The Medicare open enrollment period is almost over. You may feel rushed to make a choice, but there are some things you should think about before making big changes to your current plan. By December 7, 2025, four big changes will have been made to how the program works. It is important to figure these out before the deadline.
The Inflation Reduction Act (IRA) is making these changes, which will affect more than 66 million Medicare recipients. The changes are being made slowly but surely, and their goal is to help users get better health insurance.
$2,000 a year for out-of-pocket drug costs
In the past, Medicare benefits had a “doughnut hole” system. Thanks to the IRA, this system is no longer in place, and instead there is a $2,000 per year out-of-pocket drug spending cap.
In practice, people who sign up will have to pay a $590 deductible, which is more than the $545 deductible they had in 2024. Once the deductible is met, they will pay 25% of their drug costs during the first year of coverage until they hit $2,000 in out-of-pocket costs. After this limit, catastrophic coverage starts, which means you won’t have to pay for any more prescription drugs out of your cash. The Centers for Medicare & Medicaid Services (CMS) say this change will save Part D people about $7.4 billion a year, or about $400 per person for over 18.7 million beneficiaries, or about 36% of all Part D participants.
The average cost of Part D plans is going down, but some may see their rates go up.
Part D of Medicare talks about how to pay for prescription drugs. There is always a private insurance company in charge of it, and you can “buy” it by itself or with a Part C or Medicare Advantage plan.
Since the cap is $2,000, many people will see their rates go up. For those who take expensive medicines, the increase will probably still be less than the cost of their medicines. The nonpartisan health policy study group KFF says that because of the new $2,000 out-of-pocket spending limit, many plans may change their premiums, formularies, copays, or deductibles.
The government set a monthly raise cap of $35 in 2024 and 2025 because they thought this might happen.
You can spread out the payments for your drugs
Another interesting change is that starting in 2025, Medicare prescription drug plans will have to let people pay for their out-of-pocket prescription drug costs over a year. Before, the price had to be paid ahead of time or all at once at the drugstore. This was very inconvenient for people who took a lot of medications, especially at the start of the year before the hardship payments started.
With the new Medicare Prescription Payment Plan, your Advantage or stand-alone Part D plan will now pay for your drugs, so you won’t have to pay at the drugstore.
Medicare Part B premiums and deductibles are going up
The prices of Medicare Part B are changed every year. It will go up 5.9% from 2024 to 2025, from $174.70 to $185 for the regular monthly premium. Part B covers a wide range of outpatient services, including visits to the doctor, outpatient surgeries, and medical gadgets. The cost will go up from $240 a year to $257 a year, a 7.1% rise. Before Original Medicare starts to pay for costs, beneficiaries must meet this amount.
Part B premiums are paid for by everyone with Medicare, so it’s important to know about the rise and how much they will cost out of pocket, no matter if they have Original Medicare or a Medicare Advantage plan. Also, since most people who sign up for Medicare also get Social Security, knowing how much will be taken out of their regular checks will help them make better budgets.
