How are Medicare benefits changing for 2025?
How are Medicare benefits changing for 2025?
Changes include a $2,000 cap on Part D out-of-pocket costs, lower average premiums for Medicare Advantage and Part D plans, projected increases for Part B and Part A premiums and cost-sharing, and adjustments to income-related premium surcharges for Part B and Part D.
Louise Norris | September 30, 2024
In this article
Medicare Part D out-of-pocket costs will be capped at $2,000 for covered drugs.
Average premiums are decreasing for Part D prescription drug plans.
The standard Part D deductible will increase to $590, but the Part D donut hole will no longer exist.
Average Medicare Advantage premiums are decreasing
Medicare Advantage enrollment is expected to continue to increase in 2025.
The maximum allowable out-of-pocket cap for Medicare Advantage plans will increase to $9,350.
The standard Medicare Part B premium is projected to increase to about $185/month in 2025.
The Medicare Part B deductible is projected to increase to about $257 in 2025.
Medicare Part A premiums and Medicare Part A deductible and copays are projected to increase.
Income bracket for high-income surcharges for Medicare Part B and Part D will start at $106,000.
What are the changes to Medicare benefits for 2025?
Medicare changes for 2025 include projected increases for Medicare Part B and Part A premiums and cost-sharing, decreases in average premiums for Medicare Advantage and Part D plans, adjustments to income-related premium surcharges for Medicare Part B and Part D, a $2,000 cap on out-of-pocket costs for drugs covered under an enrollee’s Medicare Part D coverage, and the option to spread Part D out-of-pocket caps out across the full year.
Here’s a full rundown of changes to Original Medicare cost-sharing and premiums, the high-income brackets, improvements to Medicare Part D prescription drug coverage, and more.
Medicare Part D
Medicare Part D is private prescription drug coverage for Medicare beneficiaries. Part D coverage can be offered as a stand-alone plan (PDP) or integrated with a Medicare Advantage plan (MA-PD). Original Medicare does not provide outpatient prescription drug benefits, so enrollees need Part D unless they have creditable drug coverage from another source, such as a current or former employer.
How is Medicare Part D coverage changing in 2025?
Starting in 2025, Medicare Part D prescription drug enrollees will pay a maximum of $2,000 in out-of-pocket costs for drugs covered by their plan, and will have the option to spread their drug costs out in equal payments throughout the year.1 The Part D donut hole is being eliminated altogether as of 2025. All of these improvements are a result of the Inflation Reduction Act. The Inflation Reduction Act will also continue to ensure that Medicare Part D prescription drug enrollees can receive recommended vaccines at no cost, and covered insulin products with copays capped at $35/month.
To address concerns about premium increases for 2025 stemming from the Inflation Reduction Act changes,2 the federal government announced a voluntary PDP premium stabilization program for 2025, under which participating insurers will receive additional federal funding to reduce overall premiums.3 Although the premium stabilization program is voluntary for insurers, 99% of PDP enrollees are in plans that opted into the program for 2025.4
Ultimately, premiums for stand-alone Part D plans (PDPs) will decrease slightly in 2025, from an average of $41.63/month in 2024 to an average of $40/month in 2025.4
Back to top
As is always the case, there will likely be numerous options available, with a wide range of premiums. On the low end of the spectrum, there are PDPs available in most states with premiums below $1/month in 2024. On the high end, there are PDPs with premiums of more than $100/month.
How much is the Medicare Part D deductible in 2025?
The maximum Medicare Part D deductible will be $590 in 2025, up from $545 in 2024.5 Part D plans can have lower deductibles, or no deductible at all. But if they have a deductible, it can’t be more than $590 in 2025.
Or call 866-472-0949 (TTY 771) to speak to a licensed insurance agent
(Mon-Fri 8am-9pm, Sat 10am-7pm ET)
Medicare Advantage
Medicare Advantage plans combine Medicare Part A, Part B, and usually Part D, into one private plan. These plans also generally include various additional benefits that aren’t covered by Original Medicare, such as routine dental and vision.
How is Medicare Advantage changing for 2025?
Average Medicare Advantage premiums, which are paid in addition to the premium for Medicare Part B, will decrease slightly in 2025, dropping from $18.23/month in 2024 to $17/month in 2025.4 (That’s just an average; actual premiums vary widely. Most enrollees are in plans with no separate premium, so they only pay the premium for Medicare Part B.6)
Back to top
Some insurers that offer Medicare Advantage plans are planning to exit the market or scale back their service areas at the end of 2024.7,8 Others have said that they will make changes to their benefits for 2025; those could potentially include higher deductibles, coinsurance instead of copays, reductions in supplemental benefits, or provider network changes.9
Is Medicare Advantage enrollment expected to increase in 2025?
Yes, CMS projects that total Medicare Advantage enrollment will continue to increase in 2025.4About 32.8 million people had Medicare Advantage plans in 2024.10 Enrollment in these plans has been steadily growing for more than 15 years. The total number of Medicare beneficiaries has been steadily growing as well, but the growth in Medicare Advantage enrollment has far outpaced overall Medicare enrollment growth.
In 2007, just 19% of eligible Medicare beneficiaries had Medicare Advantage plans. That has grown to 54% by 202410 (to be eligible for Medicare Advantage, you must have Medicare Part A and Medicare Part B; 2023 was the first year when more than half of eligible enrollees had Medicare Advantage plans).
Is the Medicare Advantage out-of-pocket maximum changing for 2025?
Yes, the Medicare Advantage maximum out-of-pocket limit (for services covered under Medicare Part A and Part B) will grow to $9,350 for in-network costs in 2025.11 This is an increase from $8,850 in 2024, but average out-of-pocket caps are typically well below the allowable maximum.
Medicare Part B premiums and deductible
Medicare Part B covers outpatient and physician costs. Medicare Part B has out-of-pocket costs when enrollees receive covered care — an annual deductible and 20% coinsurance — and it also has a monthly premium that’s paid by nearly all enrollees (high-income enrollees pay more than the standard premium for Part B).
Is the Medicare Part B standard premium increasing for 2025?
2025 Part B premiums won’t be finalized until the fall of 2024, but the Medicare Trustees Report projects that it will increase to $185/month12 (note that the final numbers sometimes differ quite a bit from the projections in the Trustees Report). For perspective, the standard premium for Medicare Part B decreased in 2023. But it increased to $174.70/month in 2024.
For most Medicare Part B enrollees, the premiums are automatically deducted from Social Security checks. The cost-of-living adjustment (COLA) for 2025 will increase Social Security checks by about 2.5%13 (final numbers are announced by the government in October). This is expected to cover the full projected increase in Medicare Part B premiums for virtually all enrollees.