The Inflation Reduction Act, signed into law in 2022, provides financial relief for people with Medicare by expanding benefits, lowering drug costs, and strengthening the program for the future. Here’s a summary of changes you can expect in 2025.

Benefit changes

In 2025, your prescription drug plan (also known as Medicare Part D) will have two benefit changes:

• Deductible: The maximum deductible will increase from $545 in 2024 to $590 in 2025. You must pay your deductible in prescription drug charges for the year before your drug plan begins paying its share.
• Out-of-pocket maximum: After meeting your deductible, you’ll pay a copayment, or percentage, for each covered drug and the plan will pay its share of the cost until you’ve spent $2,000. After this, the plan will pay for 100% of your remaining prescription drug costs.

The “coverage gap” will be eliminated starting in 2025. In 2024, you could have spent up to $8,000 out-of-pocket on prescription drugs. Thanks to the Inflation Reduction Act, in 2025, the annual out-of-pocket costs will be capped at $2,000.

While insurers can update copays or drug formularies annually, in no case can you spend more than $2,000.

Insulin and vaccines

There is no change to the cost of insulin products or vaccines in 2025. Insulin covered by your plan continues to be capped at $35 per month, and recommended vaccines are available at no charge. The deductible is waived.

Premium changes

In addition to benefit improvements, the Inflation Reduction Act limits the amount premiums can increase. By law, premiums can increase by no more than 6% on average. However, because of insurance companies’ expectations of the cost impact of the benefit changes, you may experience changes to your Part D premium in 2025. Some plan premiums will increase by less than 6% (or even decrease) and some will increase by more than 6%. Since there are many plans available, if you do experience a high premium increase, you may want to review other available plan options.

Prescription payment plan

Starting in 2025, if you have high out-of-pocket drug costs, you’ll have the option to pay in monthly amounts throughout the plan year instead of paying all at once at the pharmacy. Starting in October 2024, you can opt into the program any time during the plan year by contacting your prescription drug plan.

Once opted into the program, you’ll pay $0 at the point of sale. The Part D plan will send a monthly bill to you, which cannot exceed a monthly cap established by Medicare.

Watch for information from your insurance company about changes to your drug plan. If your plan no longer works for your drugs or your budget, please contact Alight to help you evaluate other plans in your area.