Medicare Part D prescription drug coverage and Medicare Advantage participants will likely pay less than last year for their prescription drug coverage and plan costs. Medicare beneficiaries will see decreases in Medicare Part D and Medicare Advantage plan premiums in 2025. This is great news for budget-conscious seniors who are on track to receive the lowest Social Security COLA increase in four years.
Lower average total Medicare Part D premiums in 2025
In 2025, Medicare beneficiaries will have access to an average of 15 stand-alone Part D plans per region, according to the Centers for Medicare & Medicaid Services (CMS). When comparing 2025 Part D formularies to 2024, the CMS found no significant decreases in formulary inclusion or changes to the tier placement of drugs.
The average total Part D beneficiary premium is projected to decrease by $7.45 in 2025, from $53.95 in 2024 to $46.50 in 2025. The average stand-alone Part D plan total premium is projected to decrease from $41.63 in 2024 to $40.00 in 2025, a decrease of $1.63.
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Average Medicare Advantage premiums are expected to decrease
The CMS also announced that average premiums, benefits and plan choices for Medicare Advantage and the Medicare Part D prescription drug program are expected to remain stable in 2025.
According to the CMS, approximately 60% of Medicare Advantage enrollees in their current plan will have a zero-dollar premium in 2025.
The average monthly plan premium for all Medicare Advantage (MA) plans, which includes MA plans with prescription drug coverage, is expected to decrease by $1.23 from $18.23 in 2024 to $17.00 in 2025. The CMS says that approximately 83% of enrollees will have the same or lower premium in 2025 if they continue in the same plan.
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).
Other changes coming to Medicare Part D in 2025:
1. New $2,000 annual cap on out-of-pocket prescription costs
Beginning in 2025, people with Part D plans won’t have to pay more than $2,000 in out-of-pocket costs, thanks to a provision in the Inflation Reduction Act of 2022. The $2,000 cap will be indexed to the growth in per capita Part D costs, so it may rise each year after 2025.
This new rule applies only to medications covered by your Part D plan and does not apply to out-of-pocket spending on Medicare Part B drugs. Part B drugs are usually vaccinations, injections a doctor administers, and some outpatient prescription drugs.
2. Option to spread their prescription drug costs throughout the year.
Part D enrollees will also have the option of spreading out their out-of-pocket costs over the year rather than face high out-of-pocket costs in any given month. Part D enrollees who select this payment option will pay $0 to the pharmacy for covered Part D drugs, and Part D plan sponsors will then bill program participants monthly for any cost sharing they incur while in the program.
3. Supplemental Part D benefits count towards individual out-of-pocket costs
People with Medicare enrolled in a Part D plan that offers enhanced supplemental benefits will have the added advantage of these supplemental benefits counting towards their out-of-pocket costs, resulting in their reaching the $2,000 cap for 2025 sooner.
For instance, drugs that are excluded from the definition of Part D drug, even in cases where the plan chooses to cover them as a supplemental benefit, such as drugs for hair growth.
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