3 Big Medicare Prescription Drug Changes Coming in 2025

[dr4723]

Does anyone know how the $ 2000 'limit' for medications is calculated?

With the previous 'doughnut hole' method, the combination of what the insurance company paid and what the individual paid was used to calculate the amount to get you to the 'doughnut hole.'  Once the individual reached the 'doughnut hole,' ONLY what the individual paid was used to calculate the amount needed to reach the catastrophic coverage level. 

This article uses the word 'sharing.'  Does that imply that both the insurance company's and the individual's payment(s) will be combined to reach the $ 2000 limit?  Or are we to assume that only what the individual pays counts towards the $ 2000 limit?

Thanks.  This could make a significant difference in whether or not to use the extended payment program offered in 2025.

Dave

[GailL1]

@dr4723 

The benefit will have three phases, including a deductible, an initial coverage phase, and catastrophic coverage.  The particular medication has to be on your plans formulary to count.  Your Part D premiums do not count in your total out of pocket spending,  

If your have a standard Part D plan,

1.  you will 1st pay your deductible - $ 590 for most (2025) plans 

However, some lower tier generics may not be included in the deductible so see your plan for a list of those if it affects you.

2.  Then you will pay your co-insurance / copays until you have reached the out of pocket spending total of the $2000

3.  After reaching that $2000 out of pocket limit, you are then at the catastrophic level and will pay no additional out of pocket costs on formulary drugs for the rest of the year.

Part D plans must offer either the defined standard benefit or an alternative equal in value (“actuarially equivalent”) and can also provide enhanced benefits.  So if you have a plan that is not standard, refer to your plan for any changes to these specifics - like not having a deductible or other alternatives/

KFF.org 10/09/2024 - A Current Snapshot of the Medicare Part D Prescription Drug Benefit 

[see the sub-heading of Part D Plan Premiums and Benefits in 2025]