Medicare hit with major changes in 2025 as expert warns of medication cost 'drawbacks'

Big changes are coming to Medicare in 2025 due to the Inflation Reduction Act.

The act includes multiple adjustments to Medicare Part D coverage which will affect everything from how users spread drug costs over a year to out-of-pocket costs.

Medicare Part D helps people pay for their prescription drugs, and Kimberly Reynolds, a partner at the Welch group in Birmingham, has claimed that as part of the Inflation Reduction Act, people with Part D won’t pay more than $2,000 in out-of-pocket costs for their medicine .

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Reynolds said: “For any individual that has high pocket, prescription costs, you should see much more cash flow .

"There are many people we work with that pay up to three to $4,000 a year in out-of-pocket prescription costs.”

The adjustment is solely for covered prescriptions under Medicare. Elsewhere, Medicare users will see the “doughnut hole period” eliminated in 2025. This would ordinarily see a temporary limit put in place on what a Medicare drug plan will cover for prescription drugs due to a coverage gap.

Reynolds went on: “The insurance company paid a very little amount, and then the consumer had to pay a large cost out-of-pocket. The donut hole is eliminated now. You’re not having to pay a huge amount out of pocket now. You will have more consistent costs for your prescription drugs throughout the year .”

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The changes will also see the implementation of the option to spread drug costs over the whole year rather than having to pay a higher amount at the end of any given month .

Reynolds said this change could have its drawbacks. She added: “Insurance companies and the taxpayers are having to take on more costs because the consumer is limited at $2,000 out of pocket. So what you’re going to see is some premiums may increase , and some other out-of-pocket expenses may increase over time.”

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She noted that the changes could mean people's previous plan may no longer be the best fit for them in 2025 and that there will be very limited options to make changes after the open enrolment.

Enrolment starts on October 15 and ends on December 7.

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