Medicare open enrollment starts today, Oct. 15, and big shifts are coming to Medicare in 2025, mostly due to the Inflation Reduction Act of 2022. Open enrollment ends on Dec. 7, 2024. Before you enroll, make sure you understand the major changes, what they mean for your medical expenses and coverage, and how to choose a Medicare Advantage plan that’s best for you.

What’s New for Medicare in 2025?

The changes to Medicare plans and legislation are a mixed bag, with some costs going up and others going down. Because the cost savings aren’t level across the board, whether you’ll see an increase or decrease in your Medicare costs comes down to your coverage and medical needs. Here are some of the changes to look out for.

$2,000 Out-of-Pocket Limit for Part D Costs

In 2024, the true out-of-pocket maximum for Part D drug expenses was between $3,300 and $3,800.1 (The published maximum was $8,000, but part of those costs were shared between the patient, insurance carrier, and Medicare.) In 2025, the out-of-pocket maximum for drug expenses is $2,000 per patient.

Deductibles May Increase

While the $2,000 cap sounds like a win for patients, it may not translate to cost savings for everyone because Part D deductibles are set to rise. The maximum deductible for Medicare Part D plans will be $590 in 2025, up from $545 in 2024.23 If you take a few inexpensive medications, you may not see a change in your expenses. However, if you take several expensive medications, you likely will.

Opt-in Medicare Prescription Payment Plans (MPPP)

All plans with drug coverage now offer the ability to get a monthly bill for your medications instead of paying at the pharmacy. This won’t reduce your drug costs but may help you spread out payments over the year to manage them more easily. With the new $2,000 maximum, you shouldn’t spend more than about $167 per month on medications.

Elimination of the ‘Donut Hole’

In previous editions of Medicare Advantage, there was a gap between what most Part D plans would cover for medications and catastrophic coverage, often referred to as the “donut hole.” Once you reached the initial coverage limit of $5,030, you were responsible for 25% of your drug costs until catastrophic coverage began (after the $8,000 limit was reached).4

The new $2,000 out-of-pocket cap eliminates this “donut hole.” Once you spend $2,000 on drugs, you’ll pay nothing for covered Part D medications for the rest of the year.

Mid-Year Notice About Unused Benefits

To ensure you get the most from your Medicare Advantage plan, insurance carriers will now send a mid-year letter reminding you of the benefits you haven’t yet taken advantage of during the first half of the year. Some of these supplemental benefits include vision, hearing, fitness, and dental benefits. The letter, which you should receive between June 30 and July 31, will include the cost-sharing amount for each feature and how to access it.5