For years, Medicare Part D has offered coverage for prescription drugs, but it left some beneficiaries facing high out-of-pocket costs, especially after they entered the “donut hole” or coverage gap. The new $2,000 cap will limit how much individuals must pay out of their own pockets for prescription medications each year, bringing relief to those who have been struggling with steep drug costs.
Here are the key changes:
1. Out-of-Pocket Cost Cap for Prescriptions.
One of the most significant changes for 2025 is the introduction of an out-of-pocket cost cap. For the first time, there will be a limit on how much beneficiaries could spend on covered prescription drugs in a year. This cap will be set at $2,000 for the calendar year of 2025, providing significant relief for those who face high prescription costs.
Prior to 2025, beneficiaries faced catastrophic drug costs that exceeded $4,000 in some cases. The $2,000 cap means that once beneficiaries reach this limit, their plan will cover 100% of the costs for their covered prescriptions for the rest of the year. This is a major win for people that rely on expensive medications.
2. Elimination of the Coverage Gap “Donut Hole.”
The “Donut Hole” is a term Medicare beneficiaries know all too well. The coverage gap occurs after a beneficiary and their plan have paid a certain amount for the covered prescriptions, but before the catastrophic coverage kicks in. In the donut hole, the beneficiary is responsible for a larger percentage of their drug cost which can cause quite a financial burden.
In 2025, the donut hole has been eliminated! Instead of the beneficiary paying a percentage, they are paying a fixed co-payment for their prescriptions making their drug costs more manageable. Elimination of the donut hole will help those beneficiaries that were in the coverage gap and struggled with high out-of-pocket prescription costs.
3. Medicare Prescription Payment Plan (M3P).
The M3P is a new program for 2025. M3P is a way to help Medicare beneficiaries spread their out-of-pocket prescription drug cost across the entire year (January – December). Anyone with a Medicare prescription drug plan or a Medicare Advantage plan can use this option. All plans offer this payment option and participation is voluntary. When beneficiaries select the M3P option they will continue to pay the plans premium, each month and they will be billed from the plan to pay for their prescription drugs instead of paying at the pharmacy. To enroll in the Medicare Prescription Payment Plan the beneficiary will need to contact the plan. Beneficiaries can enroll and disenroll from the Medicare Prescription Payment Plan at any time.
It is especially important to explain the changes with Part D in 2025 with your clients. These changes could help several Medicare beneficiaries.
To gain more knowledge about changes with Part D, join us on Wednesday, February 26, 2025, from 11:00 AM – 1:00 PM at the Hovis & Associates’ Training Center for ABC’s of Part D. To RSVP, call (888) 613-6196 or email Christine Taylor at christinetaylor@hovisandassociates.com.
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