The Centers for Medicare & Medicaid Services (CMS) is outlining significant changes coming to Medicare in 2025. Currently, CMS has shared details about Medicare Part D plans, but will soon elaborate on Parts A, B, and C in the coming weeks and months. Key changes stem from the 2022 Inflation Reduction Act (IRA), which could notably influence medication costs for participants. Each year, the Social Security Administration (SSA) assesses the cost dynamics of Medicare, adjusting premiums and deductibles based on guidelines from the Social Security Act.
In 2025, some of the IRA rules set in 2022 will come into effect, potentially impacting how much beneficiaries pay for their medications. The CMS is working to finalize these changes, and we will keep you informed as new details emerge. Medicare Part A covers inpatient hospital care, critical access hospitals, and skilled nursing facilities. Nearly 99% of beneficiaries receive Part A at no cost because they've paid Medicare taxes while working. Last year, updates for 2024 were announced on October 12, 2023. We can expect a similar announcement timeline for 2025 changes to Part A.
Medicare Part B includes medical services such as doctor's visits and outpatient care. For 2024, the Part B premium is set at $174.70 per month. Annual adjustments are typically announced in the fall. Thus, we await comprehensive details for 2025. Big updates are also coming for Medicare Advantage, or Part C. These plans, provided by private companies, often include additional benefits like vision, hearing, dental, and wellness programs. An important 2025 update for Part C will be a mid-year notification for enrollees, detailing any unused benefits.
This change is designed to help beneficiaries better utilize their current plan's offerings and reassess if they should renew or switch plans during enrolment. Several changes are set for Medicare Part D in 2025, particularly influenced by the IRA. Notably, the Part D base beneficiary premium will increase by $2.08, or 6%, from $34.70 to $36.78, although actual premiums may vary. A significant benefit for enrollees will be the new out-of-pocket maximum of $2,000 per year for medications. This cap could greatly benefit those requiring expensive medications regularly.
Note that medications covered under Part B are not included in this cap. Previously, Medicare Part D had four stages: Deductible, Initial Coverage, Coverage Gap (donut hole), and Catastrophic Coverage. In 2025, the donut hole will be eliminated, simplifying the coverage structure. Plan D participants will first meet their deductible (up to $590), make copayments, and stop once the $2,000 maximum is reached. Additionally, a new payment option allows participants to spread medication costs throughout the year rather than pay upfront. This opt-in plan lets enrollees manage expenses by distributing payments monthly within a specified limit.
