Article published by Investopedia.com
Written by Lora Shinn
“In 2025, Medicare will undergo some of the most significant changes in a generation. Changes to Medicare will include a $2,000 limit on out-of-pocket Part D drug costs, an opt-in payment plan, and some potential broad changes in Medicare Advantage plans. Most result from the Inflation Reduction Act.”
“It’s going to be a tough open enrollment because nothing like this has happened in Medicare since the inception of Medicare Part D in 2006,” said Jason Rubin, an independent insurance agent in Southern California who specializes in Medicare, among other coverage. “These are uncharted waters. I feel it’s going to take a couple of years to stabilize, and 2025 is like a test to see how well 2026 is going to work.”
“1. You Won’t Spend More Than $2,000 for Drug Copays and Coinsurance Under Part D
“In 2025, a new approach will replace previous confusing and frustrating Medicare Part D phases, including the elimination of the infamous “donut hole” and a new hard limit of $2,000 per year for out-of-pocket Part D drug spending.
“This limit, Rubin said, is “good for people who take a lot of drugs and pay a lot in copays because they can blow through $2,000 quickly.”
“Here’s how the phases will work:
- “Deductible phase: If your Medicare Advantage drug plan or standalone Part D plan requires a deductible, you’ll pay 100% of your prescription drug costs until you spend $590, which is the Part D deductible for 2025.1
- “Initial coverage: You’ll pay 25% coinsurance for covered drugs until you’ve paid $2,000 out of pocket.
- “Catastrophic: After you’ve hit the $2,000 threshold for out-of-pocket spending on your medications, you pay nothing else out of pocket for 2025. Part D enrollees who reach the catastrophic threshold will save about $1,300 on drug costs in 2025 compared to 2024, according to a Kaiser Family Foundation (KFF) review.2 In future years, the $2,000 limit will increase due to inflation.
“Unfortunately, these out-of-pocket limits do not apply to Part B drugs provided by a medical professional in an outpatient hospital setting. Chemotherapy treatments, for example, may fall into this category.”
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