Changes Coming to Medicare Part D
/The out-of-pocket maximum for those covered under a Medicare prescription payment plan (Part D) will be reduced by 75% in 2025, from $8,000 to $2,000. So, those with chronic or rare conditions, especially cancer, could see reduced drug costs going forward. Furthermore, starting in 2025, Part D subscribers can opt to have the out-of-pocket maximum applied as a monthly cap to help keep costs level on a month-to-month basis.
Annual deductibles for Part D plans still apply. However, there is now a true cap to out-of-pocket costs. Previously, a complicated set of coinsurance terms (the portion of the cost paid by you versus the insurance company) meant that some seniors were forced to pay 5% of a drug’s cost without a limit. A temporary cap of $8,000 was put in place for 2024, and for 2025 this system has been overhauled with the intention of helping those most affected by the high cost of drugs. The costs are being capped for all individuals and being passed on to prescription drug manufacturers that are now forced to provide increased discounts on their most expensive drugs.
Part D plans will also share a larger portion of drug costs. In the short-term this will accelerate Part D premium increases, which is why in recent years Medicare Part D premiums have increased significantly. Part D has also become more restrictive with the list of covered drugs in an effort to reduce costs and keep premium increases reasonable.
Ultimately, these changes will shift costs and spread them amongst Part D premium payers and drug manufacturers to help reduced out-of-pocket expenses for seniors with high-cost drugs. This is likely a small first step towards the overhaul needed to ensure the sustainability of the Medicare and Social Security systems.
For those on the cusp of signing up for Medicare, join us for our upcoming workshop, Medicare Enrollment: What You Need To Know, on Wednesday, October 16, 2024, from 6-7:30p.m. featuring guest speaker Melinda A. Caughill, CSA. We hope to see you there!
- Kyle McCune, CFP®, Worley Erhart-Graves Financial Advisors
