Changes for Medicare in 2025

With each new year comes updates to Medicare. From a redesigned drug program to expanded mental health care, Medicare is rolling out enhanced programs. In 2025, Medicare is implementing a $2,000 annual cap on your out-of-pocket prescription drug costs for Part D plans. This eliminates the Part D coverage gap and offers an optional payment plan to spread those costs. The changes also include additional resources for caregivers and access to more mental health providers.
 

"In 2025, Medicare is implementing a $2,000 annual cap on your out-of-pocket prescription drug costs for Part D plans." ⁵

Medicare Now Offers a Redesigned Drug Program

Those with Medicare Part D will benefit from lower prescription costs and a redesigned drug program. Once you reach your $2,000 out-of-pocket limit, you will not pay anything more for covered Part D drugs for the rest of the year. The Inflation Reduction Act requires all Medicare prescription drug plans (Medicare Part D plans) — including both Medicare Advantage plans with prescription drug coverage and standalone Medicare prescription drug plans — to offer enrollees the option to pay out-of-pocket prescription drug costs in the form of capped monthly payments instead of all at once at the pharmacy.¹ This program will replace the Coverage Gap Discount Program, which ended December 31, 2024. 

Medicare Part D No Longer Has Donut Hole Coverage Gap

Before 2025, the Medicare Part D “donut hole” was a coverage gap in Medicare Part D where beneficiaries had to pay a higher amount of their prescription drug costs after reaching a certain spending threshold. Medicare Part D prescription drug coverage is organized into several phases. Through 2024, there were four phases. The donut hole coverage gap was the third of these four phases. Starting in 2025, there are only three phases, and the donut hole coverage gap will be eliminated.

The Inflation Reduction Act Improves Medicare Access

The Inflation Reduction Act helps provide financial relief for millions of people with Medicare by improving access to affordable treatments and strengthening the Medicare Program both now and in the future.¹ The law helps improve Medicare by expanding benefits, lowering prescription drug costs, and keeping prescription drug premiums stable.²

The Medicare Prescription Payment Plan Provides Payment Options

Beginning January 1, 2025, the Medicare Prescription Payment Plan, a voluntary payment option for Part D enrollees, will allow members to spread out their out-of-pocket costs for covered prescription drugs over the calendar year. This payment option may help many in managing their out-of-pocket expenses for prescription drugs.³

Medicare Increases Support for Caregivers

Medicare has expanded its resources for caregivers. Guiding an Improved Dementia Experience (GUIDE) is a program for dementia patients and their caregivers that launched in 2024.³ This program will quadruple who it serves in 2025.³ GUIDE provides a 24/7 support line, a care navigator to find community-based assistance and medical services, caregiver training, and up to $2,500 a year for respite services.

Medicare Has Expanded Its Mental Health Benefits

There has also been a recent push to add more mental health providers to Medicare. Prior to 2024, licensed marriage and family therapists, mental health counselors, and addiction counselors were not allowed to enroll as Medicare providers.⁴ Now they can!

If you are looking for more details about Medicare in 2025, visit https://www.medicare.gov/publications/10050-medicare-and-you0.pdf

1. CMS.gov, Part D Improvements, Accessed 2025
2. CMS.gov, Inflation Reduction Act and Medicare, Accessed 2025
3. Medicare.gov, What’s the Medicare Prescription Payment Plan?, Accessed 2025
4. AARP.org, 7 Medicare Changes You’re Seeing in 2025, 2024