How Is Medicare Changing In 2025?

Medicare makes changes every year and 2025 is no exception.

From premium hikes to drug price caps and telehealth updates, here are several Medicare changes to expect for 2025.

1. Medicare Part B Premium and Deductible Increases

In 2025, the Medicare Part B premium will be $185, which is an increase of $10.30. If you have a higher income, your premium might be higher.

The Part B deductible is also going up by $17 to $257 in 2025. This means you'll need to pay this deductible before Original Medicare starts covering your healthcare costs.

2. New Part B IRMAA Chart

The standard Part B premium for 2025 is $185, but if your income is high, you'll have to pay more. This additional amount is known as the Income-Related Monthly Adjustment Amount (IRMAA).

Your IRMAA may vary depending on what kind of Part B coverage you have and how you file taxes. Below is an updated Part B IRMAA chart for 2025.

3. Medicare Part A Premium and Deductible Increase

Most people don’t have to pay a premium for Medicare Part A which covers inpatient hospitals, skilled nursing facilities, hospice, inpatient rehabilitation, and some home healthcare services. But if you fall within the 1% that does, that premium will be increasing in 2025 too.

In 2025, the Part A premium will increase to $285 (a $7 rise from 2024) for individuals with at least 30 quarters of coverage or those married to someone who does. For individuals with fewer than 30 quarters of coverage, and certain individuals with disabilities who have exhausted other entitlements, the premium will be $518 per month (a $13 increase from 2024).

The coinsurance and deductible beneficiaries pay if admitted to the hospital are also going up a bit in 2025. Check out the chart below for the updated prices.

4. Expensive Drug Negotiations Continue in 2025

As part of the Inflation Reduction Act, a government effort to make medicine more affordable, Medicare is negotiating directly with drug companies to lower the cost of popular Part B and Part D medications.

Recently, the Biden administration secured lower prices for the first 10 drugs on the list, with some prices dropping by as much as 38% to 79%. These new prices are set to take effect starting in 2026.

Unfortunately, many small pharmacies may not carry these lower-cost drugs due to concerns about high upfront costs. Pharmacies purchase drugs at a set price and are reimbursed by Medicare or insurance. With the new lower prices, pharmacies might pay the higher price upfront, but Medicare will reimburse them at the lower rate, creating a gap. Pharmacies could end up covering that cost themselves, potentially absorbing $27,000 per month before receiving rebates.

Negotiations will continue in 2025. By February 1, 2025, Medicare administrators will select another 15 drugs for the next round of price talks, with those prices taking effect in 2027.

5. Changes to Mental Health Coverage

Medicare will continue to cover mental health services for conditions like depression and anxiety, usually through outpatient visits.

For 2025, Medicare will also include a free "social determinants of health risk assessment" during your annual Wellness visit. This questionnaire helps your doctor understand your social needs and guide you to the right support. Your doctor will also do a cognitive assessment to look for signs of dementia, including Alzheimer's disease, and evaluate your risk factors for substance abuse, too.

6. More Caregiver Support

Medicare offers some great support for caregivers. It covers respite care, which gives your caregiver a break while you stay in a Medicare-approved facility for up to 5 days. 

And now in 2025, it also includes caregiver training to help them learn things like how to give you medicine, and how to better care for you.

There’s also a new pilot program starting in 2025 that offers extra support for people living with dementia and their caregivers.

7. Changes to Telehealth Coverage

Starting January 1, 2025, most telehealth services will only be available if you're in an office or medical facility located in a rural area.

However, you may still be able to receive the following services from home:

• Monthly End-Stage Renal Disease (ESRD) visits for home dialysis
• Services for diagnosis, evaluation, or treatment of symptoms of an acute stroke
• Services to treat a substance use disorder or a co-occurring mental health disorder or for the diagnosis, evaluation, or treatment of a mental health disorder
• Behavioral health services (also called mental health services)
• Diabetes self-management training
• Medical nutrition therapy

8. New Special Enrollment Periods for Low-Income Beneficiaries

Medicare Advantage Open Enrollment runs from January 1 – March 31 each year which is when most Medicare enrollees can switch or drop their Medicare Advantage plan.

However, people who are eligible for both Medicare and Medicaid, as well as those enrolled in the Low-Income Subsidy (LIS), also known as Extra Help, have more flexibility and qualify for special enrollment periods.

In 2025, this special enrollment period will no longer be quarterly— it will be monthly. This means they can drop their Medicare Advantage plan, return to Original Medicare, and sign up for a new standalone Prescription Drug Plan once a month.

If they're already on Original Medicare, they can switch from one Prescription Drug Plan to another, but this special enrollment period can't be used to switch to another Medicare Advantage plan.

9. Part D Medicare Changes

Medicare Part D helps cover prescription drug costs, but some major changes are coming in 2025. Let's take a look at how these changes might affect your prescription drug coverage.

Fewer Part D Plans in 2025

For 2025, there will be a total of 524 stand-alone Prescription Drug Plans (PDPs) nationwide, which is a 26% decrease from 2024. Every state will still have at least 12 options to choose from.

The number of premium-free plans available to those who qualify for the Low-Income Subsidy (LIS) might be even more noticeable dropping to about 115 nationwide, a 9% decrease.

On the bright side, the number of Medicare Advantage Plans with drug coverage (MA-PDs) is growing, so you have more options. These plans often have lower or even $0 premiums compared to PDPs, so it might be worth exploring if bundling your coverage with an MA-PD could save you money.

Premiums Are Going Up

Individuals with higher incomes may pay a higher premium due to income-related adjustments. The table below shows these extra amounts for high-income beneficiaries.

And for those who are married filing separately:

New Cap on Out-of-Pocket Drug Costs

Starting in 2025, Medicare will cap your out-of-pocket drug costs at $2,000 per year. Once you reach this limit, you won’t have to pay anything for covered Part D drugs for the rest of the year.

If you're eligible for Extra Help, your costs may be lower or even covered.

Payment Plan Option for Prescription Drugs

In 2025, all Part D plans are required to offer a new Medicare Prescription Payment Plan that can help you manage drug costs by spreading payments throughout the year. This plan doesn’t lower the actual cost of drugs but may help with budgeting.

If you choose to use this payment plan, along with your Part D premium bill, you’ll get a separate bill from your Part D plan to pay for your prescription drugs rather than paying the pharmacy directly.

Changes to Catastrophic Coverage

Starting in 2025, Medicare will cover less of the costs for catastrophic drug coverage. Instead of covering 80% like before, it will only cover 20% for brand-name drugs and 40% for generics.

For those who reach catastrophic coverage, this could mean plans and manufacturers will take on more of the costs, which could end up affecting your out-of-pocket expenses.

Conclusion

Medicare is always making changes, so it's good to stay up-to-date on what's happening and make sure you understand how these changes will affect you.

If you have any questions about any of these changes or wonder how they will affect you in 2025, give us a call at 217-423-8000 to schedule an appointment with a licensed insurance agent.