Understanding Medicare Open Enrollment for 2025

TL/DR –

Medicare’s prescription drug coverage will change in 2025 due to the Inflation Reduction Act of 2022, introducing a cap on out-of-pocket spending, benefiting Medicare beneficiaries with serious illnesses and chronic diseases. The Act allows for several key changes such as a $2,000 cap on out-of-pocket spending and a new payment plan option for seniors struggling to afford prescription drugs. Medicare has also begun negotiating the price of prescription drugs with pharmaceutical companies, and has seen a $6 billion reduction in spending so far.

Key Changes to Medicare Prescription Drug Coverage in 2025

By 2025, Medicare prescription drug coverage will see significant changes due to the Inflation Reduction Act of 2022. Thus, it’s crucial to assess your current coverage choices during the Medicare open enrollment period, from Oct. 15 to Dec. 7.

Those enrolled in traditional Medicare Parts A and B with a supplemental Medigap policy don’t need to review their coverage. However, it’s necessary to reevaluate stand-alone Part D prescription plans and Medicare Advantage plans. Unlike typical employer-sponsored healthcare plans, Medicare doesn’t require annual reenrollment.

The Inflation Reduction Act introduces a cap on out-of-pocket spending, significantly strengthening Part D coverage. An AARP report reveals that 3 to 4 million Part D enrollees will benefit from the new out-of-pocket cap every year between 2025 and 2029.

Despite concerns about increasing premiums due to reforms, the Biden administration provided a program to subsidize drug plans to counteract rate hikes.

Medicare Part D Changes

Under the Inflation Reduction Act, Part D coverage will undergo several changes in 2025. The most substantial change is a new $2,000 cap. Coverage will now have three levels:

• A deductible phase of no more than $590 per year.
• An initial coverage phase, where you pay 25% of overall drug costs.
• The cap of $2,000, after which you pay nothing.

For details on Part D restructuring, refer to this KFF brief.

Another addition is the Medicare Prescription Payment Plan option aiding seniors in affording prescription drugs, providing the opportunity to spread expected costs across the calendar year.

Traditional Medicare vs. Medicare Advantage

During the open enrollment period, you can switch between traditional Medicare and Medicare Advantage. But be aware that some Advantage enrollees may struggle with affording healthcare due to co-payment and deductible costs.

Shopping for Medicare Coverage

When reviewing your options, pay close attention to any changes in the tier placement of your drugs and evaluate the options in your region with the Medicare Plan Finder. For those enrolled in Medicare Advantage, review your plan’s prescription drug coverage and whether the providers you prefer are still included in the network.

Getting Medicare Help

Many enrollees turn to insurance brokers for selecting plans. However, for a more comprehensive view, contact your local State Health Insurance Assistance Program (SHIP). The SHIP program offers free, expert help with Medicare. The Medicare Rights Center also provides a counseling hotline at 1-800-333-4114.

—
Read More US Economic News