The Centers for Medicare & Medicaid Services (CMS) expects the base beneficiary premium for people with Medicare prescription drug coverage to increase by $2.08.
CMS said Monday the preliminary technical Medicare Part D bid information for contract year 2025 will help Part D plan sponsors finalize their Part D and Medicare Advantage offerings and prepare for Medicare open enrollment.
For 2025, the base beneficiary premium will be $36.78, a $2.08 increase from 2024, according to a CMS fact sheet. Final average Medicare Advantage premiums and deductibles will be released in September.
People with Medicare prescription drug coverage (Part D) in 2025 will have the most comprehensive benefits since the program was launched in 2006 due to provisions in the Inflation Reduction Act, also known as the prescription drug law, according to CMS. All people enrolled in Part D will have their annual out-of-pocket prescription drug costs capped at $2,000 per year. In addition, the Medicare Prescription Payment Plan, which will be offered by all Part D plans starting next year, will allow people with Medicare Part D coverage the option to spread the costs of their prescription drugs over the calendar year.
Other benefit improvements that will go into effect in 2025 include the elimination of the coverage gap phase, also known as the “donut hole.” This will result in standard Part D coverage consisting of a three-phase benefit: a deductible phase, an initial coverage phase, and a catastrophic phase. There will be no initial coverage limit, and the initial coverage phase will extend to the maximum annual out-of-pocket (OOP) threshold, at which point the catastrophic phase will begin.
The changes are meant to ease the burden of out-of-pocket prescription drug costs by building on previously implemented provisions from the prescription drug law, including the $35 cap on cost-sharing for a month’s supply of covered insulin, $0 cost-sharing for eligible vaccines covered under Part D, such as the shingles vaccine, and more financial assistance in paying for drug costs by expanding eligibility for the Extra Help Program.
Beginning in 2025, the Inflation Reduction Act also redesigns how Medicare pays Part D prescription drug plans. The new program design gives plans more responsibility to manage the drug costs of their enrollees and shifts government payments that previously would have been paid as reinsurance to a risk-adjusted subsidy payment upfront. CMS said that given the significant changes to the benefit, the Inflation Reduction Act includes protections that limit year-over-year increases in the base beneficiary premium for calendar years 2024 through 2029.
According to a report by the HHS Office of the Assistant Secretary for Planning and Evaluation, the changes to the Part D basic benefit are projected to save people with Medicare an average of 30 percent in annual OOP prescription drug costs in 2025. This will result in a decrease of approximately $7.4 billion in OOP prescription drug spending for people with Medicare Part D in 2025.
CMS also noted in the fact sheet that the national average monthly bid amount, an enrollment-weighted average of all applicable Part D plan bids for basic Part D benefits, with weights based on the number of enrollees in each plan, will be $179.45. The preliminary estimated average government subsidy to plans will be $142.67 in 2025.