Inflation Reduction Act and Medicare Part D changes

What's different for prescription drug plans in 2025

With 45 years of experience you can count on, we understand that Medicare coverage is personal and changes to your coverage can affect your life. That's why UnitedHealthcare wants you to be aware of industry-wide changes to Medicare Part D prescription drug coverage in 2025 resulting from the Inflation Reduction Act. These changes aim to lower prescription costs for many members with Part D coverage, regardless of insurer. Even as regulations impact the entire Medicare industry next year, UnitedHealthcare is committed to delivering a plan that fits your needs.

Elimination of the Coverage Gap or Medicare Part D “donut hole”

In 2025, there are only three Part D prescription drug coverage stages: Deductible (depending on your plan), Initial Coverage and Catastrophic Coverage.

Lower maximum out-of-pocket drug costs

In 2024, Medicare members were required to hit an $8,000 out-of-pocket maximum on prescription drug expenses before entering the Catastrophic Coverage stage. In 2025, this out-of-pocket maximum is now $2,000.

Important 2025 changes explained

Video transcript

0:00 Hello.

0:01 As a Medicare provider with over 45 years of experience,

0:05 you can count on, UnitedHealthcare understands that Medicare coverage

0:09 is personal and changes to your coverage can affect your life.

0:13 That's why we want to keep you in the know about some changes

0:15 brought by the federal government

0:17 impacting all standalone Medicare prescription drug plans

0:21 and Medicare Advantage plans with prescription drug coverage in 2025.

0:26 Let's get started.

0:27 We'll cover three big updates.

0:30 Removal of the coverage gap, a lower

0:32 maximum out-of-pocket amount for prescription drugs,

0:36 and a new prescription payment plan option.

0:41 First, good news. In 2025,

0:43 the coverage gap, also called the donut hole, has been removed.

0:47 There are now three Part D prescription drug coverage stages: an annual

0:52 deductible stage, initial coverage stage

0:56 and catastrophic coverage stage.

0:59 If a plan has a prescription drug deductible, members will be responsible

1:02 for paying the full cost of their drugs until they reach this amount.

1:07 Then, in the initial coverage stage, they will be responsible for paying copays

1:11 or co-insurance once the member and others on their behalf

1:15 have paid a combined total of $2,000 for Medicare covered medications,

1:20 including any amount toward the deductible.

1:22 The member moves straight into the catastrophic coverage stage

1:26 where they will pay $0 for Medicare covered Part D drugs

1:30 for the remainder of the plan year.

1:33 See more coverage.

1:35 No gap. In 2024,

1:38 for all Medicare members, no matter what insurance provider

1:40 they were enrolled with, the Part D out-of-pocket max

1:44 was $8,000. In 2025,

1:47 the out-of-pocket max is lower than ever.

1:50 Once a member and others on their behalf have paid a combined total of $2,000,

1:54 they'll pay nothing for Medicare covered Part D prescription drugs

1:58 for the rest of the plan year.

2:01 However, while the goal is to lower prescription drug expenses, these changes

2:05 could result in higher deductibles or premiums in 2025.

2:10 This means members may pay more earlier in the year during the deductible stage,

2:14 but could see an overall savings compared to prior years

2:18 with the lowered out-of-pocket maximum.

2:20 Also for 2025, there's a new optional program

2:24 called the Medicare Prescription Payment Plan.

2:27 Instead of paying all your out-of-pocket costs

2:30 when you fill your prescriptions at a network pharmacy,

2:33 you can spread these payments out over the plan year with monthly bills.

2:38 It's important to know this program does not lower prescription drug costs.

2:43 The payment amount may change each month until you reach the $2,000

2:47 out-of-pocket max.

2:48 So while monthly payments may be more manageable,

2:51 they may also be less predictable.

2:53 Your plan's sponsor may contact you if you're likely to benefit

2:57 from the program.

2:58 For any questions or to find the right UnitedHealthcare plan for you.

3:03 Chat with a Medicare plan expert live on

3:07 UHC.com/Medicare.

3:10 No matter the changes, UnitedHealthcare

3:12 offers reliable coverage you can count on for your whole life ahead.

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Find the right Medicare plan for all your plans

Here's what you need to know

Lower maximum out-of-pocket drug costs.

In 2024, Medicare members were required to hit an $8,000 out-of-pocket maximum on prescription drug expenses before entering the Catastrophic Coverage stage. In 2025, this out-of-pocket maximum is now $2,000.
While the goal is to lower prescription drug expenses, these changes could result in higher deductibles or premiums in 2025.

No more "donut hole."

Depending on the plan, you'll pay your deductible, then copays and/or coinsurance in the Initial Coverage stage.
Once you or others on your behalf reach the lower $2,000 out-of-pocket maximum in combined drug costs, you’ll enter the Catastrophic Coverage stage and stop paying out-of-pocket for covered prescriptions.
Members not only pay no cost share once they reach the Catastrophic Coverage stage, but some may also reach the Catastrophic Coverage stage much sooner.

More flexibility for drug payments.

Medicare members with Part D coverage can spread their prescription drug out-of-pocket costs into monthly payments over the course of the plan year.
Costs are billed by your insurer.
This program can be valuable for members with high drug costs at the start of the plan year, but payments are subject to change each month.
Enrollment is voluntary, and you will need to opt in through your plan provider.

Learn more

Depending on your drugs, members with Part D coverage may experience these updates differently. While they aim to benefit many Medicare members by lowering prescription drug expenses, these changes could result in higher deductibles or premiums in 2025.

Additional resources and materials

Explore articles and FAQs for more in-depth information about Medicare Part D coverage, so you can make confident decisions about your health insurance coverage.

The Coverage Gap stage, known as the donut hole, is going away in 2025. You will now have 3 drug payment stages as part of your Part D benefit: Deductible, Initial Coverage, and Catastrophic Coverage. The out-of-pocket maximum has decreased from $8,000 in 2024 to $2,000 in 2025.

Inflation Reduction Act FAQs

Answers to frequently asked questions regarding industry-wide changes to Medicare Part D prescription drug coverage resulting from the Inflation Reduction Act.

How does the Inflation Reduction Act affect Medicare?

The Inflation Reduction Act (IRA) is a federal law that makes improvements to the Medicare program. Among other things, the IRA will expand Medicare benefits and help reduce Medicare members’ out-of-pocket costs for prescription drugs.