Annual Out-of-Pocket Cap

Starting Jan 1, 2025, Part D has a $2,000 calendar-year cap on what you pay out of pocket for covered prescription drugs (applies to stand-alone Part D and Medicare Advantage plans with drug coverage). After you spend $2,000 (deductibles, copays, coinsurance on covered drugs), your plan pays covered drug costs for the rest of the year.

Note: The cap doesn’t apply to drugs not covered under Part D, or drugs covered under Part B (e.g., some injectables/infusions).

Premiums & Plan Choices

• Base beneficiary premium (2025): $36.78/month.
• Average stand-alone PDP premium: about $45/month (varies by ZIP and plan).
• MA-PD drug portion: often much lower (around $7/month in many areas).
• Plan options: average of ~48 total drug-plan choices (about 14 PDPs + 34 MA-PDs), with fewer PDPs than prior years in many regions.

Changes from Recent Legislation

• $2,000 cap on covered Part D out-of-pocket costs (see above).
• No more 5% coinsurance in the catastrophic phase.
• Medicare Prescription Payment Plan (voluntary): lets you spread your eligible out-of-pocket costs over the year (doesn’t reduce total cost).

Late Enrollment Penalty

If you don’t enroll when first eligible and go 63+ days without creditable prescription coverage, you may owe a monthly penalty for as long as you have Part D.

• How it’s calculated: 1% × the national base premium ($36.78 in 2025) for each full month without creditable coverage.
• Example: 14 months late → 14% × $36.78 ≈ $5.20/month added to your plan’s premium.
• Permanent: You’ll pay it as long as you keep Part D (even if you switch plans).

Creditable Coverage

If you have other coverage (employer, union, VA, etc.) that’s considered creditable—meaning it’s expected to pay at least as much as standard Part D—you can delay Part D without penalty. Save your annual creditable coverage notice as proof for later enrollment.

Extra Help (Low-Income Subsidy)

If you qualify for Extra Help, your premiums, deductibles, and copays may be reduced significantly—and you generally won’t owe a late-enrollment penalty. Ask about eligibility based on income and resources.

1) Stand-Alone Medicare Drug Plan (Part D “PDP”)

Adds drug coverage to Original Medicare, some Medicare Cost plans, some Private Fee-for-Service plans, and Medical Savings Account plans. Eligible if you have Part A or Part B.

2) Medicare Advantage with Drug Coverage (MA-PD)

All-in-one plan with Part A, Part B, and Part D. You must have both Part A and Part B to join. Not all MA plans include drugs—verify.

I take specific drugs

Confirm your meds are on the formulary, check tiers, prior authorization, and preferred pharmacies. Compare plan copays/coinsurance for your exact prescriptions.

I want protection from high costs

All Part D plans now include a $2,000 annual cap on covered drug out-of-pocket costs. After you reach it, the plan covers the rest of covered drug costs for the year.

I want predictable monthly expenses

Ask about the Medicare Prescription Payment Plan (2025). It lets you spread eligible out-of-pocket costs over the year instead of paying all at once at the pharmacy.

I take mostly generics

Look for plans with $0–low copays on preferred generics and strong preferred-pharmacy pricing. Mail-order can also lower costs for maintenance meds.

I don’t have many drug costs now

Enroll when first eligible (or keep creditable coverage) to avoid the permanent late-enrollment penalty and stay protected if your needs change.

I want all-in-one coverage

Consider a Medicare Advantage plan with drug coverage (MA-PD) for one card and potential extras (dental/vision/hearing). Be sure your doctors and pharmacies are in-network.