3 Medicare Updates you Don’t Want to Miss for 2025

by: Cory Carlton

The Inflation Reduction Act has some significant impacts on Medicare and Medicare beneficiaries.

Here are the three major changes that most people need to be familiar with…

$2,000 Cap on Medications 

Things are getting simpler in 2025 because the confusing “donut-hole” is going away. This is a good thing because the new rules simply state the max-out-of-pocket a person will spend on their medications covered by Part D is $2,000 for 2025.

Here’s how this will work: 

Deductible Phase – If your Medicare Advantage Plan with a drug plan (MAPD) or standalone drug plan (PDP) requires a deductible, you’ll pay 100% of your prescription drug costs until you spend $590, the Part D deductible for 2025.

Initial Coverage – During this phase you will pay 25% coinsurance for covered drugs until you reach your max-out-of-pocket of $2,000.

Catastrophic Coverage – You owe nothing else once you hit the $2,000 cap for medications covered under Part D.

I’ve mentioned “medications covered under Part D” a couple of times and that is important because the $2,000 cap only applies to those meds. If you have a medication administered by a doctor or in an outpatient situation, those costs do not apply to the cap. Things like chemotherapy fall under this category of not being covered by Part D. 

MAPDs May Raise Costs or Reduce Coverage

Since the Inflation Reduction Act is reducing beneficiaries’ costs and putting more responsibility on the insurers, there are some changes coming. 

Some Medicare Advantage plans that have traditionally had no monthly premium will introduce a premium starting in 2025.

Other Medicare Advantage plans are being pulled from the market and beneficiaries on those plans are going to be automatically assigned to another plan that may not be ideal and could lead to higher costs or having to change doctors.

Some plans may reduce benefits or even increase their drug deductibles.

Networks are very likely to change. In middle Tennessee we have seen the largest provider, Vanderbilt, decide not to accept certain plans so for people on those plans they either have to change doctors or find a new plan.

Some plans could remove medications from their formulary (their list of covered medications) or could change the tier level of medications which could result in higher costs.

One of the benefits of Medicare Advantage plans are the extra benefits they come with, such as gym memberships. We expect to see some of these benefits reduce or go away completely.

Okay, deep breath. It’s all going to be okay.

Standalone PDP costs could increase

If you have a standalone PDP then you could be in for a few surprises… 

First, new deductibles could be introduced requiring you to pay more for your medications.

As mentioned previously for Medicare Advantage plan, PDPs could have some major formulary (list of covered medications) changes. Meaning your medications could cost more or could not be covered at all.

We also expect to see PDP premiums have increases. We’ve seen one plan that in 2024 cost less than $20 a month and is jumping to over $100. If you’re on that plan and you don’t make a change you could be stuck with an expensive plan that may not cover your medications like you need. 

This is all the “other side of the coin” when it comes to the Inflation Reduction Act and things you need to know. But like I said, deep breath and it’s going to be okay.

We are here to help.

What you need to do? Contact your Both Hands FG agent to schedule your free review. We do these for all our clients that request them. So, request your free review to make sure you are on the right plan for 2025 and understand all the new rules and what it will mean to you.