9 Major Medicare Changes for 2025 and How They’ll Impact Your Coverage

Medicare is undergoing sweeping changes in 2025, including a $2,000 limit on out-of-pocket Part D drug costs, the elimination of the prescription drug coverage gap known as the “donut hole,” an opt-in payment plan, and expanded coverage for a number of services and drugs. These changes could impact how much Medicare recipients pay for health care, as well as what Medicare covers under each of its parts.

Still, not all of the changes will benefit patients. For example, premiums for traditional Medicare (Parts A and B) will receive a scheduled increase, and some Medicare Advantage plans have reduced services to compensate for lower government payments to Medicare Advantage plans.

1. You’ll Pay More for Medicare Parts A and B Premiums, Deductibles, and Coinsurance 

Premiums, deductibles, and coinsurance for traditional Medicare—Part A and Part B—have increased this year, albeit by relatively small amounts. The changes are mandated by the Social Security Act to account for increased utilization.

Part A’s deductible, which applies to inpatient hospital services, is up by $44 to $1,676. Coinsurance for inpatient hospital services has risen to $419 per day for the 61st to 90th day of hospitalization and $838 per day for lifetime reserve days. And while Part A premiums have grown to $285 per month, just 1% of Medicare beneficiaries need to pay them.

The standard Part B premium has increased by $10.30 to $185 per month, along with a small increase to the annual deductible, which now stands at $257.

2. You Won’t Pay More Than $2,000 for Part D Drug Copays and Coinsurance 

Changes to prescription drug plans under Medicare could save hundreds or thousands of dollars per year for patients who tend to spend a lot on prescription medications. That’s because the notorious “donut hole” coverage gap has been eliminated and out-of-pocket costs have been capped at $2,000.

“Once they reach this threshold, all further prescription drug costs will be covered entirely by their plan,” said Dan Hardle, chief executive of Agent Boost Marketing, which supports agents who sell Medicare Advantage and prescription drug plans. “This will significantly reduce the amount of annual spending by seniors each year on prescription drugs.”

It’s a notable change from the past. In 2024, after you and your prescription drug plan paid $5,030 in medication costs, you were subject to a coverage gap, in which you would be responsible for 25% of the cost of your prescription drugs. You remained in the coverage gap until you reached the out-of-pocket limit for your plan, which was $8,000 in 2024. After that, you would pay nothing out of pocket as you entered the “catastrophic coverage” phase of your coverage.

This coverage gap, known as the “donut hole,” was eliminated in January 2025. Now, enrollees are responsible for a deductible of no more than $590 (as of 2025). Once you’ve hit your deductible, you’ll still pay 25% coinsurance, but only until you reach $2,000 in out-of-pocket costs, after which you’ll enter the catastrophic coverage phase and have all your prescriptions paid for by your plan.

3. Most Medicare Advantage Premiums Are Still $0, but Some Plans Have Cut Benefits 

When the new prescription drug plan out-of-pocket limit was announced, there was concern that insurers would raise the cost of Medicare Advantage to make up for lost revenue. However, that has not come to pass. In fact, roughly the same percentage of Medicare Advantage plans have no premium in 2025 as they did in 2024.

Nevertheless, some Medicare Advantage plans have become less optimal this year by cutting benefits such as coverage for over-the-counter medications, transportation services, and in-house support. 

The share of Medicare Advantage plans offering these special benefits—traditional Medicare typically does not cover them—declined in nearly all categories. For example, 85% of Medicare Advantage plans offered over-the-counter drug benefits in 2024, but only 73% do in 2025; 72% of plans offered meal benefits in 2024, but in 2025, only 65% do; and 36% of plans offered transportation benefits in 2024, but now only 30% do. 

Additionally, the number of Medicare Advantage plans declined 6%, which could force some patients to switch to new plans. However, the average Medicare beneficiary still has access to 42 Medicare Advantage plans in 2025 versus 43 in 2024. 

4. Medicare Covers More Behavioral Health Care and Cardiovascular Risk Assessments

Starting in 2025, Medicare will cover several additional services. Many of these programs have been demonstrated to not just improve quality of life for Medicare enrollees but also to save lives. For example, Medicare will now reimburse physicians for atherosclerotic cardiovascular disease risk assessments as part of standard “evaluation and management” visits. These tests were found to reduce the rate of heart attacks and strokes.

The Centers for Medicare & Medicaid Services (CMS) also expanded Medicare coverage for mental health treatment in two significant ways. The first is to offer reimbursement for providers who perform certain behavioral health services, called safety planning, which has been shown to reduce rates of suicide.

The other is to introduce new medical codes that “expand available mental health services to seniors,” said Hardle. This will allow Medicare to reimburse new types of providers it had not covered in the past, such as marriage counselors, family therapists, and other mental health professionals. “Seniors also will receive more comprehensive assessments to early detect those at risk of depression, anxiety, and more,” Hardle said.

In addition to these changes, Medicare will enhance its opioid treatment program to allow for more telecommunication treatment options.

5. You Can Now Pay Your Drug Copays and Coinsurance Over Several Months

The Medicare Prescription Payment Plan, a new initiative by the CMS that began in January, allows enrollees to divide their out-of-pocket prescription drug costs over a period of months in the coverage year instead of paying the entire amount upfront. It’s an optional payment method, so you can decide what works better for your budget.

Because annual out-of-pocket costs have been capped at $2,000, a patient who opts into the prescription payment plan in January will never be billed more than $166.67 for that first month ($2,000 divided by 12 months).

6. You’ll Get a Mid-Year Reminder of Unused Medicare Advantage Benefits

One reason many Medicare-eligible people choose a Medicare Advantage (Part C) plan instead of a traditional Medicare plan (Parts A and B) is that it may offer supplemental health benefits that traditional Medicare doesn’t cover.

Starting this year, Medicare Advantage plans are required to send a notice to enrollees about unused benefits, which will arrive between June 30th and July 31st. The notice will be personalized to you and list any supplemental health benefits that were advertised by your plan but which you did not use in the first six months of the year, as well as information on how to access the benefit.

As mentioned above, some Medicare Advantage plans have scaled back their supplemental health benefits, but the vast majority—more than 95%—of Medicare Advantage plans offer extra coverage for dental, hearing, vision, and fitness.

7. Dental and Oral Health Coverage Linked to Covered Chronic Conditions Has Expanded

While traditional Medicare doesn’t offer dental coverage directly, it does reimburse for dental and oral health services when those services are inextricably linked to the treatment of certain other chronic conditions. Some examples include oral infections that result from organ and stem cell transplant, dental reconstruction as the result of tumor removal, and jaw fractures.

Starting this year, the CMS will add treatment for end-stage renal disease to this list. That means dental and oral health services resulting from Medicare-covered dialysis will be covered, including examinations, diagnosis, and treatment.

The CMS also considered adding coverage for dental and oral health services inextricably linked to other chronic conditions, including diabetes and sickle cell disease, but has not yet enacted these changes.

8. Medicare Now Allows Part D Plans to Substitute Biosimilar Drugs and Interchangeable Biological Products Faster

Biosimilar drugs are used to treat the same medical conditions as a “reference” drug already approved by the FDA for such treatment. They’re typically more affordable than other brand-name versions of the reference drug. 

(Biosimilars are not the same as generic medications in that biosimilars can themselves be brand-name drugs while generic medications are identical to a brand-name drug.)

Starting in 2025, two changes to how Medicare treats biosimilar drugs will go into effect. The first allows Part D plans to update their formularies midyear to substitute a drug for its biosimilar version without getting approval from the CMS. This could save patients money if the biosimilar version is less expensive.

The other change is to interchangeable biological products, which are biosimilars that have been approved by the FDA to be substituted at pharmacies without needing approval from the prescribing physician. Medicare Part D sponsors will be able to substitute new interchangeable biological products—that is, not available at the time their formularies were published—in their formularies at any time of the year without getting approval from the CMS.

9. Medicare Advantage Plans Must Analyze Their Prior Authorization Practices From a Health Equity Perspective

According to data from KFF, Medicare Advantage plans made 50 million prior authorization requests in 2023, a substantial increase over the 42 million requests in 2022 and 37 million in 2021.  Prior authorization can cause care to be delayed or denied, with 3.2 million requests either partially or fully denied in 2023, per the KFF.

But, this year, Medicare Advantage sponsors are required to analyze their utilization management procedures to ensure that low-income and disabled Part D recipients are not being denied care through disproportionate use of prior authorizations. The results of the analysis will be posted to the plan sponsor’s website.

Medicare Changes Beyond 2025

Some changes are in the works that won’t go into effect for another year or two.

Prices for 15 More Prescription Drugs Could Drop in 2027

A signature part of the 2022 Inflation Reduction Act was to give CMS the ability to negotiate prices with drug companies. The CMS selected its first 10 prescription drugs under this program in August 2023, and later, it found that the new, lower prices would have saved patients an estimated $6 billion had the new prices been in effect that year. (The negotiated prices go into effect in 2026.)

On January 17, the CMS added 15 more medications to the Drug Price Negotiation Program. If the program is successful again, Medicare recipients will enjoy lower costs on these drugs in 2027.

The 15 additions are:

• Ozempic; Rybelsus; Wegovy
• Trelegy Ellipta
• Xtandi
• Pomalyst
• Ibrance
• Ofev
• Linzess
• Calquence
• Austedo; Austedo XR
• Breo Ellipta
• Tradjenta
• Xifaxan
• Vraylar
• Janumet; Janumet XR
• Otezla

Medicare Could Approve Anti-Obesity Medications for Coverage Under Prescription Drug Plans

Anti-obesity medications like Ozempic, Mounjaro, Wegovy, and Zepbound have dramatically changed how physicians treat obesity. However, Medicare prescription drug plans do not currently cover all these medications when they’re used to treat obesity as such—mostly, these glucagon-like peptide-1 (GLP-1) drugs are approved for other conditions such as diabetes, although some, like Zepbound, are approved for long-term weight management.

At the end of November 2024, the CMS proposed a rule change that would expand Medicare coverage to major GLP-1s to treat obesity. According to the Department of Health and Human Services, over 20% of Medicare enrollees suffer from obesity, or about 14 million people.

The new rule would recognize obesity as a chronic disease, said Carson Moore, director of Aeroflow Diabetes, which works with patients to navigate their Medicare benefits. It would “help individuals with obesity and type 2 diabetes manage and reduce weight-related complications, potentially improving symptoms associated with the paired diagnosis,” Moore said.

If the proposed rule is approved, it won’t take effect until 2026, but Medicare-eligible people who suffer from obesity can decide this year whether to add Part D coverage to their Medicare plans during Medicare open enrollment. The CMS estimates that an additional 3.4 million enrollees who are not currently being treated for approved GLP-1 uses may receive coverage under this reinterpretation.

The Bottom Line

Medicare’s coverage is regularly updated to keep up with broad changes in patient needs, scientific advances in medicine, and the rising cost of health care. Yet the changes taking effect in 2025 may be some of the most significant in years, as the CMS makes aggressive moves to lower the cost of medications, reduce out-of-pocket costs for enrollees by thousands of dollars, and cover more services.