Whether it’s your first time signing up or you need to make changes, here’s what’s new about Medicare this year

If you’re enrolled in Medicare and wondering if your current coverage is appropriate to your future needs, now is the time to consider modifying your plan or switching to another. Medicare’s Annual Enrollment Period, commonly referred to as “open enrollment,” runs Oct. 15 through Dec. 7. This is your window in which to optimize your Medicare coverage for the following calendar year.

Read on for the changes to Medicare costs and benefits for 2025, and resources where you can access detailed information specific to your area.

A $2,000 Annual Out-of-Pocket Drug Cap

In 2024 all Medicare members, regardless of their insurance provider, had an out-of-pocket Part D maximum of between $3,300 and $3,800 – for 2025 this will be capped at $2,000, which is lower than ever. Additionally, the controversial Part D “donut hole” – a coverage gap between initial copay and coinsurance coverage and full catastrophic coverage – will, after being steadily eroded after the Affordable Care Act was enacted in 2010, finally be eliminated altogether.

Under the new system, the standard annual Part D deductible will increase from the existing $545 to $590. After you reach that limit, you’ll pay 25% of drug costs until your out-of-pocket spending hits $2,000, at which point you’ll immediately enter catastrophic coverage without that precarious “donut hole” and have no further out-of-pocket costs for prescriptions during that calendar year. The Inflation Reduction Act also requires a Part D manufacturer discount program that covers 75% of the cost of applicable drugs to fill the previous coverage gap as of January 1.

Some Premiums Should Decrease

Some Medicare beneficiaries, notably those prescribed costly brand-name medications, will start saving money on health costs next year due to the new $2,000 out-of-pocket drug cap outlined above. But some plans may simultaneously adjust their premiums, formularies (the lists of prescription drugs covered), copays or deductibles in response to their related increased costs.

Thankfully, any potential Plan D premium increases will be capped at $35 per month thanks to a new program, the Part D Premium Stabilization Demonstration. And, overall, the average Part D premium is expected to decrease by $7.45 to $46.50 in 2025, according to the Centers for Medicare & Medicaid Services (CMS). CMS also predicts that Medicare Advantage premiums will be lower in 2025, falling from an average $18.23 per month to $17.00. More than 80% of Medicare Advantage enrollees will have the same or lower premium in 2025 if they remain on the same plan, with some 60% forecast to have a zero-dollar premium.

Medicare Prescription Payment Plan

Another new program for 2025 is the optional Medicare Prescription Payment Plan. As its name implies, this allows enrollees the option of spreading the out-of-pocket costs of prescriptions over the plan year rather than paying for these all at once at the pharmacy. Beneficiaries who opt into the Medicare Prescription Payment Plan will receive a monthly bill for prescriptions from their Medicare Advantage or standalone Part D plan.

While there’s no cost to participate in the Medicare Prescription Payment Plan, the payment amount may fluctuate each month until the new $2,000 out-of-pocket max is reached.

2025 Part B Premiums and Deductibles

Whether you’re enrolled with Original Medicare or Medicare Advantage, your plan will include Medicare Part B, covering outpatient services like doctor visits, outpatient surgeries and medical devices. Each year, Part B premiums and deductibles change to reflect adjustments for inflation and rising healthcare costs. In 2025, these are expected to increase from $174.70 to around $185 next year. While all Medicare enrollees pay Part B costs, some state cost-saving programs and programs through Medicare Advantage plans can reduce or even eliminate the Part B premium for beneficiaries with lower incomes.

Medicare Information Resources

During the open enrollment period, people eligible for Medicare can access information to help compare options for health and drug coverage at medicare.gov and its Medicare Plan Finder, where you can compare available plans in your area by entering your zip code. Medicare beneficiaries should have already received the latest official Medicare & You handbook in the mail and this can also be downloaded, in multiple languages and formats, at any time. Additionally, you can call (800) MEDICARE (633-4227) or contact the California Health Insurance Counseling and Advocacy Program – (800) 434-0222 – for California-specific Medicare counseling and to find services in your county.

-Paul Rogers