Medicare Part D 2025

Medicare Part D is a prescription drug benefit program for Medicare beneficiaries. Starting in 2025, Medicare Part D will undergo several changes as a result of the Inflation Reduction Act (IRA).

One of the key changes is the creation of a new catastrophic coverage threshold. Once beneficiaries reach this threshold, they will pay only 5% of the cost of their prescription drugs, while Medicare will cover the remaining 95%. This is a significant improvement over the current catastrophic coverage threshold, which requires beneficiaries to pay 5% of the cost of their drugs or a flat fee of $3.60 for generics and $8.95 for brand-name drugs, whichever is greater.

In addition, the IRA will require drug manufacturers to pay a rebate to Medicare when the price of a drug increases faster than inflation. This is intended to encourage drug manufacturers to keep their prices in check and reduce the financial burden of prescription drug costs on Medicare beneficiaries.

Another change under the IRA is the cap on out-of-pocket expenses for prescription drugs. Starting in 2024, Medicare beneficiaries will pay no more than $2,000 out-of-pocket for prescription drugs each year. This will also provide financial relief to beneficiaries who have high prescription drug costs.

Overall, the changes to Medicare Part D under the Inflation Reduction Act are intended to make prescription drugs more affordable for Medicare beneficiaries and to encourage drug manufacturers to keep their prices in check. However, it remains to be seen how effective these changes will be in achieving these goals.