CMS Updates Medicare Premiums, Deductibles, and Coinsurance Amounts
Last month, the Centers for Medicare & Medicaid Services (CMS) released 2025 premiums, deductibles and coinsurance amounts for the Medicare Part A and Part B programs, and the new 2025 Medicare Part D income-related monthly adjustment amounts.
Part A (Hospital Insurance) Monthly Premium
About 99% of Medicare beneficiaries do not pay a monthly Part A premium (it is required that the Medicare beneficiary or a spouse has 40+ quarters of Medicare-covered employment).
The 2025 Part A premium is $518 per month for people who are not otherwise eligible for premium-free Hospital Insurance and have less than 30 quarters of Medicare-covered employment. With 30-39 quarters of Medicare-covered employment, the 2025 Part A premium is $285 per month. Higher income consumers may pay more.
Part B (Medical Insurance) Monthly Premium
Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A. General tax revenues, along with premiums paid by Medicare beneficiaries, fund the Part B program.
There is a special rule for Social Security recipients, called the “hold harmless rule,” ensuring that Social Security benefits will not decline from one year to the next because of an increase in the Medicare Part B premium. Whether this rule comes into play in any year depends on the amount of Cost of Living Adjustment (COLA) and the Medicare Part B premium increase. Medicare beneficiaries who have been protected by the hold harmless rule pay less than the standard Part B premium. All others pay monthly 2025 Part B premiums based on the Modified Adjusted Gross Income (MAGI) as reported two years prior (i.e., 2023 federal tax return).
The standard 2025 monthly premium for Medicare Part B enrollees is $185.00, an increase of $10.30 from $174.70 in 2024. Medicare Part B enrollees will pay the standard $185.00 Part B premium amount in 2025 unless:
- You have Medicare and Medicaid, and Medicaid pays your premiums. (Your state will pay the standard premium amount.)
- Your modified adjusted gross income as reported on your IRS tax return from two years ago is above a certain amount. If so, you’ll pay the standard premium amount plus an Income Related Monthly Adjustment Amount (IRMAA).
- You have been protected by the "hold harmless" rule discussed above.
Since 2007, a beneficiary’s Part B monthly premium is based on income. These income-related monthly adjustment amounts affect approximately 8% of people with Medicare Part B. 2025 Part B premiums for Full Part B coverage (as opposed to Part B Immunosuppressive Drug Coverage only) based on MAGI from the 2023 tax return are shown in the following table:
Beneficiaries who file individual tax returns with income: | Beneficiaries who file joint tax returns with income: | 2025 Part B premium not held harmless | Premium level |
Less than or equal to $106,000 | Less than or equal to $212,000 | $185.00 | Standard |
Greater than $106,000 and less than or equal to $133,000 | Greater than $212,000 and less than or equal to $266,000 | $259.00 | 1.4 x standard |
Greater than $133,000 and less than or equal to $167,000 | Greater than $266,000 and less than or equal to $334,000 | $370.00 | 2.0 x standard |
Greater than $167,000 and less than or equal to $200,000 | Greater than $334,000 and less than or equal to $400,000 | $480.90 | 2.6 x standard |
Greater than $200,000 and less than $500,000 | Greater than $400,000 and less than $750,000 | $591.90 | 3.2 x standard |
Greater than or equal to $500,000 | Greater than or equal to $750,000 | $628.90 | 3.4 x standard |
For tables for married beneficiaries who file separate returns, and for Part B Immunosuppressive Drug Coverage only, click here: https://ahinsuranceservices.com/medicarepremiums.html.
Part D (Prescription Drug Coverage) Monthly Premium
Since 2011, Medicare beneficiaries’ Part D premiums have been based on income. In addition to any Part D plan premium, there is an income-related monthly adjustment amount (IRMAA) impacting higher income earners. Part D plan premiums vary from plan to plan (when Part D benefits are included in a Part C Medicare Advantage plan, premiums often are zero). Beneficiaries may pay Part D premiums directly to the plan or have them deducted from Social Security benefits; however, any IRMAA must be deducted from Social Security benefits or otherwise paid directly to Medicare. 2025 Part D IRMAA figures are shown in the following table:
Beneficiaries who file individual tax returns with income: | Beneficiaries who file joint tax returns with income: | 2025 Part D base premium* | IRMAA |
Less than or equal to $106,000 | Less than or equal to $212,000 | Plan premium | $0 |
Greater than $106,000 and less than or equal to $133,000 | Greater than $212,000 and less than or equal to $266,000 | Plan premium | $13.70 |
Greater than $133,000 and less than or equal to $167,000 | Greater than $266,000 and less than or equal to $334,000 | Plan premium | $35.30 |
Greater than $167,000 and less than or equal to $200,000 | Greater than $334,000 and less than or equal to $400,000 | Plan premium | $57.00 |
Greater than $200,000 and less than $500,000 | Greater than $400,000 and less than $750,000 | Plan premium | $78.60 |
Greater than or equal to $500,000 | Greater than or equal to $750,000 | Plan premium | $85.80 |
For married beneficiaries who file separately, click here:
https://ahinsuranceservices.com/medicarepremiums.html.
Part A (Hospital Insurance) Deductible and Coinsurance Amounts
In 2025, the Medicare Part A inpatient hospital deductible that beneficiaries pay if admitted to the hospital will be $1,676, an increase of $44 from $1,632 in 2024. The Part A inpatient hospital deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. In 2025, beneficiaries must pay a coinsurance amount of $419 per day for the 61st through 90th day of a hospitalization ($408 in 2024) in a benefit period and $838 per day for lifetime reserve days ($816 in 2024). For beneficiaries in skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period will be $209.50 in 2025 ($204.00 in 2024).
Part B (Medical Insurance) Deductible
The annual deductible for all Medicare Part B beneficiaries will be $257 in 2025, an increase of $17 from the annual deductible of $240 in 2024.
2025 Changes to Medicare Part D (Prescription Drug Coverage)
Medicare Part D coverage, whether on a Stand-alone basis or included within a Part C Medicare Advantage plan, can include a yearly deductible up to $590 in 2025. This is an increase of $45 from $545 in 2024. Many Part D plans that have a deductible apply it only to higher cost prescriptions such as those classified in Drug Tier 3 and higher.
Notable Part D Program changes coming in 2025 are as follows:
The Coverage Gap (also known as the "Donut Hole") will be completely eliminated.
Under the original Part D program, Part D enrollees faced up to 100% of total drug costs during a Coverage Gap stage. Years later, the 100% amount was reduced to 25%. In 2025, Part D enrollees will no longer face any increase in cost sharing due to hitting the cost threshold that would trigger the dreaded Donut Hole, as it has been eliminated.
Part D enrollees' out-of-pocket drug costs will be capped at $2,000 in 2025. This amount will be indexed to rise each year at the rate of growth in per capita Part D costs (this cap does not apply to out-of-pocket spending on prescription drugs covered under Medicare Part B).
You might spend even less if you are one of the roughly 75% of Part D members with an “enhanced” Part D plan, which may provide extra credit toward the out-of-pocket cap. When enhanced plans have benefits that reduce out-of-pocket spending, the value of those benefits can count toward your $2,000 cap.) As a result, many Medicare beneficiaries will hit the cap before actually spending $2,000 in out-of-pocket costs.
It is important to keep in mind that only medicines listed in your plan's Part D formulary count toward the $2,000 out-of-pocket cap. There may be certain exceptions, such as when a plan agrees to cover a non-formulary drug due to individual circumstances (this typically requires the prescribing physician to document medical need).
Part D plans and drug manufacturers will pay a larger share of costs for Catastrophic Coverage beyond the $2,000 cap, and Medicare will pay a smaller share. Medicare's share of total costs will decrease from 80% to 20% for brand-name drugs and from 80% to 40% for generic drugs beginning in 2025. Medicare Part D plans' share of costs will increase from 15% to 60% for both brands and generics above the cap, and drug manufacturers will be required to provide a 20% price discount on brand-name drugs.
Part D plans and manufacturers will face changes to their share of total drug costs paid in the Initial Coverage stage. In this stage (i.e. after any plan deductible has been met and before Catastrophic coverage), drug manufacturers will be required to provide a 10% discount on brand-name drugs (this replaces the 70% discount in the Coverage Gap stage under the current design). Part D plans will pay 65% of brand-name drug costs.
One additional change coming in 2025 is the Medicare Prescription Payment Plan, which is a new, optional way to pay out-of-pocket costs over time. It works like a “buy now, pay later option” for Medicare Part D deductibles, copays and/or coinsurance.
The payment plan is a potential budgeting tool, not something that will save you money. Total costs remain the same, and plans cannot charge fees or interest because you participate. The Medicare Prescription Payment Plan could be helpful if you have expensive medications and incur high out-of-pocket costs early in the year, for example.
All 2025 Medicare Part D plans will offer the Medicare Prescription Payment Plan, and plans will be required to reach out to you if they identify you as likely to benefit from the program. Enrollment in this optional program is done through your Part D plan.
Until next time,
Andrew Herman
