Biggest changes to Medicare Part D for 2025

There are several significant changes coming to Medicare Part D, primarily due to the Inflation Reduction Act. Here’s what you need to know.

A cap on out-of-pocket costs for prescription drugs

Starting in 2025, Medicare Part D enrollees will benefit from a new $2,000 cap on out-of-pocket prescription drug costs. That includes any deductibles, copays and coinsurance, but not premiums. This change, part of the Inflation Reduction Act of 2022, aims to reduce the financial burden on Medicare members who rely on expensive medications. 

Once a member reaches the $2,000 limit, their plan will cover 100% of the cost of covered medications for the rest of the plan year.  

This cap applies to both stand-alone Part D plans and prescription coverage included in all-in-1 Medicare Advantage plans.

Members will have the option to pay their out-of-pocket prescription drug costs in monthly installments instead of paying the full amount when they fill a prescription.

If a member selects this payment option, each month they’ll get a bill to pay their  health or drug plan directly—instead of paying the pharmacy. No interest is charged on the balance and there’s no cost to participate. 

The Medicare Prescription Payment Plan doesn’t reduce the overall cost of medications, but it may make it easier for members to manage their healthcare expenses. 

Yes, the Medicare Part D coverage gap, often referred to as the “donut hole,” ended in 2025, leaving 3 simple phases of coverage: 

1. Deductible Phase: Beneficiaries will pay 100% of their drug costs until they meet their deductible. 
2. Initial Coverage Phase: After the deductible, beneficiaries will pay a portion of their drug costs until their out-of-pocket expenses reach $2,000.
3. Catastrophic Phase: Once the $2,000 out-of-pocket limit is reached, beneficiaries will not have to pay anything for covered drugs for the rest of the year. 

These welcome changes are designed to make prescription drugs more affordable and to help simplify the payment process for Medicare beneficiaries.