This article was written by Bailey McCrary.
Medicare enrollment is open now through December 7. If you have a Medicare drug plan or Medicare Advantage Plan that includes drug coverage, there are a few changes for 2025 that you need to know about.
Beginning January 1, 2025, the out-of-pocket cap for prescription drugs is lowered to $2,000 per year for Medicare beneficiaries. This cap includes all costs associated with prescription drugs, including copays, deductibles, and coinsurance costs. This change is automatic for beneficiaries with Medicare drug plans. If you are currently paying over $2,000 each year on your Medicare prescriptions, this change will save you money!
While this is good news for Medicare beneficiaries with high drug costs, there are still a few things to watch out for:
- The $2,000 out-of-pocket cap is not applied to premiums (the amount you pay each month for the plan itself).
- If your drug is not covered by your plan, the cap does not apply.
- The cap only applies to drugs covered under Medicare Part D (the drugs you would typically get at a pharmacy). There is no annual out-of-pocket cap for drugs covered under Medicare Part B (primarily those administered in a clinic and oxygen).
Beneficiaries with high drug costs may also benefit from the new Medicare Prescription Payment Plan (MPPP). The MPPP (sometimes called the "smoothing mechanism" or "smoothing plan") allows for beneficiaries to spread the estimated cost of their out-of-pocket drug charges over the span of 12 months, instead of having to pay the out-of-pocket cost all at once.
The Medicare website has information about who would benefit most from the MPPP, examples of monthly payments, and even a tool that you can use to see what your monthly drug payments would be. It is important to note that while the MPPP can make drug costs more manageable for beneficiaries, it is not a cost-saving program and may not be right for everyone.
Beneficiaries who are likely to benefit from the MPPP include:
- those with consistently high out-of-pocket drug costs
- those with high out-of-pocket drug costs over a short period of time
Beneficiaries who are not likely to benefit from the MPPP include those with low yearly drug costs (well below the $2,000 out-of-pocket cap), those with consistent and manageable drug costs, and those who are eligible for financial assistance through Extra Help, a Medicare Savings Program, or other organizations.
Starting in 2025, anyone with a Medicare drug plan or Medicare health plan with drug coverage (like a Medicare Advantage Plan with drug coverage) is eligible to enroll. If you enroll in this plan, each month you'll continue to pay your plan premium (if you have one), and you'll get a bill from your health or drug plan to pay for your prescription drugs. You won't pay the pharmacy for your drugs. There is no cost to participate in the MPPP.
Participation in the MPPP is voluntary. If you want to participate in the MPPP, you will need to enroll. You can enroll now through the end of the Medicare enrollment period on December 7. You can also enroll at any point throughout 2025. The earlier you enroll, the more manageable your payments will be. You can enroll online, via phone, and via mail. Contact your current Medicare plan to learn how you can enroll in the MPPP.
Check out this short video from our partners at the National Health Council to review these changes. If you have any questions about the changes coming to Medicare in 2025, you can contact info@copdfoundation.org for more information!