A brief overview of the significant changes to Medicare’s Part D prescription drug program for 2025.
Beginning in 2025, your out-of-pocket prescription drug costs will be capped at $2000. For the rest of 2024, they will be capped at $8000.
This will streamline the confusing Part D stages into three and eliminate the coverage gap known as the donut hole. That gap begins when you and your plan have spent $5030 in 2024 on covered prescription drugs, and your cost sharing is no more than 25% on brand name and generic prescription drugs and closes when you’ve reached $8000. (in 2024)
Starting in 2025, your cost sharing will be 25%, after the $590 deductible (if your plan has one) until you reach the $2000 cap. Once you’ve reached that threshold, you’ll pay no additional cost sharing for 2025 on prescription drugs that are covered by your plan!
There’s also a new prescription payment plan option that lets you spread your out-of-pocket costs throughout the calendar year.
This option will be most beneficial for people who experience high out of pocket costs early in the year until they meet their deductible on certain higher tier drugs. Instead of paying the pharmacy you’ll get a bill from your health or drug plan. There is no additional cost to sign up for this option.
In 2025 Medicare will pay a smaller share of the costs in the catastrophic stage, (20% for brand name drugs and 40% for generic) while Part D plans will pay a larger share.
Also, drug manufactures will provide a 10% discount in the initial coverage stage, which is the phase after any deductible is met and until you reach the $2000 cap.
All this is happening due to the Inflation Reduction Act that was signed into law in August of 2022
The good from all these changes is those with high prescription costs will likely save money. And with the lower cost sharing for Medicare, so will the government.
The potentially bad from these changes is the higher cost sharing Medicare Advantage and standalone Part D drug plans have to take on. They are going to have to make up for the extra cost somehow. And the most likely way to do that is with higher premiums. Or skimpier benefits. Perhaps a little of both.
The impact to premium cost was predicted so Congress limited Part D premium increases to 6% annually.
That should help alleviate sticker shock when beneficiaries open their Part D plan’s Annual Notice of Change (ANOC) letter this year.
And just in time for an election year! 😉