Medicare bills are increasing for millions of Americans despite a $2,000 prescription drug cap beginning in 2025, as premiums will be higher on average compared to last year for seniors relying on Medicare Part B.
Why It Matters
More than 65 million Americans rely on Medicare for their health insurance, and a significant portion are seniors facing retirement and unable to work.
The standard monthly Medicare Part B premium was $174.70 in 2024, but many could see those rates increase this year.
What To Know
Medicare Part B covers doctor and outpatient hospital visits as well as select home health services and medical equipment.
For 2025, the standard monthly Part B premium is up $10.30 from 2024, now at $185 per month.
Part B deductibles will also see an uptick to $257 this year. That's a $17 percent rise from the $240 annual deductible in 2024.
For your exact Medicare Part B premium, you must consider your modified adjusted gross income from 2023 tax returns. Those who had an income of $106,000 or less in 2023 pay the standard premium, alongside couples who made less than or equal to $212,000. Those with higher incomes can get income-related adjustment amounts, leading to even higher monthly premium payments.
There is some good news for beneficiaries though. After the Inflation Reduction Act's changes, annual out-of-pocket Medicare Part D drug costs are capped at $2,000.
This out-of-pocket cap matters once Medicare recipients meet their deductible, and they then pay 25 percent of the coinsurance until their spending on drugs reaches $2,000. Insulin costs have also been capped at $35 per month, potentially saving seniors with diabetes thousands each year.
What People Are Saying
Kevin Thompson, finance expert and founder/CEO of 9i Capital Group, told Newsweek: "Medicare beneficiaries will see their premiums increase by approximately 5.9 percent, with Part B deductibles rising by about 7.1 percent on average. With the cost-of-living adjustment (COLA) increase, some beneficiaries may find themselves pushed into higher income-related Monthly Adjustment Amount (IRMAA) brackets, resulting in higher Medicare premiums. Additionally, the increase in Social Security benefits could lead to unintended consequences, such as affecting eligibility for other benefits such as Medicaid, SNAP and property tax relief programs."
Michael Ryan, finance expert and founder of MichaelRyanMoney.com, told Newsweek: "Picture your Medicare premium as an elevator in a high-rise building – the higher your income floor, the further up your premium goes. For 2025, that elevator is rising for everyone, but the impact varies significantly based on your financial situation."
What Happens Next
The changes arriving to Medicare are a mixed bag for recipients depending on their health and income.
While many seniors are likely to benefit from the $2,000 prescription drug cap, they can also opt for a payment plan to spread the $2,000 cost throughout the year.
"This seemingly small detail is for fixed-income seniors who previously had to choose between medications and other essentials during high-cost months," Ryan said.
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