It’s important to stay up-to-date with cost and coverage changes that health insurance plans make each year. Medicare, the federal health insurance program that covers close to 68 million Americans, is no exception. 2025 brings changes to Medicare premiums and out-of-pocket costs, Part D prescription drug costs, and the introduction of the new Medicare Prescription Payment Plan program.
New premiums and out-of-pocket costs
As of January 1, 2025, certain Medicare costs have increased:
- Part A (Hospital coverage)
- Monthly premium: Most people who have Medicare Part A do not pay a monthly premium. For anyone who does, their monthly premiums are between $285 or $518, depending on the length of their (or their spouse’s) work history paying into the Social Security retirement system
- Deductible: $1,676 per benefit period
- Co-pays: based on the number of days someone is in a hospital or skilled nursing facility
- Part B (Medical insurance)
- Monthly premium: $185 for most people (but based on household income)
- Deductible: $257
- Co-insurance: Once someone meets their deductible, Medicare will pay 80% of covered health care costs and the individual is responsible for the remaining 20%
- Part C (Medicare Advantage program)
- Any monthly Part C premium is in addition to someone’s monthly Part B, and
- The highest out-of-pocket maximum a Medicare Advantage plan can have is $9,350 for in-network costs. The Part C out-of-pocket maximum includes costs for covered hospital and medical services, but not the cost of prescription drugs covered by Medicare Part D.
For more details about the parts of Medicare, and what each part covers and costs, see our Quick Guide to Medicare 2025 and our Extended Quick Guide to Medicare.
Part D Prescription Drug Costs
Between 2006, when Medicare first started to provide prescription drug coverage, and January 1, 2024, there was no out-of-pocket maximum for Medicare prescription drug costs. Someone taking lots of prescription drugs, or even just one expensive medication, could quickly find themselves with very high out-of-pocket costs, even with insurance.
In 2024, because of the Inflation Reduction Act, the way that a standard Part D plan worked changed. The 2024 maximum deductible for a Part D plan was $545. After paying the deductible, patients paid 25% of their covered drug costs, until their total out-of-pocket drug costs reached $8,000.
The total out-of-pocket drug costs included what patients had actually spent, and the value of a 70% manufacturer price discount on brand-name drugs. This meant that individuals who took only brand-name drugs in 2024, reached the $8,000 cap by spending a total of $3,333 out-of-pocket.
After that, they had no additional out-of-pocket costs for Part D prescriptions for the rest of the year. 2024 was the first year that people with Medicare had an out-of-pocket maximum for prescription drug costs.
In 2025, the Part D benefit is changing again. The highest deductible a plan can have this year is $590. Then they are responsible for paying 25% of their covered drug costs, under their total out-of-pocket drug costs reach $2,000. After that, they will have no additional out-of-pocket costs for Part D prescriptions for the rest of the year.
For more details about Medicare Part D, see our Quick Guide to Medicare Part D.
Introduction of the new Medicare Prescription Payment Plan
Another consumer-friendly reform in the Inflation Reduction Act is the creation of the new Medicare Prescription Payment Plan program (M3P). This program allows someone to spread the costs of their covered prescription drugs over the calendar year, rather than having to pay a large amount of money all at once.
If someone didn’t enroll during last fall’s open enrollment period, they can enroll in the program any time this year, by contacting their Medicare drug plan (or their Medicare Advantage plan, if it includes drug coverage).
If someone enrolls, they don’t pay anything when they fill their prescriptions at the pharmacy. Instead, their drug plan will send them a monthly bill. There are no interest payments or fees. Enrollment is voluntary. People most likely to benefit are those who enroll early in the year and who have high drug costs.
To learn more about the Medicare Prescription Payment Plan, visit Medicare’s website.
To see a comparison of your drug costs if you do or do not enroll in the M3P, use Medicare’s Plan Finder tool. For detailed instructions about using Plan Finder to locate this information, view the recording of our Medicare: What’s New in 2025? webinar.
Other tips for the new year
In addition to what’s new in 2025, people with Medicare need to know their rights around Medicare coverage at the beginning of any new year, including what to do if a particular drug or service is no longer covered by their plan, how to make the most of enrollment periods, and what to do if they have a change in their financial situation and need help with their Medicare costs.
Triage Cancer has resources to help, including our new Checklist: How to Make a Medicare Prescription Drug Exception Request, our Quick Guide to Medicare Enrollment Periods, and our 2025 Quick Guide to Medicare Savings Programs.
Learn more about Medicare and cancer.
