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According to the 2025 HealthView Services Medicare Part D National Cost Data Report, there will be a rise in premiums across prescription drug plans nationwide, with an average increase of 11% by three national providers. In the five states with the largest retiree populations—California, Florida, Texas, New York, and Pennsylvania—the increase is even steeper, averaging 23%, with some large provider plans rising by 32%.
HealthView services attributed this, in part, due to changes introduced by the Inflation Reduction Act (IRA) and CMS’ $35 monthly cap on high-end premium increases, which has moderated the rise from 33% last year to 21% in 2025. While basic Part D coverage costs have decreased by 4%, mid- and high-tier plans have seen hikes of 4% and 21%, respectively, reflecting higher premiums for plans with enhanced drug coverage.1
“The Centers for Medicare and Medicaid Services announced in September that Part D policies would decline in 2025 with the implementation of Inflation Reduction Act provisions,” said Ron Mastrogiovanni, CEO, HealthView Services, in a press release. “Our research shows the cost of basic plans has declined, but the price for plans that offer lower deductibles and better coverage continue to rise, with monthly premiums for high-end plans significantly more expensive this year.”
The report also highlights the reduction of the out-of-pocket cap from $8,000 to $2,000, effective January 1, 2025. This will result in an average increase to $760 dollars for a Medicare Part D plan, up $77 from 2024. According to the report, this emphasizes the need for retirees to factor in both premiums and out-of-pocket expenses to effectively manage their healthcare budgets.1
“Premiums are only part of the Part D prescription drug story,” continued Mastrogiovanni, in the press release. “Consistent with the broader trend of ‘shrinkflation’ to manage costs, carriers are making changes to coverage and eliminating some plans. Retirees and their advisors need to review the fine print to evaluate the potential impact on their retirement budgets of deductibles, out-of-pocket costs based on the drugs they may be taking, the risk of unforeseen medical events, and which drug tiers are and are not covered within their plan.”
The IRA is also affecting prescription drug plans (PDPs). According to KFF, 544 PDPs will be offered in 2025 across 34 regions, a 26% decrease from 2024. This includes 9% lower plans of Part D Low-Income Subsidy for no premium.2
“The Inflation Reduction Act’s lower cap will directly benefit the approximately one quarter of retirees who are expected to have higher out-of-pocket spending than the new limit,” said Mastrogiovanni, in the press release. “With costs being shifted to retirees through higher premiums and deductibles, as well as more limited drug choices, most will be paying more when all expenses are included. This needs to be planned for.”
References
1. Medicare Part D Report: National 2025 Premiums Rise by an Average of 11% and 23% in the Five States with Highest Population of Retirees. PR Newswire. October 31, 2024. Accessed October 31, 2024. https://www.prnewswire.com/news-releases/medicare-part-d-report-national-2025-premiums-rise-by-an-average-of-11-and-23-in-the-five-states-with-highest-population-of-retirees-302292452.html
2. A Current Snapshot of the Medicare Part D Prescription Drug Benefit. KFF. October 9, 2024. Accessed October 31, 2024. https://www.kff.org/medicare/issue-brief/a-current-snapshot-of-the-medicare-part-d-prescription-drug-benefit/#:~:text=In%202025%2C%20524%20PDPs%20will,many%20Medicare%20Advantage%20drug%20plans.