What are the changes to Medicare benefits for 2025?
Medicare changes for 2025 include increases for Medicare Part B and Part A premiums and cost-sharing, decreases in average premiums for Medicare Advantage and Part D plans, adjustments to income-related premium surcharges for Medicare Part B and Part D, a $2,000 cap on out-of-pocket costs for drugs covered under an enrollee’s Medicare Part D coverage, and the option to spread Part D out-of-pocket caps out across the full year.
Here’s a full rundown of changes to Original Medicare cost-sharing and premiums, the high-income brackets, improvements to Medicare Part D prescription drug coverage, and more.
Medicare Part D premiums and deductibles
Medicare Part D is private prescription drug coverage for Medicare beneficiaries. Part D coverage can be offered as a stand-alone plan (PDP) or integrated with a Medicare Advantage plan (MA-PD). Original Medicare does not provide outpatient prescription drug benefits, so enrollees need Part D unless they have creditable drug coverage from another source, such as a current or former employer.
How is Medicare Part D coverage changing in 2025?
Starting in 2025, Medicare Part D prescription drug enrollees will pay a maximum of $2,000 in out-of-pocket costs for drugs covered by their plan, and will have the option to spread their drug costs out in equal payments throughout the year. The Part D donut hole is being eliminated altogether as of 2025. All of these improvements are a result of the Inflation Reduction Act. The Inflation Reduction Act will also continue to ensure that Medicare Part D prescription drug enrollees can receive recommended vaccines at no cost, and covered insulin products with copays capped at $35/month.
To address concerns about premium increases for 2025 stemming from the Inflation Reduction Act changes, the federal government announced a voluntary PDP premium stabilization program for 2025, under which participating insurers will receive additional federal funding to reduce overall premiums. Although the premium stabilization program is voluntary for insurers, 99% of PDP enrollees are in plans that opted into the program for 2025.
Ultimately, premiums for stand-alone Part D plans (PDPs) will decrease slightly in 2025, from an average of $41.63/month in 2024 to an average of $40/month in 2025.
Although there are fewer PDPs available for 2025 than there were in 2024, there continue to be numerous options available in each state, with a wide range of premiums. On the low end of the spectrum, there are PDPs available with premiums as low as $0/month in 2025. On the high end, there are PDPs with premiums of more than $100/month.
How much is the Medicare Part D deductible in 2025?
The maximum Medicare Part D deductible will be $590 in 2025, up from $545 in 2024. Part D plans can have lower deductibles, or no deductible at all. But if they have a deductible, it can’t be more than $590 in 2025.
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Medicare Advantage costs and enrollment
Medicare Advantage plans combine Medicare Part A, Part B, and usually Part D, into one private plan. These plans also generally include various additional benefits that aren’t covered by Original Medicare, such as routine dental and vision.
How are Medicare Advantage costs changing for 2025?
Average Medicare Advantage premiums, which are paid in addition to the premium for Medicare Part B, will decrease slightly in 2025, dropping from $18.23/month in 2024 to $17/month in 2025. (That’s just an average; actual premiums vary widely. Most enrollees are in plans with no separate premium, so they only pay the premium for Medicare Part B.)
Some insurers that offer Medicare Advantage plans are planning to exit the market or scale back their service areas at the end of 2024., Others have said that they will make changes to their benefits for 2025; those could potentially include higher deductibles, coinsurance instead of copays, reductions in supplemental benefits, or provider network changes.
Is Medicare Advantage enrollment expected to increase in 2025?
Yes, CMS projects that total Medicare Advantage enrollment will continue to increase in 2025.About 32.8 million people had Medicare Advantage plans in 2024. Enrollment in these plans has been steadily growing for more than 15 years. The total number of Medicare beneficiaries has been steadily growing as well, but the growth in Medicare Advantage enrollment has far outpaced overall Medicare enrollment growth.
In 2007, just 19% of eligible Medicare beneficiaries had Medicare Advantage plans. That has grown to 54% by 2024 (to be eligible for Medicare Advantage, you must have Medicare Part A and Medicare Part B; 2023 was the first year when more than half of eligible enrollees had Medicare Advantage plans).
Is the Medicare Advantage out-of-pocket maximum changing for 2025?
Yes, the Medicare Advantage maximum out-of-pocket limit (for services covered under Medicare Part A and Part B) will grow to $9,350 for in-network costs in 2025. This is an increase from $8,850 in 2024, but average out-of-pocket caps are typically well below the allowable maximum.
Medicare Part B premiums and deductible
Medicare Part B covers outpatient and physician costs. Medicare Part B has out-of-pocket costs when enrollees receive covered care — an annual deductible and 20% coinsurance — and it also has a monthly premium that’s paid by nearly all enrollees (high-income enrollees pay more than the standard premium for Part B).
Is the Medicare Part B standard premium increasing for 2025?
Yes, the standard 2025 Part B premium will be $185/month, which is an increase of a little more than $10/month over the 2024 premium.
For most Medicare Part B enrollees, the premiums are automatically deducted from Social Security checks. The cost-of-living adjustment (COLA) for 2025 will increase Social Security checks by 2.5% This will more than cover the full increase in Medicare Part B premiums for virtually all enrollees, so most Social Security recipients will still see larger checks in 2025, despite the larger Part B premium being withheld.
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How much is the Medicare Part B deductible for 2025?
The 2025 Medicare Part B deductible is $257, up from $240 in 2024.
Some enrollees have supplemental coverage that pays their Medicare Part B deductible. This includes Medicaid, employer-sponsored plans, and Medicare Supplement (or Medigap) Plans C and F. But since the beginning of 2020, Medigap Plans C and F have no longer been available to newly eligible enrollees (this is discussed in more detail below).
Many Medicare Advantage plans have copays and deductibles that don’t necessarily increase in lockstep with the Medicare Part B deductible. So although their benefit designs fluctuate from one year to another, the changes aren’t the same as the deductible and copay changes that apply to Original Medicare.
Medicare Part A premiums, deductible, and coinsurance
Medicare Part A covers hospitalization costs. Medicare Part A has out-of-pocket costs when enrollees need hospital care, although most enrollees do not pay a premium for Medicare Part A. But you’ll have to pay a premium for Medicare Part A if you don’t have 40 quarters of work history (or a spouse with 40 quarters of work history).
Are Medicare Part A premiums increasing in 2025?
Roughly 1% of Medicare Part A enrollees pay premiums; the rest are entitled to free premiums based on their earnings history or a spouse’s. For enrollees who pay premiums for Medicare Part A, the premiums will increase slightly for 2025. Depending on how much work history the person has, the 2025 Part A premiums (for the 1% of beneficiaries who have to pay a premium) will be either $285/month or $518/month.
Is the Medicare Part A deductible increasing for 2025?
Yes, the Medicare Part A deductible will increase for 2025. Medicare Part A has a deductible that applies to each benefit period, rather than a calendar year deductible like Medicare Part B or typical health insurance plans (a Medicare benefit period begins when a person is admitted for inpatient care, and ends when they have not received any inpatient care for at least 60 days). The deductible generally increases each year, and it will grow to $1,676 in 2025.
The Medicare Part A deductible applies to all Original Medicare enrollees who receive inpatient care, although many enrollees have supplemental coverage that pays all or part of the Medicare Part A deductible.
How much will Medicare Part A copayments be in 2025?
The Medicare Part A deductible covers the enrollee’s first 60 inpatient days during a benefit period. If the person needs additional inpatient coverage during that same benefit period, there’s a daily copayment (this used to be called coinsurance, but Medicare now refers to it as a copayment).
The daily copays for inpatient days 61-90 will grow to $419/day, and the copay for lifetime reserve days will grow to $838/day.
How much is the Medicare Part A skilled nursing facility copayment in 2025?
Original Medicare covers up to 100 days in a skilled nursing facility care if the patient has an inpatient hospital stay of at least three days before being transferred to a skilled nursing facility. After day 100, all skilled nursing facility expenses are the responsibility of the beneficiary (unless they have supplemental coverage that provides additional benefits).
Although the first 20 days of a covered stay in a skilled nursing facility have no cost-sharing, there’s a copayment that applies to days 21 through 100 in a skilled nursing facility. That copayment is $204 per day in 2024, and will grow to $209.50 per day in 2025.
Medicare supplement insurance (Medigap) plans
Can I still buy Medigap Plans C and F?
As a result of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), Medigap Plan C and the high-deductible Medigap Plan F are no longer available for purchase by people who become newly eligible for Medicare on or after January 1, 2020.
People who became Medicare-eligible prior to 2020 can keep Medigap Plans C or F if they already have them or apply for those plans at a later date, including for 2024 coverage. (Medical underwriting applies in most states if you’re switching from one Medigap plan to another after your initial enrollment window ends, but some states have guaranteed-issue Medigap plans even after the initial enrollment period has ended.)
Medigap Plans C and F cover the Medicare Part B deductible in full (The Part B deductible is $240 in 2024, but is expected to be higher in 2025). But other Medigap plans require enrollees to pay the Medicare Part B deductible themselves. The idea behind the change is to discourage overutilization of services by ensuring that enrollees have to pay at least something when they receive outpatient care, as opposed to having all costs covered by a combination of Medicare Part B and a Medigap plan.
Because the high-deductible Medigap Plan F was discontinued for newly eligible enrollees as of 2020, there is a high-deductible Medigap Plan G available instead.
The income-related monthly adjusted amount (IRMAA)
Will there be inflation adjustments for Medicare beneficiaries in high-income brackets in 2025?
Yes. The threshold for high-income surcharges (and each of the income brackets) will increase for 2025, and the surcharges at each income level will also increase.
Medicare beneficiaries with high incomes pay more for Medicare Part B and Medicare Part D prescription drug coverage. But what exactly does “high income” mean? The high-income brackets were introduced in 2007 for Medicare Part B and in 2011 for Medicare Part D prescription drug plans, and for several years they started at an income of $85,000 ($170,000 for a married couple).
But the income brackets began to be adjusted for inflation as of 2020. For 2025, the threshold where the surcharge starts to be added will increase again, to $106,000 (up from a threshold of $103,000 in 2024). The surcharge in 2025 will be based on modified adjusted gross income reflected on 2023 tax returns, since those are the most recent tax returns on file when 2025 begins; there’s an appeals process you can use if your income has changed since then.
For 2024, the Medicare Part B premium for high-income beneficiaries will ranges from about $245/month to about $594/month, depending on income. For 2025, these high-income enrollee will pay between about $259/month and about $629/month, depending on how high their income is.
For Medicare Part D, the 2024 high-income surcharge (added to the beneficiary’s plan-specific premium) ranges from $12.90/month to $81/month, depending on income. For 2025, this range will be from $13.70/month to $85.80/month, depending on income.
Learn more about the income-related monthly adjusted amount (IRMAA).
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
Footnotes
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