Thanks to the Inflation Reduction Act, in 2025 annual out-of-pocket costs will be capped at $2,000 for people with Medicare Part D.
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.
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.
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 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).
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).
For the first time, beginning in 2025, the prescription drug law, known as the Inflation Reduction Act, requires all Medicare prescription drug plans (Medicare Part D plans) — including both standalone Medicare prescription drug plans and Medicare Advantage plans with prescription drug coverage — to offer enrollees the ...
Key takeaways:
You may want to consider using GoodRx instead of Medicare when Medicare doesn't cover your medication, when you won't reach your annual deductible, or when you're in the coverage gap phase (“donut hole”) of your Medicare plan. GoodRx's prescription drug prices are frequently cheaper than Medicare copays.
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.
In 2025, the MOOP for Medicare Advantage Plans is $9,350, but plans may set lower limits. If you are in a plan that covers services you receive from out-of-network providers, such as a PPO, your plan will set two annual limits on your out-of-pocket costs.
The bottom line
You have to spend $8,000 on covered medications during the year to get out of the coverage gap. You can consider using GoodRx, patient assistance programs, and other cost-saving options to avoid the donut hole.
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.
The Centers for Medicare & Medicaid Services Nov. 1 released its calendar year 2025 final rule for the physician fee schedule. The rule will cut the conversion factor by 2.8% to $32.35 in CY 2025 compared to $33.29 in CY 2024.
An out-of-pocket maximum is a cap, or limit, on the amount of money you have to pay for covered health care services in a plan year. If you meet that limit, your health plan will pay 100% of all covered health care costs for the rest of the plan year.
In order to serve a Medicare patient, even if they want to pay out of pocket, [the clinics] have to have some sort of agreement with the patient. This law basically protects people who are sick right now and need care.
Good news for 2025: In 2025, the Medicare Part D coverage gap, also known as the “donut hole,” will be eliminated under the Inflation Reduction Act (IRA). Part D plan members will also enjoy the security of an annual maximum out-of-pocket cost for prescription drugs.
Consider using a GoodRx coupon instead of Medicare in the following situations: Your medication isn't covered by your Medicare plan. The medication costs less with a GoodRx coupon than with your Medicare copay. You don't expect to reach your annual deductible.
As in 2024, there is no beneficiary cost sharing above the annual OOP threshold in 2025. The coverage gap phase (also known as the “donut hole”) will be eliminated, which will result in standard Part D coverage consisting of a three-phase benefit: a deductible phase, an initial coverage phase, and a catastrophic phase.
If you don't get premium-free Part A, you pay up to $518 each month. If you don't buy Part A when you're first eligible for Medicare (usually when you turn 65), you might pay a penalty. Most people pay the standard Part B monthly premium amount ($185 in 2025).
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.
Medicare's new $2,000 prescription drug cap goes into effect. Here's how it works. Starting Jan. 1, 2025, millions of Americans who get their prescription drugs through Medicare could get a major financial break when a $2,000 out-of-pocket spending cap on medications goes into effect.
If your spouse dies, do you get both Social Security benefits? You cannot claim your deceased spouse's benefits in addition to your own retirement benefits. Social Security only will pay one—survivor or retirement. If you qualify for both survivor and retirement benefits, you will receive whichever amount is higher.
Have you heard about the Social Security $16,728 yearly bonus? There's really no “bonus” that retirees can collect. The Social Security Administration (SSA) uses a specific formula based on your lifetime earnings to determine your benefit amount.
Generally, the maximum Federal SSI benefit amount changes yearly. SSI benefits increased in 2024 because there was an increase in the Consumer Price Index from the third quarter of 2022 to the third quarter of 2023. Effective January 1, 2024 the Federal benefit rate is $943 for an individual and $1,415 for a couple.