Consumers who are enrolled in Original Medicare may not have much to do in response to administrative changes, but every year brings a new enrollment period for Part D, the prescription coverage for Medicare enrollees. A number of changes coming for the 2025 enrollment year will affect prescription coverage and pricing, and educating yourself is part of preparing for the Medicare annual enrollment period.
Following are the biggest changes to note as you prepare for the Medicare Open Enrollment Period for the 2025 plan year, which is Oct. 15 to Dec. 7.
No. 1: The Base Premium Calculation: $36.78
The base premium calculation is what the Centers for Medicare and Medicaid Services (CMS) uses as a standard for each enrollee’s premiums based on the bids the administrators receive from plan providers, plus changes such as inflation, new drug approvals that could cost the program more, or generic alternatives hitting the market that could decrease the program’s expenses.
Yet, other factors will determine your actual monthly premium:
- Your specific Part D plan’s coverage and network
- Whether you have Part D as a standalone addition to Original Medicare vs. wrapped into a Medicare Advantage plan
- Your income threshold
- Whether you enrolled late and must pay the (lifelong!) penalty for doing so
No. 2: The $590 Deductible
Every year, Medicare adjusts its Part D deductible, so it’s no surprise to see this as one of the Medicare Part D changes for 2025.
It’s worth noting that not all Part D plans require a deductible, and some place the threshold lower, but, under CMS regulations, plans must limit their deductible to $590. So, if you have a deductible on your plan, then you may need to pay 100 percent of your drug costs up to $590 before your plan will step in and begin to cover your prescription costs.
No. 3: The $2,000 Out-of-Pocket Spending Cap
Perhaps the most important 2025 Part D change is the $2,000 out-of-pocket spending cap introduced this year thanks to the 2022 Inflation Reduction Act.
Beginning in 2025, Part D plans and drug manufacturers will cover the excesses for enrollees beyond the out-of-pocket maximum. Moving forward, this amount will be adjusted for inflation, so it will likely increase year to year, but for Medicare participants who may have expensive prescription medications, this change alone could net thousands of dollars in savings.
Keep in mind, too, that while this cap applies to all prescription meds that are part of a Part D plan or that are covered as prescription features in a Medicare Advantage plan, this out-of-pocket spending cap on drug coverage does not include any drugs administered and paid for through Medicare Part B.
No. 4: No more donut hole
If you have been asking “When will the donut hole be eliminated?”, your time has come. The 2025 Medicare Part D plan changes officially end the tiered system that required plan enrollees to hit one tiered level, then cover enormous costs and then hit another tiered level before catastrophic coverage stepped in.
Instead, starting in 2025, once you have met your deductible, you’ll pay up to 25 percent of your drug costs until you meet the out-of-pocket spending cap of $2,000. That’s it. That’s all you’ll pay for the prescription drugs that are covered under your Medicare Part D plan in 2025. You never thought losing a donut would make you this happy, did you?
No. 5: The introduction of the Medicare Prescription Payment Plan
For the first time ever, CMS is introducing the Medicare Prescription Payment Plan, which could allow you to spread your prescription costs more reliably throughout the year. This program is entirely voluntary, and anyone using a Part D plan or Medicare Advantage plan can elect to pay this way.
The idea is to help those who may have more expensive medications and who may meet the deductible and out-of-pocket spending caps earlier in the year to better budget for their medications. If you go this route, you won’t pay your pharmacy when you pick up your prescriptions. Instead, you’ll pay your monthly premium to your Part D or Medicare Advantage insurance carrier, and you’ll also pay a bill from them which divides your pharmacy costs across the number of months left in the year.
Ex: You have a prescription that is costly and not available as a generic. Your monthly refill costs you $800. Under a traditional model, you’ll hit your plan deductible the first month, and then every month afterward you’ll pay your 25 percent copayment ($200) toward your out-of-pocket maximum, which will likely happen in August.
| 2025 Out of Pocket Costs of an $800 Monthly Prescription, Traditional | ||
| Month | Patient payments | Total out-of-pocket |
| January | $590 deductible + $52.50 copay | $642.50 |
| February | $200 copay | $842.50 |
| March | $200 copay | $1,042.50 |
| April | $200 copay | $1,242.50 |
| May | $200 copay | $1,442.50 |
| June | $200 copay | $1,642.50 |
| July | $200 copay | $1,842.50 |
| August | $157.50 copay | $2,000 |
| September | $0 | $2,000 |
| October | $0 | $2,000 |
| November | $0 | $2,000 |
| December | $0 | $2,000 |
If you select the Medicare Prescription Payment, however, you’ll see those patient responsibilities gradually increase until they level off at about the time you reach your out-of-pocket maximum. You’ll continue paying in the later months of the year, but you’ll avoid the balloon of a sizable upfront payment.
| 2025 Out of Pocket Costs of an $800 Monthly Prescription, Medicare Prescription Payment Plan | ||
| Month | Patient payments | Total out-of-pocket |
| January | $53.54 | $53.54 |
| February | $71.72 | $125.27 |
| March | $91.72 | $216.99 |
| April | $113.95 | $330.93 |
| May | $138.95 | $469.88 |
| June | $167.52 | $637.40 |
| July | $200.85 | $838.25 |
| August | $232.35 | $1,070.60 |
| September | $232.35 | $1,302.95 |
| October | $232.35 | $1,535.30 |
| November | $232.35 | $1,767.65 |
| December | $232.35 | $2,000.00 |
Other Changes to Medicare Part D Plans for 2025
We’ve covered the most formative changes for most Medicare enrollees, but it does bear keeping in mind that you’ll want to evaluate all of your Plan D or Medicare Advantage options for your specific prescriptions.
For the upcoming year, despite a lot of speculation, weight loss medications will still not be covered under Part D. However, some popular weight loss medications have been approved as treatments for diabetes and sleep apnea. No doubt these and other drugs coming to market to treat dementia or other common illnesses will continue to make headlines, but, in the meantime, talk to your doctor and plan thoroughly for the specific prescriptions you can anticipate needing in the coming year.
When can I change my Part D Plan?
New plans won’t take effect until 2025, but you can begin searching for your next Medicare Part D Plan on Oct. 1, 2024, and can enroll for your new coverage any time during open enrollment from Oct. 15 to Dec. 7, 2024.
If you have more questions about how your Part D plan can fit into your broader Medicare coverage, sign up for our free Medicare workshop today.
At Medicare School, we work directly with insurance companies to help you get the best plan for your prescription needs, and are happy to help you understand the details of your Medicare plans to get the most out of your coverage. If you’re looking to change your Medicare Part D coverage or simply understand your current coverage better, contact a Medicare School guide to schedule a personal consultation, or call now at (800)-864-8890.