Medicare drug coverage gets a facelift for 2025
Add Axios as your preferred source to
see more of our stories on Google.

Illustration: Annelise Capossela/Axios
Changes are coming to Medicare prescription drug coverage next year that are expected to lower many seniors' out-of-pocket costs.
Why it matters: The Inflation Reduction Act included an overhaul of Medicare's prescription drug benefit, and some key reforms kick in next year, including:
Capped out-of-pocket costs. Medicare beneficiaries won't pay more than $2,000 for prescription drugs in 2025, no matter which plan they choose.
- About 1.5 million Medicare beneficiaries spent more than $2,000 on prescriptions in 2021, according to KFF. The cap doesn't apply to monthly insurance premiums or drugs that are administered at the doctor's office.
End of the "doughnut hole." Plans will no longer include a coverage gap where insurers significantly scale back how much they'll pay for prescriptions after enrollees rack up a certain dollar amount, only to reactivate when another cost milestone is reached.
- The doughnut hole practice largely ended in 2020. But enrollees may still have faced coverage gaps over the last four years. Starting in 2025, standard Part D coverage will only consist of a deductible phase, an initial coverage phase and a catastrophic phase, CMS said.
Premium changes. Seniors will, on average, see lower premiums for their prescription drug coverage next year. Stand-alone Part D plans will have an average monthly cost of $40, while Medicare Advantage plans that include prescription insurance will have an average drug premium of $13.50.
- Premiums were on track to increase this year, in part due to the $2,000 patient cost cap. But the Biden administration launched a controversial pilot program that offered subsidies to insurers to keep patient monthly costs lower. That program is currently set to last three years.
Reality check: Patients won't yet have access to the lower prices Medicare negotiated this year for 10 widely used but expensive drugs. Those prices will take effect in 2026.
