacy. It’s called the Medicare Prescription Payment Plan and is available to all with no additional costs.
This will be an option you can choose if you find that lump sum prescription drug costs strain or break your budget. This approach allows you to spread out costs over time rather than paying on the spot at the pharmacy when you pick up. Instead, your Medicare drug plan or Medicare Advantage plan will send you a monthly, capped bill. This would be an expected amount that you can plan for accordingly.
It is important to note that if you’re on a Medicare Prescription Payment Plan, you can’t be turned over to a credit collector for nonpayment but you can lose the privilege of your payment plan.
Fewer Stand-Alone Part D Options
It’s expected that there will be 26% fewer stand-alone Part D plans than were available over the last five years. This is related to the changes brought about by the Inflation Reduction Act that will require Part D plans and drug companies to pay more of the drug costs that exceed the cap on coverage. Medicare will cover less drug costs.
However, there shouldn’t be a need to despair, because you will still have at least a dozen options for stand-alone plans and many Medicare Advantage drug plans to choose from. Some suggest that narrowing the pool to fewer plans could help simplify the process during Medicare Open Enrollment.
Key Changes to Remember for Medicare Part D 2025
Whether you are finalizing your Medicare plans for next year or are preparing yourself for the year to come, several changes will affect your Part D coverage. Enrollees will enjoy a $2,000 out-of-pocket cap that will keep them from paying prescription costs for the rest of the year.
For those unmanageable prescription bills, you can opt for capped monthly payments on your prescriptions to spread costs out over time rather than paying up front at the pharmacy. This is a no-cost option available to all Part D and Medicare advantage enrollees.
You will also find fewer Part D plans to choose from for 2025 but will still have plenty to choose from in your state.
