Medicare Part D plans save seniors a lot of money on retirement healthcare costs compared to paying for their prescriptions completely out of pocket, but they come with plenty of costs of their own. The average Part D plan has a monthly premium of $55.50, according to the National Council on Aging. Then, there's a deductible of up to $545, plus a copay.
Those who regularly take medication can still spend quite a bit, leaving them with less money than they planned for other expenses. But a new Medicare law taking effect Jan. 1, 2025 could save these individuals a lot of money.
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New caps on out-of-pocket prescription drug costs are coming
Arguably the biggest Medicare change coming next year is the $2,000 cap on out-of-pocket prescription drug spending. After you've reached this limit, you won't pay any more toward your prescription drug costs throughout the rest of the year, apart from your Part D premium.
The $2,000 limit includes any money you pay for prescription drugs, including your deductible and copays, as well as any money other people or organizations pay on your behalf for your medications. Payments from Medicare's Extra Help program, which assists low-income seniors in paying prescription drug costs, count too.
One thing worth noting is that the $2,000 out-of-pocket limit only applies to prescriptions that your Part D plan covers. If you need a prescription that's not covered under your plan, you will be responsible for paying the full cost of this out of pocket. That makes selecting your 2025 Part D plan all the more important.
Plan terms vary from year to year, so take advantage of the upcoming annual enrollment period from Oct. 15 to Dec. 7 to review all your options. Pay special attention to any medications you're routinely taking now as well as other medications you think you may need in the near future.
A new prescription payment plan will also be available
Medicare is also introducing a new prescription payment plan next year. This won't actually reduce your prescription costs. But it may make them a little easier to manage by spreading these costs throughout the year rather than paying as you incur them.
This will be a new option available on all Part D plans at no charge, but you don't have to participate if you don't want to do so. Those who choose to enroll will continue to pay their monthly Part D premium. You'll also get another monthly bill from your plan provider for a portion of your prescription costs. When you go to the pharmacy to pick up your prescriptions, you won't have to pay anything. Essentially, your plan provider is covering the cost with your pharmacy and you'll owe your insurer instead.
Your monthly payments are what you would have paid for your prescription drug costs, plus your previous month's balance, divided by the number of months left in the year. Note that you could still wind up with larger payments toward the end of the year under this plan, especially if you must buy expensive prescriptions in the final few months of the year. However, the $2,000 out-of-pocket cap discussed above still applies.
Those interested in learning more about how this prescription payment plan works can find out on the Medicare website . You can sign up before the new year if you'd like, but you can also elect to join this payment plan at any time during 2025 by contacting your plan provider.
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