Medicare Part D Plan is used either as a stand-alone plan (Original Medicare with or without Medicare Supplement also known as Medigap) or as a part of Medicare Advantage with Prescription Drugs (MAPD). There are multiple Medicare Part D Plans based on the Standard Benefit Plan. The Standard Benefit Plan is the prescription drug plan offering minimum allowable benefits.
Highlights of Medicare Part D – 2025
Here are highlights of the defined standard Medicare Part D plan changes from 2024 to 2025.
1. Initial Deductible
The Initial Deductible is an amount you will pay yourself before your Medicare drug plan coverage begins to pay a share of the retail drug cost. Insulin and ACIP vaccines covered by your Medicare drug plan are always excluded from the deductible – and some drug plans will exclude certain low-costing drugs tiers from the deductible. The standard Initial Deductible will increase from $545 in 2024 to $590 in 2025.
2. Initial Coverage Limit (ICL)
The Initial Coverage Limit will cease to exist in 2025 and the ICL will instead be replaced by the annual out-of-pocket spending threshold (TrOOP or RxMOOP). Accordingly, the 2024 ICL (retail cost of formulary drug purchases before entering the Coverage Gap) of $5,030 will be replaced with the 2025 annual out-of-pocket spending limit (TrOOP or RxMOOP) of $2,000 – equating to a total retail formulary drug cost of around $6,380 (excluding covered Insulin and Vaccine costs).
3. Coverage Gap (Donut Hole)
The Coverage Gap phase is eliminated in 2025.
4. Total annual out-of-pocket spending threshold (TrOOP or RxMOOP)
The annual out-of-pocket spending limit will decrease from $8,000 in 2024 to $2,000 in 2025. The TrOOP threshold now represents the maximum out of pocket spending limit for formulary drugs (RxMOOP).
5. Catastrophic Coverage Phase
The Catastrophic Coverage phase will remain the third phase of Medicare Part D coverage, however, since January 1st, 2024, Medicare beneficiaries will no longer pay any cost for formulary drugs purchased in the Catastrophic Coverage stage (after exceeding the annual TrOOP threshold or RxMOOP).
Medicare Part D Enrollment
Read Medicare Enrollment Periods for Medicare Part D.
US Government Sources
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