Big changes are coming to Medicare in 2025 that could make a major difference in the cost of your prescription drugs.

Thanks to the Inflation Reduction Act, Medicare beneficiaries will receive the program’s most significant updates to drug coverage since its introduction in 2006.

These updates are considered a big win for many beneficiaries, especially those taking expensive medications, but there are some important details and potential costs to keep in mind.

4 big changes to Medicare for 2025

Medicare open enrollment runs from October 15 to December 7. During this annual event, people with Medicare can review their plans and make changes to their Medicare coverage, which take effect January 1.

If you are one of the more than 66 million people enrolled in Medicare, it is important to understand upcoming changes to the program so you can make informed decisions.

With Medicare open enrollment well underway, here’s everything you need to know.

1. Annual ceiling for medications payable of $2,000

The Inflation Reduction Act, signed into law in 2022, green-lighted significant changes to the Medicare program. These measures are rolled out over time and the latest provision comes into force next year.

Starting in 2025, out-of-pocket drug spending will be capped at $2,000 per year and the prescription drug “donut hole” will be eliminated.

Here’s how the new system will work:

You will pay a deductible of $590 (compared to $545 in 2024). Once you meet the deductible, you will pay 25 percent of your drug costs in the initial coverage phase until your personal expenses reached $2,000. Once you reach this limit, you will have what is called catastrophic coverage and will not pay any additional costs for prescription drugs.

This provision is expected to save Medicare enrollees approximately $7.4 billion annually, according to the Centers for Medicare & Medicaid Services (CMS). This translates to an average savings of nearly $400 per person for more than 18.7 million beneficiaries in 2025, or about 36% of total Part D enrollment.

2. Some Part D plan premiums may increase – but the average cost is decreasing

Although some Medicare beneficiaries save money on healthcare costs Thanks to the new $2,000 cap, especially for those taking expensive brand-name drugs, others could see their premiums increase.

Before we get into the details, here’s a quick overview of how Medicare enrollees get prescription drug coverage.

The Part D marketplace includes two types of plans, both administered by private health insurance companies that contract with the federal government and receive funding from CMS. One is a stand-alone plan that only offers drug coverage, and the other is a Medicare Advantage plan that bundles drug coverage with other health services.

KFF, a nonpartisan health policy research organization, warns that some plans may adjust their premiums, formularies, copays or deductibles in response to the new $2,000 out-of-pocket spending cap. This is due in part to rising costs for insurers and limited increases in government payments.

A new program, the Part D Premium Stabilization Demonstration, helps limit premium increases for Part D enrollees. This program caps monthly premium increases at $35 in 2024 and 2025.

So, at most, premiums for stand-alone drug plans could increase by $35 per month compared to 2024 levels. But some plans may have more modest increases or even decreases.

That being said, the average Part D premium is decreasing, according to CMS. The estimated average premium for Part D beneficiaries is expected to decrease by $7.45 in 2025, to $46.50 in 2025, from $53.95 in 2024.

While it’s helpful to understand the average costs of drug plans, you’ll need to look at the premium for your specific plan — or any plan you’re considering switching to during open enrollment — to understand the true cost.

3. You can choose to pay for your medications over time

Starting in 2025, Medicare prescription drug plans must offer their enrollees the option of splitting their prescription drug costs into monthly payments throughout the year, instead of paying them all at once. the pharmacy.

If you choose to enroll in the Medicare Prescription Payment Plan, you will receive a bill from your Medicare Advantage plan or stand-alone Part D plan for your drug costs instead of paying at the pharmacy. There is no additional cost to participate in the program.

To enroll or learn more, contact your Medicare prescription plan provider.

4. Potentially higher Medicare Part B premium and deductible

Your Medicare Part B premium and deductible change every year. In 2025, this figure will likely increase, although the change has not yet been announced. Medicare Part B covers a wide range of outpatient services, including doctor visits, outpatient surgeries, and medical devices.

Medicare Part B premiums and deductible costs are important information for beneficiaries. All Medicare enrollees pay these costs, whether they participate in a Medicare Advantage plan or Original Medicare.

Most enrollees benefit from the Part B premium automatically deducted from their monthly Social Security check. It should be noted, however, that state savings programs as well as programs through Medicare Advantage plans can help reduce or eliminate the Part B premium for low-income beneficiaries.

What to Do During Medicare Open Enrollment

Medicare Open Enrollment occurs annually from October 15 to December 7. During this time, you can switch from Original Medicare to a Medicare Advantage plan (or vice versa), switch between Medicare Advantage plans, or switch between Medicare Part D prescription drug plans.

You can view the plans using the Health Insurance Plan Search and sign up for a new plan online or over the phone.

When evaluating Medicare costs, consider factors other than monthly premiums. Deductibles, co-pays, and access to services all contribute to the overall cost. Choosing the lowest premium plan isn’t always the best option. Lower premiums may mean higher costs or limited drug coverage.

If you are having trouble paying your Medicare costs, you may be eligible for the Extra Help program. Those who are eligible typically pay up to $4.50 for a generic drug and $11.20 for a brand-name drug with Extra Help.

If you are enrolled in a Medicare plan, you should have received an Annual Change Notice letter in the mail in September.

Reread this letter carefully. It will outline the cost changes to your current plan as well as the medication list, also known as a formulary. Verify that your current medications are still covered and see if their level or your out-of-pocket costs have changed.

Get help from SHIP

Navigating Medicare can be complex. If you need help exploring your options, a network of free, federally funded programs can help.

The National Health Insurance Assistance Program (SHIP) provides individual counseling, education, and support to Medicare beneficiaries and their families.

Each state has its own SHIP program, although it may have a slightly different name in your state, such as SHINE (Serving Health Insurance Needs of Everyone) in Florida or SHIBA (Senior Health Insurance Benefits Advisors) in Idaho.

A SHIP advisor can help you in many areas, including comparing drug plans, identifying potential savings, and answering open enrollment questions, all at no cost.

You can find your SHIP using the online site Regional SHIP Locator tool. Or you can call the National Network hotline at 877-839-2675.

Conclusion

Medicare’s changes in 2025 could make a big difference in the cost of your medications and how you manage your payments. Take time during open enrollment to compare plans, confirm your medications are covered, and review options like the Extra Help program to lower your costs.

Whether you are currently enrolled in Medicare or approach to eligibilityNow is the time to understand how these updates will affect your budget and how you can take advantage of them.