How much will Medicare Part D prescription drug premiums increase in 2025?

For the first time since 2006, the Centers for Medicare and Medicaid (CMS) did not release next year's projected premiums or other data on Medicare Part D policies in July.

Instead, CMS is revising the program to prevent a significant increase in Part D premiums in 2025 — increases that would be announced around election time.

Significant changes have been made to Part D in recent years. Starting in 2025, out-of-pocket costs for prescription drugs for Part D enrollees will be capped at $2,000.

However, the cost of this benefit is largely borne by insurers and drug manufacturers, meaning Part D premiums will likely rise along with deductibles and copayments. In addition, insurers will likely reduce coverage for some drugs.

Another provision limited the annual premium increase to 6%. However, this limitation applies only to the base premiums applicable to Part D plans with minimum benefits. CMS indicated that the base premium for Part D will be $36.78 in 2025, an increase of $2.08, or the maximum 6%, from 2024.

Most policyholders take out policies with more comprehensive benefits than the basic policies that are not covered by the 6 percent cap.

Some insurers have indicated they may withdraw from the market or significantly reduce their presence in the Part D program. Others anticipate significant premium increases.

Typically, CMS releases data about the next year's Part D policies before this time, such as estimates of the premium range, the number of policies a typical beneficiary can choose from, and other information. CMS said it will release this information sometime in September.

Instead, CMS announced in July that it would convert all of Part D into a “voluntary demonstration project” by 2025.

Key elements of the project include that premiums cannot increase by more than $35 per year and that the government pays Part D insurers more money per policyholder. The goal of the changes is to improve “stability” for Part D beneficiaries. In other words, to prevent premiums from increasing too much.

It is unclear whether this is a one-year solution to delay premium increases until 2026 or something else.

Medicare beneficiaries should prepare for significant changes to Part D policies over the next few years. As insurers adjust to the new rules and CMS changes its policies, there may be large fluctuations in premiums, copayments, deductibles, and covered drugs.