Passed in 2022, the Inflation Reduction Act brought many prominent changes to Medicare to be implemented in 2025. One of the remarkable changes was a reprieve from the costly prescription drugs. In 2023, Medicare restricted the cost of insulin in the Part D drug plan to $35 a month. They also removed the out-of-pocket costs for recommended vaccines.
In 2024, the government increased eligibility for monetary assistance from the Part D Extra Help program. In August, they lowered the costs of Medicare’s ten most expensive medicines. These changes in drug prices will be in effect from 2026.
Change in Part D plans
The most noteworthy change in Part D plans will take effect in 2025 by capping out-of-pocket spending on covered drugs at $2,000 annually. This modification will positively affect the costs and coverage of the Part D Medicare Advantage plan.
The Part D plans outshine all other changes in Medicare that have the potential to make significant differences in 2025. These include Medicare Advantage midyear coverage notices, stringent marketing rules, more advantages for family caregivers, and access to more mental health providers.
Changes You’ll See in 2025
Let’s now discuss the significant Medicare Changes you’ll experience in 2025.
1) Out-of-Pocket Spending
The out-of-pocket limit of $2,000 per annum for prescription drugs is for Medicare Part-D policies and drug coverage in the Medicare Advantage Plan.
Meena Seshamani, M.D., the director of the federal Center for Medicare, in an interview with AARP, said, “It’s the first time in the history of the Medicare program that people have a cap on how much they could have to pay out of pocket. And such a significant change means that in open enrollment, it is so important to shop. Because with such big changes, there very well could be a plan that better suits your health and financial needs.”
Here, it is important to mention that the amount of $2,000 is for copays, deductibles, and for covered drugs. It doesn’t cover premiums or drugs that aren’t covered in a policy. Gretchen Jacobson, vice president of Medicare for the Commonwealth Fund, says, “It doesn’t apply to their Part B drugs,” like the injections they get at a doctor’s facility. In case the Part D costs jump up, the amount capped can be adjusted in the following years.
2) No More Part D ‘donut hole’
This change to take effect from 2025 will ease the way how Part D works. Till now, the coverage plans consisted of four phases.
Deductible: In 2024, the policyholder had to pay the complete cost of drugs until it met the deductible limit of $545.
Initial Coverage: Members had to pay coinsurance and copayments, which varied by medication.
Coverage Gap: In 2024, the coverage gap happens when your drug plan reaches spending of $5,030 on covered medications. Also known as the donut hole, insurance plans paid a smaller amount in this gap for brand-named drugs and have dispensing fees. The policyholder may have to pay more out-of-pocket for the same medications than in the initial coverage period.
Catastrophic Coverage: Based on out-of-pocket costs, it starts from $8,000. It’s the payor’s share. The member doesn’t need to pay anything in the catastrophic phase of 2024. Hence, you don’t need to pay for the covered prescriptions till the start of 2025.
From the 1st of January 2025, Part D deductible plans may reach up to $590. The insurance holder copays for their drugs till out-of-pocket costs reach $2,000. According to insurance experts, this capping amount will help a large majority of people in the country.
According to the Centers for Medicare and Medicaid Services (CMS), by April 1, 2024, around 1.8 million people, i.e., 3.5% of people covered by medication plans, had paid $2,000 for out-of-pocket prescription costs.
People whose medication expenses are more than usual are more likely to pay a hefty amount at the start of the year. The new Prescription Payment Plan from Medicare will allow those who’re allowed to pay prescription costs every month instead of all at once.
“This will enable people to spread out the out-of-pocket drug costs over the course of the year so that you don’t experience that sticker shock and those cash flow issues at the pharmacy,” Seshamani says.
Although the new payment method doesn’t lower the cost, it helps to manage your payments and budget. You can opt into the plan whenever you want just by contacting your Part D company.
3) Ways to Get Weight Loss Drugs
You may be aware of the fact that Medicare cannot cover medications suggested for weight loss. However, if prescribed for other purposes, Part D plans can include coverage for prevalent weight loss medications. For instance, Mounjaro (tirzepatide) and Ozempic (semaglutide) against type 2 diabetes.
In march 2024, the Food and Drug Administration (FDA) approved Wegovy as suitable for those who’re obese and have cardiovascular issues. Some Part D plans permitted the medicine in the official list as they were not allowed to make modifications in the premiums in the middle of the year.
Diane Omdahl, author of Medicare for You: A Smart Person’s Guide, says, “I looked at 83 stand-alone Part D plans and 235 Medicare Advantage plans in four cities, and only two plans covered Wegovy.” Diane is also the president of 65 Incorporated, a health consultancy firm in Mequon, Wisconsin, working to assist people with Medicare guidance and decisions.
We may see more weight loss drugs covered from 1 Jan 2025. Tricia Neuman, who is the executive director for KFF’s program on Medicare Policy, while talking about Wegovy and prescriptions changes, says, “We estimate that roughly 1 in 4 Medicare beneficiaries with obesity or who are overweight could be eligible for Wegovy to reduce the risk of serious heart disease.”
“On the one hand, Wegovy is likely to be subject to relatively high cost-sharing because of its high price, but on the other hand, Part D enrollees who take these drugs will benefit from having the new $2,000 cap on their drug expenses.” We can see an expanded coverage in Part D plans subject to the FDA’s approval for other uses of weight loss drugs.
Medicare doesn’t cover Zepbound (tirzepatide) thus far, as the FDA hasn’t approved it for weight loss. In case the FDA deems tirzepatide appropriate for treating moderate to severe obesity and obstructive sleep apnea, as requested by Eli Lily, a leading pharmaceutical company, we may see Part D plans covering this drug.
4) Changes to Medicare Advantage Coverage
As mentioned above, the 2,000 out-of-pocket cap includes copays, deductibles, and coinsurance in Medicare Advantage plans’ prescription drug section. In 2025, we may notice changes in these plans to cover their additional costs.
As compared to Part D plans, they may not adjust premiums, mainly if they charge for nothing in addition to Part B premium, says Meredith Freed, senior policy manager with KFF’s program on Medicare policy.
Adding more, Freed says, “The zero-dollar premium is really attractive to people and one of the easiest ways to compare across plans.” However, a plan may alter it formulary to lower the out-of-pocket maximum spending limit and to enhance the percentage paid for services like coinsurance. It may also lessen or eliminate special advantages that initially lured you toward the plan.
“If you still have a dental benefit, for example, maybe it’s a little less generous than in prior years,” Freed says.
The fine print
Make sure to carefully review the changes in your plan’s annual notice. When finding and comparing Medicare Advantage plans through Medicare Plan Finder, don’t fall for the general description of coverage. Take time out to go through the fine print, like an explanation of benefits, prior to choosing the one that suits you. Lastly, confirm that the plan’s network includes your providers.
5) Midyear Statement from Medicare Advantage Plan
This is significant for those insurance holders who decided in favor of Advantage plans rather than original Medicare, 50.4 percent as of April 2024. Their midyear statement shows benefits available and waiting to be availed. They are important as these additional perks sometimes lure a Medicare enrollee to choose a specific plan.
“For example, if they haven’t used any of their dental, vision, hearing or fitness benefits, plans are required to notify them if they have any benefits left,” says the Commonwealth Fund’s Jacobson.
You’ll keep seeing TV ads from Medicare Advantage plans, the private insurance provider alternative to the Medicare we all know, that are more realistic. Based on the rules that applied last year, prior to open enrollment, didn’t allow Medicare Advantage ads to boast benefits that weren’t offered in the area where the ad was to be aired. Moreover, the ads shouldn’t deceive the masses into thinking they’re contacting a Government employee in case someone calls to clarify doubts or confusions.
6) Program for Family Caregiver Services
This year, a program was kick-started for patients suffering from dementia and their caregivers. It will expand fourfold in 2025, reaching more areas of the country. Known as Guiding an Improved Dementia Experience (GUIDE), this initiative promises 24/7 support, a care navigator to find medical services and community-based support, training for caretakers, and up to $2,500 per year for providing at-home, overnight, or adult day care services. Caretakers and patients usually won’t have copayments.
Expanding from 96 to 294
To streamline the process, CMS handpicked 96 organizations on July 1, 2024 to participate in this program. These included hospitals, practices of all sizes, academic medical centers, and community-based organizations presently serving dementia patients. CMS looks to expand as it has selected 294 more organizations to join from July 2025.
“We’re very excited about this,” says Janet LeClair, CEO of Memory & Movement Charlotte (North Carolina), a nonprofit medical practice that has focused on dementia patients for 11 years. “The caregiver is really the pivotal person ensuring the quality of life of the patients.”
Note: There’s a condition that the program participants should be enrolled in original Medicare and must have dementia diagnosed. They cannot be in a nursing home or hospice.
Adding more, LeClair said, “We know intuitively that respite is so critical to the health and well-being of the caregiver, which directly correlates to the health and wellness of the patient.”
Visit the CMS Guide program fact sheet or CMS Innovation website to check to see if a program is available in your region. Programs starting from July 2025 are listed. To learn more about eligibility, contact the program for assessment.
7) Adding More Mental Health Providers to Medicare
According to a KFF study, the percentage of adults aged 65 and older using mental health services rose slightly from 19% in 2019 to 20% in 2022. However, access to care may have influenced these figures. Prior to this, licensed mental health and addiction counselors and marriage and family therapists were not legally allowed to bill Medicare. This was because they could not be enrolled as Medicare providers. Now, some have enrolled as Medicare providers, and they can bill too.
Paperwork Process
“But it’s not just automatic. There are steps they need to take,” says Freed.
Medicare Advantage plans are now required to meet higher standards to enhance access to behavioral health specialists. “We’ve had such tremendous excitement and interest with tens of thousands of clinicians enrolling in the Medicare program, which will make a big difference for access to care,” Seshamani says.
A careful estimate tells us that more than 400,000 qualified behavioral health clinicians across the US are eligible for it. However, the patients need to confirm from the provider whether they accept Medicare or not.
Good News
Various telehealth facilities that saw expansion during the COVID-19 epidemic are going to expire at the end of 2024. However, Medicare has expanded access to telemedicine permanently for behavioral health services. This is a positive development, and we’ll see easy access to providers, especially in remote areas.
Positive development: Even though many telehealth expansions that took effect during the COVID-19 pandemic will expire at the end of 2024, Medicare permanently expanded access to telemedicine for behavioral health services. That can help with access to providers, especially in rural areas.
Summary of The Above Points
Now that we’ve explained major insurance changes for 2025 in detail, here’s a short recap of all the points mentioned above.
1) The changes from the Inflation Reduction Act will be implemented in 2025.
2) A reduced out-of-pocket limit in Part D drug plans eliminates the previous coverage gap, known as the “donut hole.”
3) We may see more weight loss medications in Part D plans for the treatment of other medical disorders.
4) To help cover additional expenses, the Medicare Advantage plan may see changes in 2025.
5) Carefully go through the midyear statement in your Medicare Advantage plan to see benefits you haven’t used.
6) Caretakers of patients with dementia may be entitled to respite care.
7) Telemedicine made permanent for mental health services. More behavioral health counselors are enrolling in the Medicare program.