4 Changes Coming to Both Medicare Part D and Medicare Advantage in 2025

Part of a stress-free retirement is knowing that you can afford the cost of health care services. Medicare — the government’s health insurance plan for individuals over age 65 — is intended to help you do just that.

Elements of Medicare change every year. Here is a quick guide to upcoming changes to two parts of Medicare — Medicare Part D and Medicare Advantage.

Get familiar with these changes so you're prepared for the Medicare open enrollment period, which runs from Oct. 15 through Dec. 7. (A second open enrollment period for those with a Medicare Advantage plan runs from Jan. 1 through March 31.)

Medicare Part D is the portion of Medicare that helps you pay for prescription drugs. In 2024, out-of-pocket expenses for retirees on Medicare Part D are capped at $8,000. After you hit $8,000, catastrophic coverage kicks in to help you afford prescriptions for the rest of the year.

Fortunately for retirees, the new out-of-pocket cap for Medicare Part D will be lowered to $2,000 starting Jan. 1, 2025. Once you have spent $2,000 on prescriptions, you don’t have to pay more out of pocket for the rest of the year.

It’s important to note that only money spent on medications covered by your Medicare Part D plan counts toward your out-of-pocket limit. If you need medication that isn’t covered, you will end up paying the full cost yourself.

So, make sure to check which medications are covered by which plans during this year’s open enrollment period.

Starting in 2025, seniors using Medicare Part D have the option to sign up for a medication payment plan.

Rather than paying the full cost of a prescription when you arrive at the pharmacy, you can choose to make smaller payments through bills from Medicare over the course of the year instead.

This change can help ensure you get the medications you need when you need them and to spread out payments so they are more affordable.

Medicare Advantage — also known as Medicare Part C — is an alternative to Original Medicare. If you choose Medicare Advantage, your insurance will come from a Medicare-approved health plan offered by a private insurance company that contracts with the government.

There have been reports that some Medicare Advantage plans might reduce benefits, increase cost-sharing for policyholders, or both.

If you are already enrolled in a Medicare Advantage plan, take extra care to examine upcoming changes in your insurance coverage for 2025. If your costs are increasing or you are losing crucial coverage, now is the time to look for a new Medicare plan that suits your budget and health care needs.

Similarly, some Medicare Advantage insurance providers have stated that they are going to stop offering certain plans or offering coverage in specific states starting in 2025.

For instance, insurance provider Aetna will offer 10% fewer Medicare Part D plans in 2025, leaving consumers with fewer options. Insurance provider Cigna has said it plans to exit the Medicare Advantage market altogether, although it’s still providing coverage in 600 counties across several states for the moment.

If your Medicare Advantage plan is disappearing, you will need to choose a different Medicare Advantage plan or switch over to Original Medicare.

Every fall, there is a period where anyone on Medicare can evaluate their current Medicare plans and adjust coverage as needed. The open enrollment period applies to both Original Medicare plans and Medicare Advantage plans.

During this period, you can add coverage like a Medicare Part D plan, switch from Medicare Advantage to Original Medicare (or vice versa), or switch to a new Medicare Advantage plan if yours is changing or going away.

Open enrollment starts on Oct. 15 and ends on Dec. 7. If you are enrolled in Medicare Advantage, a second open enrollment period runs from Jan. 1 through March 31 and allows you to make additional changes.

Note that the Medicare open enrollment period only applies to individuals who already have Medicare insurance. If you are a new enrollee, your enrollment period starts three months before your 65th birthday and ends three months after your 65 birthday.

Whether you are enrolling in Medicare for the first time or considering switching plans, it pays to understand upcoming changes so you can choose the best plan for your health as you prepare yourself financially for retirement.

Remember that open enrollment ends on Dec. 7. So, be sure to make any changes to your coverage before then.