Here are 3 major Medicare updates coming in 2025 — plus what you need to know before you lock in your coverage this year

For next year, most of the big changes revolve around Medicare Part D, which deals with prescription drug coverage. If you’re currently signed up for Medicare Part D, you must pay attention to these new rules — and you should also take note of them if you have a Medicare Advantage Plan since those plans may provide prescription drug coverage as well.

Here’s what you need to know.

There's a new cap on part D coverage

The first and most important thing to be aware of is that there's a new cap on out-of-pocket spending for prescription drug coverage under Medicare Part D. This cap was introduced as part of the Inflation Reduction Act.

Part D will now provide three levels of coverage, eliminating the complex payment structure that existed before the change. Here's how it’ll work.

• You'll have a deductible, which is capped at $590 per year, which you must pay out-of-pocket before Part D starts covering prescriptions.
• During your initial coverage phase, you'll pay 25% of overall drug costs.
• Once you hit a $2,000 out-of-pocket spending limit by paying for covered drugs, you won't have to pay any more.

There are some plans that provide better coverage, including offering lower deductibles — but all Part D plans now must be at least this generous.

Medicare Part D premium prices could increase

With the new out-of-pocket cap on drug spending, lawmakers were concerned that insurers might push up premiums on stand-alone prescription drug plans. To prevent that from happening in 2025, the Biden administration instituted a program subsidizing those plans.

Unfortunately, insurers are still allowed to raise rates in 2025 although the increase is capped at $35 a month. Still, this can be a substantial amount of money in added premiums.

If you currently have a standalone plan, find out whether your premiums are increasing. If they are, consider shopping around to see if there are any better deals.

A Medicare Prescription Payment Plan option is available

Finally, the introduction of a Medicare Prescription Payment Plan is another huge change that could have a positive impact for seniors who struggle to budget for high-cost medications.

This option makes it possible for older adults to spread out their expected costs throughout the year. Instead of paying in one lump sum, they can pay the price of their medications over time. If you’re on a fixed income, this can be more affordable than having to pay thousands at once when you get expensive prescriptions filled.

It’s important for older Americans to be aware of these changes as they enter into the open enrollment period so they can explore their options for prescription drug coverage carefully to make the best choice.