Medicare Changes You Need to Know for 2025

The Inflation Reduction Act of 2022 included many significant changes to the Medicare program, including major revisions to Part D, which covers prescription drug plans. In 2023, insulin costs were capped at $35 per month, and this year the White House pushed forward provisions to reduce the costs of some of the most expensive prescription drugs.

In 2025, other changes to Medicare will take effect. Here is a summary of those changes and how they might affect your pocketbook. (If you’re new to Medicare, here is a quick primer on the different programs.)

Annual Cap on Your Part D Out-of-Pocket Expense

Starting in 2025, those with Part D plans will not have to pay more than $2,000 per year in co-pays, deductibles, and coinsurance. The cap could rise, though, and will be indexed to the growth of the per capita Part D costs each year. This also applies to those enrolled in Medicare Advantage plans. Enrollees in Part D who are in the catastrophic category and take only brand-name drugs will see their cap drop from about $3,300/year to $2,000 as well.

Part D participants will also have the option of spreading out their co-pays over the year instead of having to pay a large lump sum in a given month, which could ease personal cash-flow concerns. 

Simplification and Elimination of the “Donut Hole” Gap

Currently, an enrollee in Part D first pays the full cost of their drugs up to their deductible ($545). After this, copayments are required that vary with the type of medication prescribed. From there, enrollees face the dreaded “donut hole,” or gap in coverage where a covering plan pays less for brand-name drugs and you have to make up the rest until you reach the cap.

In 2025, the deductible may be $590, but there is no “donut hole.” After the deductible is met, co-payments are then required up to the cap of $2,000 per year, but there will be no coverage gap in between. In addition, enrollees will no longer deal with changes to cost-sharing for specific drugs when they progress from initial coverage to the coverage gap phase. Depending upon the medication needed, this could represent significant savings. Also, Medicare Part D and the drug companies themselves will bear more of the cost beyond the cap.

Changes to Medicare Advantage Plans

Healthcare insurers are prone to emphasizing the added features and benefits of Medicare Advantage (MA) over Traditional Medicare, including dental, vision, and fitness supplemental programs, to entice new enrollees to MA plans. However, recent studies indicate only 30% of these benefits are actually used, resulting in costly waste to the program. To help address this, starting in 2025, MA plans will be required to send their participants a personalized Notification of Unused Supplemental Benefits during July of each year.

While it is not expected that MA programs will adjust premiums, there may be changes to the list of covered medications, reductions to program out-of-pocket spending limits, increases to extra service charges, or reductions in other benefits.

There will also be stricter rules governing sales of Medicare Advantage plans by brokers and agents. New rules will prohibit incentives, such as large bonuses and other perks, to agents selling Medicare Advantage plans. Compensation limits will be imposed to combat aggressive sales practices.

Increased Benefit for Dementia Patients and Caregivers

Implemented in 2024, the Guiding an Improved Dementia Experience (GUIDE) program provides 24/7 support, medical and community-services assistance, and caregiver training to help dementia patients and their caregivers, along with $2,500 in financial assistance for at-home, overnight, or adult day care expenses. This program’s coverage will expand four-fold in 2025 to help more patients (only those enrolled in Traditional Medicare) across the country.

Weight-Loss Drugs May Be Easier to Obtain

Weight-loss drugs are not covered by Medicare, but when prescribed to help with other medical conditions, such as Type II diabetes, these medications might fall under Part D coverage. In 2025, more such prescriptions may be covered if the FDA approves them for conditions other than weight loss, such as serious heart and cardiovascular conditions, diabetes, and sleep apnea. 

Watch for Changes to Your Plan

It’s expected that premiums, copayments, and covered drugs could vary widely during Medicare Open Enrollment beginning October 1st. Be sure to look closely at changes to your plan that were published in September and compare those to other options available using the Medicare Plan Finder.

Work With an Experienced Advisor

Making the most of your Medicare benefits is an important component of sound retirement planning. To truly realize your financial goals, you need a comprehensive plan that considers all aspects of your financial life. Working with a financial professional can help you develop a Medicare strategy tailored to your needs. 

We at The Rosamond Financial Group are here to help. Ready to get started? Schedule a free, no-obligation call by reaching out to my office at 830-798-9400 or email solutions@rosamondfinancialgroup.com. 

About Preston

Preston Rosamond is a financial advisor and the founder of The Rosamond Financial Group Wealth Management, LLC with over two decades of industry experience. He provides comprehensive wealth management and financial services to successful business owners, corporate executives, and affluent retirees who enjoy simplicity and seek a professional to help them pursue their goals. Preston personally serves his clients with an individual touch, a sincere heart, and his servant’s attitude is evident from the moment you meet him. Learn more about Preston or start the conversation about your finances with him by emailing solutions@rosamondfinancialgroup.com or schedule a call on his online calendar.