Millions of Medicare beneficiaries could face steep increases in monthly premiums for stand-alone Part D prescription drug plans next year, with hikes potentially reaching $50 per month. The higher costs would primarily affect enrollees in traditional Medicare who opt for separate drug coverage rather than Medicare Advantage plans, according to health policy experts.
Part D drug plans, offered through private insurers, have been part of Medicare since 2006. While next year’s exact rates will not be announced until closer to the Oct. 15 open enrollment period, experts anticipate broad increases driven by rising prescription drug use, new federal cost-sharing rules, and reduced funding for premium stabilization.
“Everyone should shop plans in open enrollment,” advised Stacie Dusetzina, professor of health policy at Vanderbilt University Medical Center, stressing that sticking with the same plan could cost beneficiaries significantly more in 2025.
1.Rising Drug Spending
Prescription drug spending across insurers and government programs rose more than 10% in 2024, fueled by increased use of expensive new therapies, according to the American Journal of Health-System Pharmacy. Medicare beneficiaries are increasingly prescribed high-cost drugs for autoimmune diseases, and while Medicare does not cover weight loss treatments, many members take related medications for conditions such as diabetes.
Future costs could also be influenced by potential tariffs on imported pharmaceuticals and a Trump administration pilot program, slated for 2027, that would expand access to weight-loss drugs under Part D.
2.New $2,000 Out-of-Pocket Cap
Under the Inflation Reduction Act, starting in 2024, Medicare Part D enrollees pay no more than $2,000 annually out-of-pocket for prescription drugs. This cap — adjusted for inflation annually — significantly reduces costs for patients needing expensive medications. However, the law shifts a greater share of drug expenses from the federal government to insurers, likely prompting higher premiums across the board.
“This reform makes Part D real health insurance, but there’s a cost to doing so,” said Dusetzina. Advocates emphasize the cap benefits not only current high-cost patients but also those who may face serious illnesses in the future.
While the change applies to both stand-alone and Medicare Advantage drug plans, Advantage insurers — who receive higher per-member payments — may avoid raising drug premiums by using funds to absorb cost increases, in addition to offering extra benefits such as vision or dental care.
3.Reduced Stabilization Funding
A premium stabilization program, launched under the Biden administration to ease the transition to new drug cost rules, temporarily lowered Part D premiums this year. Federal funding for the initiative will drop by about 40% in 2025, the Trump administration announced in July.
The change will allow insurers to raise monthly premiums by up to $50, compared with a $35 limit in 2024. In 2024, the program contributed to a 9% drop in average monthly premiums, from $43 to $39, according to KFF.
Juliette Cubanski, deputy director of Medicare policy at KFF, expects some insurers to take full advantage of the higher allowable increase next year. “I fully expect we will see some plans with increases up to $50 a month,” she said.
With the open enrollment period just two months away, policy experts urge Medicare beneficiaries to carefully review their options before making a choice for 2025.
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