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Unpacking the changes to Medicare in 2025

Medicare coverage is personal — and changes to those plans and benefits may feel unnerving as it affects one’s overall health and well-being.

Originally passed in 2022, the Inflation Reduction Act brought about many changes to Medicare that are now being implemented for 2025. These changes affect all standalone Medicare prescription drug plans and Medicare Advantage plans with prescription drug coverage.

These are three of the big updates to understand:

  • removal of the coverage gap
  • a lower maximum out of pocket amount for Part D prescription drugs
  • a new prescription payment plan option

Removal of the coverage gap

First, good news in 2025: The coverage gap, also called the donut hole, has been removed. There are now three Part D prescription drug coverage stages:

  • An annual deductible stage
    • If a plan has a prescription drug deductible, members will be responsible for paying the full cost of their drugs until they reach this amount.
  • Initial coverage stage
    • In the initial coverage stage, members are responsible for paying co-pays or coinsurance.
  • Catastrophic coverage stage
    • Once the member and others on their behalf have paid a combined total of $2,000 for Medicare covered medications (including any amount toward the deductible) the member moves straight into the catastrophic coverage stage where they will pay $0 for Medicare-covered Part D drugs for the remainder of the plan year.

Out of pocket maximum

In 2024 for all Medicare members, no matter what insurance provider they were enrolled with, the Part D out of pocket max was $8,000.

For 2025, the out-of-pocket maximum is lower than ever. Once a member and others on their behalf have paid a combined total of $2,000, members will not pay a copayment or coinsurance for Medicare covered Part D prescription drugs for the rest of the plan year.

However, while the goal is to lower prescription drug expenses, these changes could result in higher deductibles or premiums in 2025. This means members may pay more earlier in the year during the deductible stage but could see an overall savings compared to prior years with the lowered out of pocket maximum.

Prescription payment plan

Finally, there’s a new optional program called the Medicare Prescription Payment Plan. Instead of paying all your out-of-pocket costs when you fill your prescriptions at a network pharmacy, you can spread these payments out over the plan year with monthly bills.

It’s important to know this program does not lower prescription drug costs. The payment amount may change each month until the $2,000 out of the pocket max is reached.

So while monthly payments may be more manageable, they may also be less predictable. Your plan sponsor may contact you if you’re likely to benefit from the program.

Learn more about the Inflation Reduction Act and the changes to Part D.

To learn more about the ins and outs of Medicare, visit MedicareEducation.com.

https://www.uhc.com/news-articles/medicare-articles/ira-medicare

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