For 2025, the maximum Medicare Part D deductible is $590, but many plans offer lower or $0 deductibles, with costs varying by insurer and plan, though the new Inflation Reduction Act simplifies coverage with a new $2,000 annual out-of-pocket cap. After meeting the deductible, beneficiaries pay 25% coinsurance until they hit the $2,000 out-of-pocket limit, then pay $0 for covered drugs, a major change from previous years.
Medicare Part D changes in 2025, driven by the Inflation Reduction Act (IRA), introduce a significant $2,000 annual out-of-pocket (OOP) cap, eliminating the coverage gap ("donut hole") and creating three simplified phases: deductible, initial coverage, and catastrophic coverage with $0 OOP costs after the $2,000 threshold is met, benefiting many beneficiaries with lower overall drug spending. Other key updates include shifts in liability, a new manufacturer discount program, and some plans increasing premiums, making 2025 a big year for Part D reform.
The standard monthly premium for Medicare Part B enrollees will be $185.00 for 2025, an increase of $10.30 from $174.70 in 2024. The annual deductible for all Medicare Part B beneficiaries will be $257 in 2025, an increase of $17 from the annual deductible of $240 in 2024.
Deductible: An amount you pay for covered drugs and items each year, before your plan starts to pay. Your deductible will depend on which plan you choose. No Medicare drug plan may have a deductible more than $615 in 2026, and some plans have no deductible.
Best Medicare Part D plans at a glance
Wellcare is a top pick for Medicare Part D plans in 2026, according to analysis from NerdWallet's editorial team. It has the lowest average premiums and highest government quality ratings of any major provider.
Medicare Part D changes for 2026 include a new $2,100 out-of-pocket (OOP) spending cap for prescription drugs, lower base premiums, a maximum deductible of $615, and ongoing drug price negotiations from the Inflation Reduction Act, providing more predictable costs and better coverage for beneficiaries. These changes streamline coverage into three phases (deductible, initial, catastrophic) and remove the coverage gap (donut hole) for better cost protection, though premiums and specific costs still vary by plan.
The standard deductible for Part D plans in 2025 is $590. However, some plans have a lower (or zero-dollar) deductible with a higher premium. Once beneficiaries reach their deductible, they enter the initial coverage period.
Yes, your Medicare premiums can be tax deductible as a medical expense if you itemize deductions on your federal income tax return. You can only deduct medical expenses after they add up to more than 7.5 percent of your adjusted gross income (AGI).
Your CalPERS health coverage will automatically be canceled the first day of the month after you turn 65. Review Cancellation of CalPERS Health Coverage for information on reinstating your health coverage.
Medicare Part D generally excludes drugs for weight loss/gain, cosmetic purposes (like hair growth), fertility, and most cough/cold relief, plus non-prescription (OTC) meds and most vitamins (except prenatal/fluoride). Specific examples include Viagra (for ED), Propecia (hair loss), Xenical (weight loss), and Robitussin AC. Coverage varies by plan, but these categories are national guidelines.
Here are some of the biggest Medicare mistakes to avoid:
Medicare Part D income limits involve two different situations: lower limits for the Extra Help program (LIS) to reduce costs for those with low income and resources, and higher limits that trigger Income-Related Monthly Adjustment Amounts (IRMAA), meaning higher premiums for high-income earners, based on your prior year's tax return (e.g., 2024 income for 2026 costs). For Extra Help (LIS), income limits are around 150% of the Federal Poverty Level (e.g., ~$23,475 for an individual in 2025). For IRMAA, higher premiums start for individuals earning over $109,000 (or $218,000 joint) in 2024, with escalating surcharges for higher incomes.
After the application of MA rebates, which reflects what people in MA plans with prescription drug coverage will pay, the average Part D total premium for MA plans with prescription drug coverage is projected to decrease from $13.32 in 2025 to $11.50 in 2026 (a decrease of $1.82).
In 2026, the Medicare Part D Standard Benefit Includes a $615 Deductible and a $2,100 Cap on Out-of-Pocket Drug Spending. Note: The manufacturer discount applies to brand-name drug costs only.
Deductible period: Until you meet your Part D deductible. Deductible amounts can change every year. , you will pay the full negotiated price for your covered prescription drugs. Once you have met the deductible, the plan will begin to cover the cost of your drugs.
The annual deductible for all Medicare Part B beneficiaries will be $257 in 2025, an increase of $17 from the annual deductible of $240 in 2024.
Starting in 2025, there is an annual limit on what you pay out-of-pocket for prescription medications through Medicare and Medicare Advantage prescription drug plans. All prescription medications, including specialty medications, covered by Part D plans are included under this cap.
The extra $144 added to Social Security usually comes from the Medicare Part B Giveback benefit, offered by some Medicare Advantage (Part C) plans, which pays back some or all your Part B premium, showing up as extra money in your check if it's deducted from your Social Security. To qualify, you need Original Medicare (Parts A & B), pay your own Part B premium, live in a plan's service area, and enroll in a specific Medicare Advantage plan that offers this "rebate," with the amount varying by plan and location.