Say Goodbye to the Medicare Part D
Donut Hole in 2025!

The Inflation Reduction Act signed by President Biden in 2022 aims to protect Medicare beneficiaries by limiting their out-of-pocket costs on medications.  Starting in 2024, the bill phased in cost savings on expensive Part D medications at the pharmacy to approximately $3,300.  In 2025, the maximum out-of-pocket for a Medicare beneficiary's Part D medications will reduce to $2,000.

Medicare Part D Plans today

Currently, Medicare Part D prescription drug plans include four phases: the Deductible, Initial Coverage, "Donut Hole" and Catastrophic Coverage phases. Beginning in 2025, there will no longer be a Coverage Gap phase, notoriously known as the “Donut Hole”.  The Donut Hole is the phase of Medicare Part D prescription coverage where the member pays 25% of the prescription cost at the pharmacy.  For example, some people would be shocked when their $45 per month medication suddenly jumps in price to $225 when they hit the Donut Hole.



 

Medicare Part D Plans in 2025

Starting January 1, 2025, all Part D prescription drug plans will include three phases: the Deductible, Initial Coverage, and Catastrophic phases. 2025 Prescription drug plans will be allowed to have a deductible of up to $590, an increase from $545 in 2024. While some plans may not have a deductible phase, many plans that do only charge the deductible for higher-tier medications, typically brand-name ones. This update is welcome and meaningful change for many Medicare beneficiaries who are faced with high-cost medications.
                                                          

Medicare Part D Prescription Payment Plan

Medicare beneficiaries on high-cost brand name medications can be charged hundreds of dollars or more to fill their medications for one month.  This can be a financial hardship for many New Jersey beneficiaries. As a part of the Inflation Reduction Act relief program, the government will require Part D prescription drug plans to offer a new payment plan program that will spread the costs of medications evenly throughout the year instead of having a high upfront cost.

Additional guidance on the Medicare Part D Prescription Payment plan can be found here.

Starting in 2025, anyone on Medicare Prescription coverage is eligible for this program. Participants will not pay a charge for their medications at the pharmacy; instead, they will be billed a monthly cost based on the total medication costs spread throughout the year. Instead of the $590 deductible all hitting in January, a payment of $49.17 can be made every month to pay off the deductible.

The new maximum prescription cost for 2025 will be $2,000. Anyone whose prescriptions reach $2,000 can pay $166.67 monthly instead of $2,000 upfront.

Each prescription drug plan will be sending information on how to enroll in the Medicare Prescription Payment Plan during the year’s enrollment period, Oct. 15^th to Dec. 7^th.  In 2025, a Medicare beneficiary can enroll in the payment plan at any time during the year and in 2026 they will be able to sign up for the program at their local pharmacy.

We’re here to help!

New Jersey Medicare Brokers is here to help if you have any questions about these changes.  You can reach us at 800-797-0605 or at www.njseniorins.com.