Medicare Price Increases for 2025 Revealed

By: David Donovan | Last updated: Sep 04, 2024

Medicare Part D will undergo some changes in 2025, according to a glimpse provided by the Centers for Medicare & Medicaid Services. In addition, the Inflation Reduction Act of 2022’s Medicare rules will begin to take effect in 2025, transforming how you pay for medications.

The Social Security Administration determines how much the Medicare program will cost each year.

Social Security Act

Utilizing the guidelines outlined in the Social Security Act, the Social Security Administration then either raises or lowers deductibles and premiums. In the coming weeks and months, the CMS is expected to fill in the changes to Medicare 2025.

Sample for the new United States Medicare program cards that began rolling out in 2018.

Source: Medicare/https://www.medicare.gov/newcard

Inpatient care in hospitals, critical access hospitals, and skilled nursing facilities is covered by Part A of Medicare.

Part A Changes

Nearly 99% of Medicare recipients get Part A free of charge since they paid Government health care charges while working, as per the Centers for Medicare & Medicaid Services.

Chiquita Brooks-LaSure CMS administrator speaking on stage into a mic next to another woman in a chair

Source: BrooksLaSureCMS/X

On October 12, 2023, the CMS announced the Part A changes for 2024 so a similar date should be expected for this next year’s announcement.

Part B Changes

Medical services like doctors’ services and outpatient care are covered under Part B. This part is discretionary, and for 2024, Part B’s premium is $174.70 each month.

A panel discussion for the CMS and the health equity conference, a woman speaks into a mic on stage in a chair as four men sit on either side of her

Source: CMSGov/X

The CMS reports yearly adjustments to Part B in the fall, so we’ll need to stand by until then before we can get the all relevant information for 2025.

Part C Updates

Some updates will also be made to Medicare Advantage, also known as Medicare Part C. Part C plans come from privately owned businesses and can offer additional coverage, for example, vision, hearing, dental, and well-being and health programs.

Health Equity Conference, there are rows of people sitting in seats looking towards a stage with a lectern and mic

Source: CMSGov/X

The plan you select determines how much this alternative costs. Beginning in 2025, participants in Medicare Advantage will receive a mid-year notification informing them of any unused benefits that they may utilize.

Re-enrollment to Medicare Advantage

The mid-year reminder will remind you to make use of your benefits and prompt you to reevaluate whether you require the particular plan you signed up for.

CMS 2024 Quality Conference, there are two rows of people on stage sitting tiered with a woman speaking at a lectern into a mic

Source: CMSGov/X

You will be able to make a more educated decision about whether you should stick with your current plan or switch to a new one when the time comes for re-enrollment.

Part D Increases

Part D can assist with taking care of the expenses of prescription drugs. This year, a slew of changes to Part D plans will be made possible by the Inflation Reduction Act.

CMS 2024 Quality Conference, a woman speaks into a mic at a lectern with flags and a screen behind her.

Source: CMSGov/X

As per the CMS, the Part D base recipient premium will increase by $2.08, or 6%, from $34.70 to $36.78.

Significant Change

The IRA includes a 6% cap to the base Part D plans, yet actual premiums might shift. CMS said it will deliver preliminary Part D premium averages later this year.

CMS 2024 Quality Conference, a woman speaks into a mic at a lectern looking towards a screen with health institution logos on it

Source: CMSGov/X

The annual out-of-pocket maximum of $2,000 for medications will be a significant change for Plan D enrollees in 2025.

Exclusions to the Maximum

For enrollees who are required to take expensive medications on a monthly basis, this maximum out-of-pocket change may have significant advantages.

Three women sit on stage in chairs next to tables with water on them as they talk, there is a large screen and flags behind them.

Source: CMSGov/X

Note that because they are typically administered by a doctor or practitioner at a facility, Medicare Part B-covered medications will not count toward this maximum which is due to be implemented in 2025.

Eliminating the Donut Hole

There were four stages of coverage in 2024, Deductible, Initial, Coverage Gap (also known as the donut hole), and Catastrophic.

A man speaks into a mic at a lectern for CMS 2024 Quality Conference with flags behind him.

Source: CMSGov/X

The Coverage Gap is a temporary limit on what the drug plan will cover for medication expenses. The donut hole coverage gap will be eliminated by Medicare in 2025, further simplifying coverages.

Closer to the Next Level of Coverage

Participants in Plan D will now have to pay their deductible (up to $590) and copayments until they reach the new out-of-pocket maximum of $2,000, moving them closer to the next level of coverage than in previous years.

Five people sit on a stage in white chairs next to tables with water on them for CMS 2024 Quality Conference.

Source: CMSGov/X

People will be able to pay for their medications over the course of the year using a new payment plan option rather than paying for them all at once.

Payment Plan

The new plan lets people choose to participate in this payment plan and spread out their payments over the rest of the year, up to a certain limit.

HIMSS conference with CMS speaking, there are four people on chairs on a stage as a woman stands at a lectern speaking into a mic

Source: CMSGov/X

The payment plan is only opt-in.

These significant changes to Medicare will come alongside any further updates to be announced later this year.