Prescription Drug plans for 2025

Annual limit of $2,000 for prescription drug costs in Part D

Beginning in 2025, people with Medicare Part D will have an annual limit, capping their out-of-pocket prescription drug costs at $2,000. In the years that follow, annual limits will be adjusted based on inflation. This cap does not apply to out-of-pocket spending on Part B drugs. Medicare Part B covers drugs that are administered by a doctor, nurse, or other healthcare provider in an outpatient setting such as a doctor’s office. For example, some cancer drugs and injectable drugs are covered under Part B.

This will have the biggest impact on people with Part D who have expensive medications and who don’t qualify for the Extra Help program.   

For example, someone who usually has drug costs high enough to reach the catastrophic threshold could save about $1,300 in 2025, compared to their 2024 spending. 

Option to pay out-of-pocket prescription drug costs in monthly installments

Beginning January 1, 2025, each Medicare prescription drug plan, including Medicare Advantage plans with drug prescription programs, must give patients the option to pay for their out-of-pocket prescription costs in monthly installments, with a monthly limit on spending.

Changes to Medicare Part D premiums

The Inflation Reduction Act included a provision that prevents “Medicare Part D base beneficiary premiums” from increasing more than six percent each year. Unfortunately, the base beneficiary premium is not the same as the amount that Part D enrollees pay for coverage, and the law did not cap the growth in individual plan premiums to six percent. Health plans use the base beneficiary premium to calculate their plan’s basic premiums, but they also consider other factors.  

This IRA premium provision is effective from 2024 to 2029, so the base beneficiary premium is limited to six percent increases each year, but plans are not limited to other increases.

Patients should carefully review their plans during open enrollment to ensure they are considering all out-of-pocket costs and coverage.