Projected Medicare Costs for 2025
In 2025, several changes are expected to impact Medicare beneficiaries, affecting premiums, deductibles, and out-of-pocket costs.
Firstly, the Part A deductible for hospital admissions will increase to $1,676, marking an increase of $44 from the 2024 figure. On the other hand, the annual deductible for Part B will rise to $257, a $17 increase from 2024.
The average premium for Part D, which covers drug costs, is set to decrease, with the monthly cost dropping to $46.50 in 2025, down from $53.95 in 2024.
Medicare Supplemental insurance, often referred to as Medigap policies, are categorised by letters A through N. Each policy offers the same basic benefits, with variations in additional coverages and premium costs.
The maximum out-of-pocket limit for Medicare Advantage plans in 2025 stands at $14,000 for both in-network and out-of-network services combined. For in-network services only, the limit is $9,350.
Surcharges for high earners apply to Medicare drug coverage (Part D) in 2025, ranging from $13.70 to $85.80. Similarly, for Medicare Part B, the IRMAA surcharge amounts range from $74.00 to $443.90.
Two popular Medigap plans, K and L, have an out-of-pocket limit and lower monthly premiums due to shared coinsurance costs. However, Plan G, a popular choice among beneficiaries, does not cover the Part B deductible of $257 in 2025.
Medicare open enrollment runs from October 15 to December 7 annually, during which individuals can switch from original Medicare to a Medicare Advantage plan, or vice versa.
The coinsurance amount for hospitalization in 2025 is $419 a day for the 61st through the 90th day, an increase of $11 from 2024. Beyond the 90th day, the coinsurance payment increases to $838 a day, a $12 increase from 2024.
Beginning in 2025, Part D enrollees will have the option of spreading out their out-of-pocket costs over the year rather than face high out-of-pocket costs in any given month.
Lastly, it's worth noting that Medicare premiums and deductibles have increased in 2025 compared to 2024 levels. Additionally, Medicare Advantage premiums will be adjusted upwards starting January 1, 2026, leading to increased profit margins for insurers due to higher treatment costs driven by the aging Baby Boomer population. Medicaid premiums, however, will be adjusted with a delay of nine to twelve months.
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