• By 2025, a $2,000 annual copayment will keep costs down for Medicare enrollees who use drugs covered by Part D plans.
• A payment plan allows Medicare enrollees to pay for their medications in limited monthly installments instead of paying the full cost upfront at the pharmacy.
• A decline in the number of standalone Part D drug plans will mean fewer choices for enrollees, which can simplify the process of choosing a Medicare plan.

There will be several changes coming to Medicare’s Part D drug plans in 2025 that could potentially impact enrollees’ benefits and costs, including changes to premiums, a new copayment, and a decrease in the number of drug plans offered.

“Overall, these changes in 2025 strike a good balance between controlling costs and adding protections for Medicare beneficiaries,” said Brandy Burch, CEO of BenefitBay.

“For most people, these updates will provide more stability and predictability in their healthcare costs,” Burch told Healthline, “which could make a big difference when it comes to planning for the year ahead.”

Here’s a look at the top five changes to Medicare Part D prescription drug plans.

The Medicare Part D base premium for the beneficiary will increase in 2025 compared to the previous year. However, this does not mean that Medicare enrollees will pay more out of pocket each month for their Part D drug benefits.

The Inflation Reduction Act also provides for a premium stabilization mechanism. This limits actual premium increases for Part D plans to an average of about $2 per month.

The base premium is not what Part D participants pay each month. It is the basic amount allowed for premiums.

However, a recent analysis from ValuePenguin shows that overall Medicare Advantage premiums will increase 4% in 2025 from the previous year – from $24 to $25 per month. This rate change varies by state.

These are average changes, so your plan’s premiums could change by a different amount: up or down. It’s important to shop around during the Medicare Open Enrollment period, which runs from October 15 to December 7, to find the best plan for your budget and needs.

You may have heard of the “doughnut hole” – or the gap in prescription drug coverage – about Medicare Part D.

You fall into this gap once your Medicare Part D plan pays a certain amount for your prescription drugs during one year of coverage. At this point, you will pay more out of pocket for your prescription drugs until you reach your annual limit.

Depending on your plan, when you reach your annual limit, the plan may help pay for your prescription drug costs again.

If this sounds confusing, don’t worry. The donut hole will disappear after 2024 and be replaced by a new $2,000 co-pay in 2025. This change, due to the Inflation Reduction Act, affects all Medicare plans.

Once you pay $2,000 out of pocket for covered medications during a calendar year, you automatically receive “catastrophic coverage.” As a result, you won’t have to pay out of pocket for Part D drugs for the rest of the year.

An estimated 1.4 million low-income Medicare Part D participants without subsidies are expected to benefit from the $2,000 deductible, KFF reports. These people had annual out-of-pocket expenses above this limit.

Burch said the $2,000 co-pay will have a big impact for Medicare enrollees.

“For people who rely on expensive medications, this limit means they can finally plan their healthcare budget without worrying about unexpectedly high costs,” she said. “It goes a long way in providing peace of mind, knowing that once they reach that $2,000 threshold, they are covered for the rest of the year.”

This change will not only reduce out-of-pocket drug costs for enrollees – especially for those taking multiple or expensive medications – but it will also likely help them take their medications as prescribed, which could improve their health outcomes.

In 2025, there will also be the option for Part D participants to pay the cost of their prescription drugs in limited monthly installments instead of all at once at the pharmacy.

The Medicare Prescription Payment Plan is available at no charge to all plans, including Medicare prescription drug plans and Medicare Advantage plans with prescription drug coverage. However, participation is voluntary.

If you choose this option, instead of paying for your medications at the pharmacy, you will receive a monthly bill from your Medicare prescription drug plan or Medicare Advantage plan.

“This (payment plan) makes the cost (of medications) seem more manageable by breaking it down over time,” Burch said. “It’s like you have some breathing room, instead of having to deal with a large payment all at once. And that flexibility can be a relief for people on a tight budget.”

Jenn Kerfoot, chief strategy and growth officer at DUOS, pointed out that people on the Medicare Prescription Payment Plan cannot be sent to a collection agency for not paying their bills. However, the plan may kick them off the payment plan if they don’t pay their bills, she told Healthline.

KFF reports that in 2025 there will be 26% fewer standalone Part D plans than in the previous year and 5% fewer Part D plans for low-income subsidy (LIS) beneficiaries.

These decreases are due to changes resulting from the Inflation Reduction Act, which takes effect in 2025, including the $2,000 copayment. Part D plans and drug manufacturers will also have to pay a greater share of drug costs above the cap, and Medicare will pick up less for drug costs.

However, KFF said enrollees in each state can still choose from at least a dozen standalone plans and many Medicare Advantage drug plans.

While some people may ultimately lose their current plan, having fewer plans in general can help simplify things for people during Medicare Open Enrollment.

“Fewer choices mean people have to spend less time evaluating and comparing endless options, which can be overwhelming,” says Burch. “For many older adults, a streamlined set of options can make the process easier and help them focus on finding the best fit, without all the guesswork.”

Because the donut hole disappears thanks to the new $2,000 co-pay, the Coverage Gap Discount Program is no longer necessary.

It will be replaced by the Manufacturer Discount Program from 2025. Under this program, the manufacturer typically pays a 10% rebate on brand-name drugs and biologics during the initial Part D coverage phase, according to CMS.

When a beneficiary reaches the catastrophic stage – after the $2,000 deductible – the manufacturer typically offers a 20% discount on these drugs and biologics.

“This change could change the way drug rebates are applied, especially on brand-name medications,” Burch said. “but the good news is that there should still be financial relief (for enrollees) for prescriptions.”

“However, it is important for enrollees to double-check how this update may affect their specific medications during open enrollment,” she added. “This way they avoid surprises when it comes to costs.”

Kerfoot recommends that people consider several things when shopping for a Medicare drug plan this year, including whether their 2024 plan will still be offered, whether their existing plan will reduce their benefits, or whether the medications they take will still be covered by the plan, and whether the premium has changed.

Burch also suggests people keep in mind the five big changes happening next year.

“With the adjustments to out-of-pocket limits, payment options and plan choices, it is important to choose a plan that best suits their specific health care and financial needs,” Burch said. “If we take a little extra time now to understand the new landscape, we can save a lot of worry, and possibly a lot of money, in 2025.”

There will be several changes coming to Medicare Part D prescription drug plans in 2025 that could impact drug costs and plan coverage. One change is an annual copayment of $2,000. Once enrollees reach this limit, they will no longer have to pay for their medications out of pocket for the rest of the year.

A new payment plan will also launch in 2025, allowing enrollees to pay for their medications in limited monthly installments instead of all at once at the pharmacy. This free option is available for all Part D plans, including Medicare Advantage plans with drug coverage. Participation is voluntary.

In 2025, there will be 26% fewer standalone Part D plans than in 2024 and slightly fewer Part D plans for low-income seniors. However, there are at least a dozen standalone plans available in each state, so enrollees still have options.