Changes to Medicare in 2025

CMS made significant changes to Medicare for the contract year 2025 to support and improve stability for people with Medicare. These changes took effect at the start of 2025. Here is a recap of the key updates that affected Medicare coverage that year. Wondering what drives updates like these? See how the election could affect your Medicare.

1. New $2,000 annual cap on out-of-pocket prescription costs for Part D holders

Beginning in 2025, people with Part D plans won’t have to pay more than $2,000 in out-of-pocket costs, thanks to a provision in the Inflation Reduction Act of 2022. The $2,000 cap will be indexed to the growth in per capita Part D costs, so it may rise each year after 2025.

If you are enrolled or looking to to enroll in Medicare Part D plans, review your choices carefully by using the Medicare Plan Finder. Comparing plans is the best way to ensure the prescription will be covered if there is a specific medication you take regularly.

This new rule applies only to medications covered by your Part D plan. The new annual cap does not apply to out-of-pocket spending on Medicare Part B drugs. Part B drugs include vaccinations, injections a doctor administers, and some outpatient prescription drugs. The $2,000 out-of-pocket spending cap applies to deductibles, copayments and coinsurance in the prescription drug portion of Medicare Advantage plans.

2. A new midyear notification to Medicare Advantage policyholders

Medicare Advantage plans offer coverage that traditional Medicare doesn’t. These benefits include dental, vision, hearing, fitness and even financial benefits. Every Medicare Advantage plan includes supplemental coverage, and some have extra coverage on traditional Medicare.

However, 3 in 10 beneficiaries of supplemental coverage said they didn’t use any of these benefits in the past year. Whether due to forgetfulness, a lack of need, or otherwise, 30% of people didn’t use their additional coverage at all. The midyear statement will now show available benefits that you haven’t used.

Beginning in 2025, Medicare Advantage plans will need to provide policyholders with a tailored “Mid-Year Enrollee Notification of Unused Supplemental Benefits” each July. This notice will detail any unused supplemental benefits, including the extent and cost of claiming each benefit, how to access them, and a customer service contact number for further assistance.

3. Changes to Medicare to add more mental health providers

The percentage of adults 65 and older reporting they used mental health services is only roughly 20%. However, this may be to some extent due to the level of access that Medicare holders have to mental health services.

Before this year, many of the mental health, counseling, and addiction recovery services were not considered Medicare services. Because of this, they were not allowed to bill Medicare. The cost of these services fell to the Medicare policyholder. This year, they can bill Medicare, and some already have started.

Medicare Advantage plans must meet stricter standards to improve access to behavioral health specialists. Similarly, Medicare is looking to permanently expand access to Telehealth services for behavior health services.

Frequently Asked Questions

What changed for Medicare in 2025?

Three big updates took effect in 2025: a new $2,000 annual cap on out-of-pocket costs for covered Part D prescriptions, a required midyear notice to Medicare Advantage members listing any unused supplemental benefits, and broader access to mental health care as more provider types were allowed to bill Medicare.

How much are out-of-pocket prescription drug costs capped at in 2025?

Beginning in 2025, you will not pay more than $2,000 in out-of-pocket costs for drugs covered by your Medicare Part D plan. The cap is indexed to Part D cost growth, so it can rise in later years. It applies only to Part D covered drugs, not to drugs covered under Medicare Part B.

Does the $2,000 Part D cap apply to Medicare Advantage plans?

Yes. The $2,000 out-of-pocket cap applies to the deductibles, copayments, and coinsurance in the prescription drug portion of Medicare Advantage plans that include Part D coverage.

What is the Mid-Year Enrollee Notification of Unused Supplemental Benefits?

Starting in 2025, Medicare Advantage plans must send each member a personalized notice every July listing the supplemental benefits (such as dental, vision, or hearing) they have not used, what each benefit covers, how to use it, and a customer service number.

Did Medicare expand mental health coverage in 2025?

Yes. Counseling and addiction recovery providers that previously could not bill Medicare are now able to, so more of those services are covered. Medicare Advantage plans also face stricter standards for access to behavioral health specialists, and telehealth access for behavioral health was extended.

Take advantage of the changes to Medicare

With these changes to Medicare in 2025, it can mean a lot of good things for many people. Get a Medicare plan tailored to your health needs to take the most advantage of these changes. Cheaper out-of-pocket maximums for Part D, and more incentive to use your supplemental coverage mean more benefits out of your plan. Medicare Advantage is more advantageous than ever, so don’t wait on securing your health.