The Changes to Medicare Part D in 2025

With Medicare open enrollment beginning last week, some significant changes are coming to the prescription drug coverage (Medicare Part D) for 2025. These changes are part of an effort to make drug prices more affordable for the millions of retirees currently enrolled. Knowing these changes can help you decide what coverage to keep or change during enrollment, which lasts through December 7th.

Key changes

(1) $2,000 hard cap - Medicare Part D enrollees can face substantial costs even after reaching the catastrophic coverage phase, where they typically pay 5% of the drug costs without limit. However, starting in 2025, there will be a $2,000 annual limit on what enrollees pay for their medications out of pocket. I’ve had several clients with yearly drug costs over $5,000 - $7,000, so this will be a substantial savings.

(2) Spread out the cost - Beneficiaries will have the option to spread out their medication costs over the course of the year. For example, if they have a pricey drug that will result in them reaching the $2,000 cap in January, they can opt to pay the $2,000 over the course of the year.

(3) Capped premium increases through 2029—Insurance companies are limited to how much they can increase premiums per year from 2025 to 2029. While this is likely to protect costs over the next few years, it raises concerns about potentially significant increases in 2030, especially since the insurers are also capped at collecting $2,000 from their beneficiaries.

Given these changes, if you are already enrolled in a plan, reviewing your coverage now during open enrollment (October 15th - December 7th) is a good idea to ensure your plan is still optimized for your situation!

Happy Planning,

Alex

This blog post is not advice. Please read disclaimers.