Medicare Part D in 2025: A First Look at Prescription Drug Plan Availability, Premiums, and Cost Sharing

[Duaine]

Overall, KFF analysis shows that the market for Part D coverage remains robust based on the overall number of plan options, but the number of sponsors, plans, and enrollees in the stand-alone PDP market has trended downward over time, while the MA-PD market remains stable and continues to experience steady enrollment growth. In part, this reflects the predominance of low- or zero-premium MA-PDs and the availability of extra benefits, which are enabled by rebates in the Medicare Advantage payment system and amplified by aggressive marketing. Monthly premiums for stand-alone PDPs are substantially higher than for MA-PDs.

Medicare Part D Highlights for 2025

• The average Medicare beneficiary has a choice of 48 Medicare plans with Part D drug coverage in 2025, including 14 Medicare stand-alone prescription drug plans (7 fewer than in 2024) and 34 Medicare Advantage drug plans (2 fewer than in 2024). Over the past 10 years, the number of PDPs available to the average beneficiary has decreased by 52% while the number of MA-PDs has increased by 143%.
• The number of firms offering stand-alone PDPs has dropped from 11 in 2024 to 7 in 2025, along with a reduction in the overall number of PDPs (down from 709 to 464).
• In 2025, a smaller number of PDPs will be "benchmark" plans – that is, PDPs available for no monthly premium to Medicare Part D enrollees receiving the Low-Income Subsidy (LIS) – than in any year since Part D started. Medicare beneficiaries will have access to 1 less benchmark PDP in 2025 than in 2024, on average – two out of the average 14 PDPs available overall. An estimated 1.1 million LIS enrollees (26% of all LIS PDP enrollees) need to switch plans during the 2024 open enrollment period if they want to be enrolled in a benchmark plan in 2025.
• The estimated average enrollment-weighted monthly premium for Medicare Part D stand-alone PDPs is projected to be $45 in 2025, a modest increase from $42 in 2024 (based on June 2024 enrollment). After accounting for enrollment choices by new enrollees and plan changes by current enrollees, the actual average weighted PDP premium for 2025 is likely to be lower than the estimated average of $45.
• Monthly premiums for drug coverage are estimated to be six times higher for PDPs compared to MA-PDs in 2025 – $45 versus $7. The average monthly premium is projected to increase for PDPs but decrease for MA-PDs. MA-PD sponsors can use rebate dollars from Medicare payments to lower or eliminate their Part D premiums, as well as provide extra benefits, but there is no equivalent rebate system for PDPs.
• Average monthly premiums for the 12 national PDPs are projected to range from around $3 to $128 in 2025. Premium variation across plans is in part related to whether plans offer basic or enhanced benefits and the value of benefits offered, as well as variation in the underlying costs that plans incur for their enrollees.
• More than half of non-LIS Part D PDP enrollees (7.0 million out of 13.1 million) will see a reduction or no change in their monthly premium in 2025 if they make no changes during open enrollment, but 1 in 5 non-LIS PDP enrollees (2.6 million) will see their monthly premium increase by $35 if they stay in their same plan for 2025. This is the maximum increase allowed for PDPs participating in the new Part D premium demonstration, which includes measures intended to stabilize the PDP market as major changes to the Part D benefit take effect in 2025, including a new $2,000 out-of-pocket drug spending cap.
• The share of MA-PD enrollees who will be in plans that charge a deductible for Part D coverage will nearly triple from 21% in 2024 to 60% in 2025 if they do not switch plans. Most stand-alone PDP enrollees (84%) will also be enrolled in plans that charge a deductible for drug overage in 2025, similar to the share in 2024 (87%). (Some of the enrollees in these plans receive low-income subsidies that cover their deductible.) The average deductible in 2025 will be more than twice as large for PDP enrollees as for MA-PD enrollees ($486 versus $225) (the standard deductible in 2025 is $590).
• Many Part D enrollees will face coinsurance rather than copayments for both preferred brands and non-preferred drugs, which can mean less predictable out-of-pocket costs. This includes a larger share of MA-PD enrollees compared to 2024: 28% will be in plans that charge coinsurance for preferred brands versus 2% in 2024, and 57% will be in plans that charge coinsurance for non-preferred drugs versus 11% in 2024. Among PDP enrollees, 83% will be in plans that charge coinsurance for preferred brands and 100% in plans charging coinsurance for non-preferred drugs in 2025. For specialty tier drugs (those that cost more than $950 per month), median coinsurance will be 25% for PDP enrollees and 30% for MA-PD enrollees.
• [EXTERNAL LINK] - Medicare Part D in 2025: A First Look at Prescription Drug Plan Availability, Premiums, and Cost Sharing | KFF

 

[axeman462]

to bundle MAPD and stand alone PDP into the same basket is a lame attempt at inflating the numbers to make a bad situation look better.

Almost half the population will not consider an MAPD.
The other half will not ever consider a PDP.
It is a relatively small slice of the people that will actually consider crossing the line from MAPD to OM and vice versa.

So immediately, those numbers are cut in half at least.

looking at just PDP in Florida you only have 14 plans across 6 carriers. Of which 1 carrier with 2 plans, Florida Blue, is not really competitive. And there are another 6 plans offer by another 4 carriers that is not very competitive at all. And then another 2-3 plans that are moderately competitive in any given scenario.

What you are left with in the typical Rx scenario is, at best, 3-4 plans (but usually 1, maybe 2) plan options for the customer.

Its horrendous.

10 years ago we had something like 34 different plans offered by 9 or 10 different carriers. And often had 6 or 7 drug plans within a few dollars of each other in total cost. It was true competition.

 

[somarco]

Not to detract from your post, but averages are fine if you or your client are average.

Average means an equal number of results above the average and an equal number under the average.

Not everyone lives at Lake Wobegone where the women are strong, the men are all good looking and the children above average.

I hear agents say things like the MOOP is (pick a number) $2000 . . . $5000 . . . $10000 but no one ever hits that.

My book is relatively small but in 2024 I have half a dozen (that I know of) who had claims xs of $300k and one that has racked up almost $1M in claims.

I guess you could say they are above average . . . but not in the way you would like.

The ability to absorb an unexpected bill of $3k to $6k or more can be challenging for most folks "on a fixed income".

Some of my clients are having trouble wrapping their mind around paying $2,000 for very expensive meds even though the premium is $0.

And some only recently discovered their SilverScript premium jumped from $15 to $50 because they failed to read the ANOC and my newsletters warning them about the premium increase as well as the 12/7 deadline.

 

[LostDollar]

The ability to absorb an unexpected bill of $3k to $6k or more can be challenging for most folks "on a fixed income".

I tried pulling that line on @rousemark once. He just popped right back with "it all depends on where your income is fixed", or something similar.

 

[rousemark]

I tried pulling that line on @rousemark once. He just popped right back with "it all depends on where your income is fixed", or something similar.

A lot of retiree's fixed income is higher than the income of those still working. However, I have never understood that phrase. If you are working on a salary basis, your income is fixed. I used to tell people that tried to give me that so story, "I wish my income was fixed. It is possible I won't make anything today."

 

[just-a-client]

The way the term is currently used, it no longer means anything. People seem to now be using it as a synonym for retirees of limited or modest means.

It used to mean people on a fixed pension. The majority of pensions don't adjust for inflation, so pensioners get poorer over time as they can't keep up with the cost of living.

Similarly, no annuities are sold anymore with inflation provisions. You can buy some that go up say 2% per year, but they probably aren't worth it.

Very few people are completely on a fixed income even if they have a fixed pension or annuity, because they also have social security, which has a cost of living increase each year. (The way it's calculated, it's unfairly small for seniors vs typical price increases they face especially with medical, but that's another matter.)

For retirement plans people now have 401ks and IRAs etc. Well invested and with good luck, or at least without bad luck, they should beat inflation. One hopes.

Anyway, with fewer and fewer people covered by traditional pensions, it makes sense that fewer and fewer people know what fixed income originally meant.

Salaries aren't fixed, as, ignoring people stuck perpetually at minimum wage, people get raises every year, and despite the vocal politics on this forum, wages have lately, on average, been rising more than inflation. The psychological problem is that people attribute their raises to their own enterprise and work accomplishments, while blaming inflation on outside forces, and not connecting the two. So too many people yell about one and ignore or take for granted the other.

 

[annon123]

For retirement plans people now have 401ks and IRAs etc. Well invested and with good luck, or at least without bad luck, they should beat inflation. One hopes.

One catch with things in the stock market is that over half of the stocks are owned by retirement companies managing people's retirement funds. Unfortunately due to the population bubble (eg demography) we boomers tend to break everything we touch due to that. Because more than half of the stock market is owned by retirement funds unfortunately the minimum distribution is going to force people to take money out of their retirement even if they are lucky enough not to need it (most will need it). There aren't enough people (due to the population bust under the boomers) that are at the major stage of of life where people tend to focus more on retirement savings and put more in.

As a result more will be coming out of the stock market than going in once a big chunk of boomers are of age that they have no choice but to take money out. That means stocks will eventually fall and bonds will follow about 3 years later (when stock fall people tend to switch to bonds but the minimum distribution requirements will still mean they will eventually need to cash those in). An economist friend ran the numbers multiple different ways and got the same result although the timing was spread over a couple years (which is a pretty narrow time frame all things considered).

The finance guys (eg most of the ones who work at these retirement companies) don't study demography in their MBA programs outside of taking their 2 econ classes and much of that isn't about demography (economists do though but they don't tend to work at retirement companies). The finance folks I have talked to at TIAA, Vanguard and Fidelity are convinced that the third world countries will up their investments in our stock market and that will make up the difference. The catch with that is that no 3rd world country is in the top 20 counties investing in our stock market and tracking changes in country investments over time don't support that assumption.

You already see the boomer effect with housing. The boomers with less money who can't afford or don't want to live in 55+ retirement communities are downsizing and buying smaller houses (eg downsizing) that are either ranch or have the master bedroom on the first floor. They are competing with first time home buyers for those. That has driven the price of those houses up faster than other houses.

Also many McMansions are made out of materials that have a 50 year life span. Oops expensive repairs right about when they will want to sell. And once the boomers are ready to sell their Mc Mansions, fewer buyers (demography again) for big houses as fewer in that stage of life where they buy them. The value of those houses will drop (supply/demand and also repairs) and the presumed money for retirement from that asset won't be as big as people had hoped. That will impact their retirement too.

I, personally, think we will have some bad luck coming based on demography (which is totally independent from politics and who does or does not run the country).

 

[Fisher]

I hear agents say things like the MOOP is (pick a number) $2000 . . . $5000 . . . $10000 but no one ever hits that.

My book is relatively small but in 2024 I have half a dozen (that I know of) who had claims xs of $300k and one that has racked up almost $1M in claims.

To be fair, $1M in OM claims certainly doesn't correlate to hitting MOOP on an Advantage plan. I had an MAPD guy spend 43 days in the hospital - 10 days in ICU - and his total OOP was $900-something. The billed amount on the EOBs was close to $600K.

The few MOOPs being hit that I've been aware of were chemo related.

I'm not championing Advantage plans but your comparison is not necessarily apples to apples.

 

[just-a-client]

One catch with things in the stock market is that over half of the stocks are owned by retirement companies managing people's retirement funds. Unfortunately due to the population bubble (eg demography) we boomers tend to break everything we touch due to that. Because more than half of the stock market is owned by retirement funds unfortunately the minimum distribution is going to force people to take money out of their retirement even if they are lucky enough not to need it (most will need it). There aren't enough people (due to the population bust under the boomers) that are at the major stage of of life where people tend to focus more on retirement savings and put more in.

As a result more will be coming out of the stock market than going in once a big chunk of boomers are of age that they have no choice but to take money out. That means stocks will eventually fall and bonds will follow about 3 years later (when stock fall people tend to switch to bonds but the minimum distribution requirements will still mean they will eventually need to cash those in). An economist friend ran the numbers multiple different ways and got the same result although the timing was spread over a couple years (which is a pretty narrow time frame all things considered).

The finance guys (eg most of the ones who work at these retirement companies) don't study demography in their MBA programs outside of taking their 2 econ classes and much of that isn't about demography (economists do though but they don't tend to work at retirement companies). The finance folks I have talked to at TIAA, Vanguard and Fidelity are convinced that the third world countries will up their investments in our stock market and that will make up the difference. The catch with that is that no 3rd world country is in the top 20 counties investing in our stock market and tracking changes in country investments over time don't support that assumption.

You already see the boomer effect with housing. The boomers with less money who can't afford or don't want to live in 55+ retirement communities are downsizing and buying smaller houses (eg downsizing) that are either ranch or have the master bedroom on the first floor. They are competing with first time home buyers for those. That has driven the price of those houses up faster than other houses.

Also many McMansions are made out of materials that have a 50 year life span. Oops expensive repairs right about when they will want to sell. And once the boomers are ready to sell their Mc Mansions, fewer buyers (demography again) for big houses as fewer in that stage of life where they buy them. The value of those houses will drop (supply/demand and also repairs) and the presumed money for retirement from that asset won't be as big as people had hoped. That will impact their retirement too.

I, personally, think we will have some bad luck coming based on demography (which is totally independent from politics and who does or does not run the country).

That's depressing and I hope things don't go that way. The oldest baby boomers are 78 and have been withdrawing money from retirement savings since they were 70 1/2, but we haven't seen this problem manifest just yet.

It's not like every retiree has investments. Many have little to no savings, and live on social security alone. Some have pensions - while pensions are disappearing, older people are the ones still most likely to have them. Those who have retirement savings, it's not all in stock and stock mutual funds (or shouldn't be, it's too risky to be all in). They have bond funds, bonds, CDs, cash too. And the ones forced to sell investments to meet their Required Minimum Distributions, but who don't actually need the money, will just repurchase the same investments in their non-retirement brokerage accounts.

What you are describing is a kind of financial doomsday, and there are always commentators out there predicting the next crash, just as there are always the over-exuberant.

But I agree that housing is a total mess. There is not enough entry level housing available, and the housing available doesn't match what retirees need - like a flat entry on the ground floor, no interior stairs, wider hallways, walk-in showers... No one has built towards those needs. The shortage of such homes is in the millions. (60 million seniors over 65.) Maybe 10s of millions! I guess some homes can be retrofitted, but not everyone wants to put motorized chairs on their staircases. So then what happens? People close off their upper levels and turn their dining room into a bedroom? That's a depressing thought.

Aging does have some s good points - it's better than the alternative.

 

[somarco]

$1M in OM claims certainly doesn't correlate to hitting MOOP

I understand . . . and $1M in gross billed claims will come down quite a bit after repricing.

I also know that hitting the MA MOOP is a moving target, more so than with OM.

Either plan, OM or MA, involves some degree of repricing. But MA plans can make additional adjustments for claims denied as well as OON claims.

MA claims denied do not absolve the patient responsibility for paying the provider.

OM denied claims are NOT the responsibility of the patient unless there is a properly executed ABN form. And there are no networks with OM, so . . .

MA plans in GA have a MOOP cap of roughly $4k to $10k depending on HMO, PPO, zip, carrier . . . etc.

And since a policyholder may be liable for denied or OON claims, the true OOP for the patient cannot be calculated.

Plans with a $4k MOOP may only require $20k in repriced claims to hit the MOOP.

When I get calls from clients about huge medical bills they are almost always looking at the provider billed amount, not the repriced amount. And they neglect to consider their OOP will, in most cases, be limited to the Part B deductible.