Inflation Reduction Act Medicare changes taking effect in 2025: 5 things to know

Here are five things to know about the changes coming in 2025: 

1. Beginning in 2025, out-of-pocket costs for prescription drugs for Medicare beneficiaries will be capped at $2,000 annually. 
2. The changes led to higher premiums bids from Part D plans. The average bid for Part D plans increased 179% from 2024 to 2025, according to the Congressional Budget Office. 
3. In August, CMS pitched a plan to stabilize premiums. Most plans opted into the demonstration, which requires insurers to reduce base premiums for $15 a month for 2025. CMS will take on more risk for plans’ potential losses as part of the demonstration, costing $5 billion in 2025, according to the Congressional Budget Office. 
4. Starting in 2025, Medicare beneficiaries can opt into a cost-smoothing program to spread high one-time costs throughout the year.
5. In 2024, CMS published negotiated drug prices for the 10 of the most expensive drugs with no generic or biosimilar alternatives. These negotiated prices will take effect in 2026. 

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