Thanks to the Inflation Reduction Act of 2022, Medicare has introduced some of the most impactful changes in recent years, including relief from high prescription drug prices.
Here’s a snapshot of the changes:
- In 2023, Medicare capped insulin costs at $35 per month in Part D prescription plans and removed out-of-pocket costs for recommended vaccines.
- In 2024, the government expanded eligibility for the Part D Extra Help program and, on August 15, announced negotiations to lower the prices of 10 of Medicare’s most expensive drugs, with these prices set to take effect in 2026.
A major change coming in 2025 requires Part D plans to limit out-of-pocket spending on covered drugs to $2,000 per year. This adjustment will also impact other costs and coverage in Part D and Medicare Advantage plans, making it essential to review your options during this year’s open enrollment.
This Part D update takes center stage among other Medicare changes in 2025, such as midyear coverage notices for Medicare Advantage, stricter marketing regulations, expanded support for family caregivers, and improved access to mental health providers.
$2,000 Out-of-Pocket Spending Cap for Prescriptions
Starting in 2025, a $2,000 annual out-of-pocket limit will be in place for prescription medications, covering both stand-alone Medicare Part D policies and drug coverage in Medicare Advantage plans.
The $2,000 cap will cover deductibles, copayments, and coinsurance for covered medications but won’t apply to premiums or drugs that aren’t covered by the plan.
End of the Part D ‘Donut Hole’ or Coverage Gap
This change simplifies Part D coverage, which used to involve four phases:
- Deductible Phase: You paid full drug costs until reaching your deductible, up to $545 in 2024.
- Initial Coverage: You paid copayments, which varied by medication.
- Coverage Gap: Known as the “donut hole,” this phase started once you and your plan spent $5,030 on covered drugs in 2024. Plan coverage was reduced, especially for brand-name drugs, resulting in potentially higher out-of-pocket costs.
- Catastrophic Coverage: Once you reached $8,000 in out-of-pocket costs (including manufacturers’ discounts), you paid nothing for covered prescriptions through the year’s end.
In 2025, the Part D deductible can go up to $590, after which you’ll pay copayments until your total out-of-pocket costs hit $2,000.
This cap could benefit millions. By April 1, 2024, over 1.7 million enrollees (around 3.5% of those in drug plans) had already exceeded $2,000 in out-of-pocket costs, per CMS, with many more likely to by year’s end.
High-cost drug users often face large expenses at the start of each year. To help, the Medicare Prescription Payment Plan will allow enrollees to spread out prescription costs monthly, reducing the impact on cash flow.
This helps people manage their out-of-pocket drug costs throughout the year, easing the cash flow strain at the pharmacy.
The payment plan doesn’t reduce total costs, but it makes budgeting easier. You can enroll by contacting your Part D provider.
Expanded Access to Weight Loss Medications
Medicare cannot cover drugs prescribed solely for weight loss. However, Part D plans can cover well-known weight loss medications, like Ozempic and Mounjaro, when prescribed for other conditions, such as type 2 diabetes.
In March, the FDA approved Wegovy for people with cardiovascular disease who are also overweight. While few Part D plans added Wegovy midyear due to fixed premiums, you may see broader coverage of weight loss medications in 2025.
Subtle Adjustments in Medicare Advantage Coverage
The $2,000 out-of-pocket cap applies to deductibles, copayments, and coinsurance for the drug portion of Medicare Advantage plans.
In 2025, Medicare Advantage plans may make adjustments to balance these added costs. While they’re less likely than Part D plans to change premiums—especially if they don’t charge beyond the Part B premium—plans with zero-dollar premiums are generally safe. The zero-dollar premium is highly attractive and simplifies plan comparisons. However, a plan might adjust its formulary (covered drugs list), reduce its out-of-pocket maximum, increase coinsurance for certain services, or cut back on extra benefits initially offered.
Midyear Statement from Your Medicare Advantage Plan
For the 50.4% of beneficiaries who opted for Medicare Advantage over Original Medicare as of April 2024, the midyear statement will highlight unused benefits. This is valuable information, as these additional perks are often key reasons enrollees choose a specific plan.
Expanded Program for Family Caregiver Services
A program designed for dementia patients and their caregivers, which started this year, will expand fourfold in 2025 to reach more areas across the country.
Named Guiding an Improved Dementia Experience (GUIDE), the program offers a 24/7 support line, a care navigator to help find medical services and community resources, caregiver training, and up to $2,500 annually for respite services such as at-home care, overnight care, or adult day care. Generally, patients and their caregivers will not face copayments for these services.
Efforts to Increase Access to Mental Health Providers in Medicare
While the proportion of adults aged 65 and older using mental health services rose by just 1 percentage point to 20% between 2019 and 2022, as reported in a KFF study, access to care may have influenced these figures.
Previously, licensed marriage and family therapists, mental health counselors, and addiction counselors were unable to bill Medicare because they could not enroll as Medicare providers. However, this year they gained the ability to do so, and some have already begun participating.
Need help? Call Brady Insurance Marketing: 801-347-2087. Our assistance is at no cost to you