Medicare Part D premiums for prescription drug plans offered in all 50 states and Washington, D.C. by three national providers will rise by an average of 11% in 2025—but by 23% in the five states with the highest population of retirees.
Those are key findings from HealthView Services’ new 2025 Medicare Part D Premiums: National Cost Data Report, released on Oct. 31.
Among the 357 plans reviewed, basic Part D coverage offered during open enrollment for 2025 is lower by an average of 4%, the report found. The price of mid- and high-end plans which offer higher tiers of drug coverage will be more expensive for retirees this year. Mid-level plan premiums increased by 4%, while the cost of high-end plans rose by 21%.
In the five states with the highest populations of retirees – California, Florida, Texas, New York and Pennsylvania – the average increase across all plans is 23%. Premiums for five plans at two additional large providers operating in these states increased by 32%.
“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 of HealthView Services. “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 shows the cost of many high-end plans rising by the $35-a-month cap on premium increases introduced by CMS this year. The new limit is one reason why the increase in high-end plans for 2025 is lower than the 33% jump in prices for similar plans seen in HealthView Services’ 2024 Medicare Part D Data Report. The effort to stabilize premiums underscores pressure from higher prescription drug prices and changes to the cost allocation methodology between carriers and the government that will come into effect on January 1, 2025, when the cap on out-of-pocket expenses is reduced from $8,000 to $2,000.
“Premiums are only part of the Part D prescription drug story,” adds Mastrogiovanni. “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.”
In dollar terms, the price range of plans available to retirees in 2025 is broad. The report shows 12 Part D plans in specific states from the three largest national carriers available at no cost, based on CMS plan subsidies. The average annual cost for a Part D plan in 2025 is $760, an increase of $77 compared to 2024. Retirees need to take into account premium inflation and out-of-pocket costs that are not covered by the plans they select.
“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. “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.”
Danvers, Mass.-based HealthView Services is a leading provider of retirement healthcare cost, Social Security optimization, and long-term care retirement planning, portfolio management tools and data for the financial services industry. The firm provides planning apps with the goal of creating funding solutions today to cover future in-retirement healthcare expenses.
SEE ALSO:
• Americans Largely Keep Same Health Plan During Open Enrollment
