As of Jan 1, 2025, the Medicare Part D coverage gap (commonly known as the "donut hole") is gone. This major change, a result of the Inflation Reduction Act, simplifies prescription drug coverage by removing the coverage gap phase and establishing a $2,000 annual cap on out-of-pocket spending for covered drugs.
Whether you're taking only brand-name drugs or a mix of brand-name and generic drugs, most people who reach the catastrophic coverage phase in 2024 will pay between $3,300 and $3,800 in out-of-pocket costs. In 2024, Mr. Alvarez takes $200,000 in Medicare Part D covered brand-name drugs.
The annual deductible for all Medicare Part B enrollees in 2025 will be $257, an increase of $17 from the 2024 deductible of $240. Certain beneficiaries will continue to pay higher premiums based on their modified adjusted gross income.
Beginning January 1, 2025, people with Part D plans through traditional Medicare and Medicare Advantage plans with prescription drug coverage won't pay more than $2,000 over the calendar year in out-of-pocket costs for their prescription medications.
The average estimated monthly Part D plan premium in 2025 is $46.50. Other factors can affect the cost of Part D including monthly premium, yearly deductible and copayments. High-income earners may pay a surcharge known as the “income-related monthly adjustment amount” (IRMAA).
For 2025, beneficiaries whose 2023 income exceeded $106,000 (individual return) or $212,000 (joint return) pay a higher total Medicare Part B premium amount depending on income. The 2025 IRMAA surcharge amounts for Part B will added on top of the basic Part B premium of $185.00, an increase of $10.60 from 2024.
After the application of MA rebates, which reflects what people in MA plans with prescription drug coverage will actually pay, the average MA plan with prescription drug coverage Part D total premium is projected to decrease from $15.56 in 2024 to $13.50 in 2025 (a decrease of $2.06).
Most people pay no premiums for Part A. For Medicare Part B in 2025, most beneficiaries will pay $185 per month. Certain factors may require you to pay more or less than the standard Medicare Part B premium in 2025.
MA payments are expected to increase by 4.33% on average from 2025 to 2026, as proposed. This is over a $21 billion increase in expected MA payments to MA plans for next year.
Starting in 2025, all Part D and Medicare Advantage plans will have a $2,000 annual cap on out-of-pocket prescription drug costs (this cap was previously $8,000). Once you hit this threshold, your costs for covered prescriptions will be $0 for the rest of the year.
Health systems have cited delayed reimbursements, cumbersome prior authorization requirements and high rates of patient claim denials for their decisions to drop Medicare Advantage plans.
In 2024, for example, you reached the Part D donut hole when you and your plan had paid $5,030 for your medications. Prior to 2019, if you reached the coverage gap, you would have to pay 100% of your prescription drug costs in that period until you met the catastrophic coverage period spending threshold.
Out-of-pocket costs
Health or prescription drug costs that you must pay on your own because they aren't covered by Medicare or other insurance. will be capped at $2,000 in 2025. You'll also have the option to pay out-of-pocket costs in monthly amounts over the plan year, instead of when they happen.
New in 2025: $2,000 Out-of-Pocket Cap
With the $2,000 cap in effect this year, 19 million seniors, and others on Medicare, are expected to save an additional $7.4 billion in out-of-pocket costs. Check out how much people with Part D coverage saved in the first part of 2024 thanks to the cap.
Best for ratings: Aetna Medicare Advantage. Best for low-cost plan availability: Cigna Medicare Advantage. Best for Part B Giveback: Humana Medicare Advantage. Best startup: Devoted Health Medicare Advantage.
With a premium stabilization-capped 2024 base beneficiary premium of $34.70, the average basic Part D premium is projected to increase from $32.09 in 2023 to $34.50 in 2024, a 7.5% increase.
eligibility for Medi-Cal. For new Medi-Cal applications only, current asset limits are $130,000 for one person and $65,000 for each additional household member, up to 10. Starting on January 1, 2024, Medi-Cal applications will no longer ask for asset information.
How do you get $144 added back to your Social Security check every month? If you enroll in a Medicare Advantage plan with a Part B giveback benefit, the plan reduces the amount deducted from your Social Security check for Medicare Part B, which could add up to $144 back to your check each month.
"Based on NerdWallet's Medigap rubric, I picked five best Medicare Supplement Insurance companies for 2025: AARP/UnitedHealthcare, Mutual of Omaha, State Farm, Anthem and Blue Cross Blue Shield. These companies stood out based on plan types offered, premiums, discounts, complaint rates and nationwide availability."
Disadvantages of Medicare Advantage plans can include difficulty switching out of the plans later, restrictions on care access, limited provider networks, and limitations on extra benefits.
The estimated average enrollment-weighted monthly premium for Medicare Part D stand-alone PDPs is projected to be $45 in 2025, a modest increase from $42 in 2024 (based on June 2024 enrollment).
The brackets are set by the Social Security Administration (SSA) and are indexed for inflation each year. The SSA recently released the updated IRMAA thresholds and premium amounts for 2025—see the below chart.
In contrast, traditional Medicare does not have an out-of-pocket limit for covered services. In 2024, the out-of-pocket limit for Medicare Advantage plans may not exceed $8,850 for in-network services and $13,300 for in-network and out-of-network services combined.
Nearly 68 million Social Security beneficiaries will see a 2.5% COLA beginning in January 2025. Increased payments to nearly 7.5 million people receiving SSI will begin on December 31, 2024. (Note: Some people receive both Social Security benefits and SSI).