Understanding changes to Medicare is crucial to understanding your health coverage. The federal health insurance program that covers more than 68 million people has already undergone significant changes in 2025. More change could be on the horizon with a new administration in the White House.
This two-part blog series explores the biggest shifts in Medicare in 2025 and the influence the new presidential administration could have on the program.
2025 Medicare changes
Like most years, 2025 has seen increases in premiums, deductibles and coinsurance.
- The standard monthly premium for Part B, which covers outpatient hospital services, rose from $174.70 to $185.
- The annual deductible for Part B increased from $240 to $257.
- The annual Part A inpatient hospital deductible increased from $1,632 to $1,676.
Most people get Medicare Part A premium-free based on their earnings.
One of the biggest changes this year was the elimination of the donut hole, a gap in prescription drug coverage that occurred after you and your insurance plan spent a certain amount on prescriptions. Once you reached that specific sum as a Medicare Part D beneficiary, you became responsible for up to 25% of your total drug costs until you reached another sum. In 2024, for example, the donut hole started once you and your drug plan spent $5,030 on covered drugs and lasted until you spent $8,000.
However, a provision in the Inflation Reduction Act that went into effect this year put a $2,000 limit on out-of-pocket costs for Medicare Part D enrollees, eliminating the donut hole gap.
Beginning in 2025, enrollees in Medicare Advantage, the alternative to Original Medicare offered by private insurance companies, will receive a mid-year reminder of the additional benefits they have as part of their current plan. The idea is to help enrollees get the most out of their coverage by reminding them of any unused supplemental benefits they may have.
Finally, the Centers for Medicare and Medicaid Services (CMS) introduced the Medicare Prescription Payment Plan, which allows enrollees to split their out-of-pocket medication costs over the calendar year. The program is available under Medicare Part D plans and Medicare Advantage plans. Once you’ve enrolled in the payment plan, you’ll no longer pay for medications at your pharmacy. Instead, you’ll receive a monthly bill from your plan that covers the cost of your prescriptions.
The new payment option does not create any cost savings. You’ll still pay the full costs of your medications, even if you enroll in this payment plan.
Will government spending cuts affect Medicare?
Cutting costs across the federal government has been a focal point of the new administration. The Department of Government Efficiency has laid off federal workers and implemented other measures to reduce government expenses.
With the U.S. spending on average about double the amount per person on health as other similar countries, questions have arisen about how these cost-cutting measures may affect federal health insurance programs (Source: Common Wealth Fund).
At this point, there is still a lot of uncertainty. In February, the U.S. House of Representatives passed a budget resolution instructing the agency that oversees Medicaid and part of Medicare to reduce its spending by $880 billion over the next decade. Medicaid makes up a substantial portion of that agency’s budget.
Untangling the complications (and costs) of Medicare
Navigating the complexities of Medicare can feel overwhelming. As an employer, it’s important to understand how the program affects your employee population over the age of 65. In 2024, the claims costs per member per year (PMPY) for those over 65 were $16,602 compared to $7,011 PMPY for those under 65, according to URA’s Book of Business.
At UROne Benefits®, we help those approaching or at Medicare eligibility age understand what makes the most sense for their health and wellness care budget and needs. Our team of trusted Medicare specialists can answer questions and provide customized health insurance recommendations.
Click here to read the second part of this series.
For more information, contact Nicki Miklos at nmiklos@oswaldcompanies.com or fill out this form.