2025 Prescription Drug Plans - Tiers & Changes

As part of the Inflation Reduction Act (IRA), there have been some updates to Part D that aim to make prescription drug costs more affordable. 

In 2024, Part D coverage included four tiers: annual deductible, initial coverage, coverage gap (aka the "donut hole"), and catastrophic coverage. For 2025, the coverage gap tier will be eliminated and there will be a more simplified structure.

• You pay 100% of the drug costs (if applicable) until you reach your annual deductible.
• We expect most plan deductibles to be $590 (2025), but some plans may have lower or $0 deductibles.  
• Keep in mind, plans with lower deductibles typically have higher monthly premiums and do not guarantee lower out of pocket costs.  
• If your plan does not have a deductible, your coverage will begin in the Initial Coverage (Tier 2). 

• You pay 25% coinsurance for covered Part D drugs
• The drug plan usually pays 65% of the cost of applicable drugs and 75% of the cost of all other covered Part D drugs. 
• As part of the Manufacturer Discount Program, the drug manufacturer typically covers 10% of the cost of applicable drugs. 
• Once you reach the annual out-of-pocket threshold of $2,000, you'll move into the next tier.

• You'll pay no cost-sharing (copays or coinsurance) for the remainder of the year on covered Part D drugs when you reach this limit.  
• In 2025, you'll have the option to pay out-of-pocket costs in monthly installments over the plan year, instead of when they happen.  

The new Inflation Reduction Act (IRA) updated what counts towards True out-of-pocket (TrOOP) costs in 2025.  TrOOP includes costs you pay out of pocket (e.g., your deductible, copays, and coinsurance) and some payments made on your behalf.   

• TrOOP costs are important because they determine when catastrophic coverage will begin. 
• The drug plan keeps track of each member’s TrOOP costs and will provide a monthly explanation (EOB) that shows TrOOP costs to date.
• Premium payments do not count towards TrOOP.

Most drug plans will release their 2025 plan benefits to the public by late September 2024. 

Under the Inflation Reduction Act, covered insulin receives reduced cost-sharing for many Medicare beneficiaries.  

• Insulin cost-sharing is capped at $35 per 30-day supply

• A 3-month supply of covered insulin should be no more than $105

• You do not have to pay a deductible for Part D and Part B-covered insulin

• Insulins will drop to $0 cost-share in the catastrophic tier

Although new pricing will not be effective until 2026, Medicare has negotiated and finalized drug pricing directly with manufacturers for the following high-tier medications.  Prices for the first 10 drugs will likely be effective Jan 1, 2026.  More info available here.  

• Eliquis
• Jardiance
• Xarelto
• Januvia
• Farxiga
• Entresto
• Enbrel
• Imbruvica
• Stelara
• Fiasp; Fiasp FlexTouch; Fiasp PenFill; Novolog FlexPen; Novolog PenFill

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