The new year is bringing notable updates to Medicare costs, especially for Parts B and D. Understanding these changes can help beneficiaries plan for potential increases in out-of-pocket expenses and prepare for shifts in income-related adjustments.
Medicare Updates 2025: What you need to know
Medicare Part B Premiums and Deductibles
In 2025, the standard monthly Medicare Part B Premium will see a rise in cost, moving from $174.70 to $185.00 (monthly). This is an increase of ~6%. While moderate, it reflects broader healthcare costs and will impact monthly budgets for many seniors.
Additionally, the Medicare Part B Deductible will increase from $240 to $257 (annual). This means that beneficiaries will have to meet a slightly higher deductible before Medicare begins covering outpatient services.
Income-Related Adjustments: High-income beneficiaries will continue to see a variation in Part B premiums. For those with higher income levels, the income-related monthly adjustment amounts (IRMAA) will apply. This adjustment affects around 8% of beneficiaries and can lead to higher premiums based on income.
Medicare Part A Adjustments
Part A covers hospital inpatient services, and in 2025, it also brings a few changes in costs:
- Hospital Deductible: Beneficiaries admitted to the hospital will see a very slightly increased deductible from $1,632 to $1,676. This deductible is per admission and will cover a beneficiary for up to 60 days in the hospital.
- Coinsurance Changes: For hospital stays beyond the initial 60 days, coinsurance costs will rise, reflecting adjustments aligned with Medicare’s funding needs. This increase is only $11-$32/day copay (depending on the amount of days in the hospital).
- Premium Adjustments for Limited Work Credits: Beneficiaries with fewer work credits will face increased Part A premiums, but only by $7-$13 (monthly).
Medicare Part D: Prescription Drug Costs
Part D is where most of the changes stand. The benefits will change, structure will change, cost, and income-related adjustments for high-income beneficiaries.
Impacts of the Inflation Reduction Act
The Inflation Reduction Act is continuing to affect Medicare, particularly with its focus on controlling out-of-pocket costs and maintaining access to essential services. This includes the new out-of-pocket maximum for prescription medications of only $2000. This is a reduction from the 2024 out-of-pocket maximum, $8000! Providing cost protection for those with high prescription needs comes at a cost however. This has lead to many plans reforming their benefits or increasing their cost.
Preparing for the Changes
We strongly recommend reviewing your plans. especially the plan that covers your medications. If this is a Medicare Advantage plan, remember your company can change your medical benefits or access to care in order to offset the additional cost expected as a result of the Inflation Reduction Act.
For a detailed breakdown of these changes, check the official CMS update here.