As you work to maintain financial stability, planning for healthcare expenses remains a critical element—especially as you approach retirement. While much of your financial preparation can be done before retirement, staying updated on ongoing changes is essential. Medicare costs, for instance, are subject to annual adjustments, and understanding these updates is key to making well-informed choices about your healthcare coverage.
The Centers for Medicare and Medicaid Services (CMS) have just released the Medicare premiums, deductibles, and other cost updates for 2025. Whether you’re covered by Original Medicare, considering Medicare Advantage, or reviewing your prescription drug plan, this guide will provide the insights you need to feel confident about your healthcare decisions.
Let’s take a closer look at what’s changing and how it may impact your coverage.
The Parts of Medicare
First, a quick review of the parts of Medicare. Medicare is divided into four parts, each covering specific healthcare services. Part A covers hospital stays, skilled nursing facility care, hospice, and some home health services, with most people not paying a premium for this part. Part B includes outpatient care, doctor visits, preventive services, and medical supplies, and typically requires a monthly premium.
Part C, also known as Medicare Advantage, is an alternative to Original Medicare offered by private companies, often bundling Part A, Part B, and sometimes Part D, along with additional benefits. Part D provides coverage for prescription drugs, with costs and coverage varying depending on the plan you select.
Medigap plans, also known as Medicare Supplements, helps cover costs that Original Medicare doesn’t, such as deductibles and coinsurance. Medicare costs, including premiums, deductibles, and out-of-pocket limits, can change each year due to factors like inflation and healthcare spending. These adjustments influence how much you need to budget for healthcare, from routine doctor visits to hospital stays.
Part A Premiums and Costs in 2025
Medicare Part A, often called hospital insurance, covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health services. While many beneficiaries don’t pay a premium for Part A, there are still other important costs to consider for 2025.
Most people qualify for premium-free Part A based on their own or a spouse’s work history, typically requiring at least 40 quarters (or 10 years) of Medicare-covered employment. If you don’t meet this requirement, the premiums for Part A are as follows: If you have 30-39 work credits, the premium will be $285 per month, and if you have fewer than 30 work credits, the premium will be $518 per month.
In addition to premiums, there are also deductibles and coinsurance to account for. If you need inpatient hospital care, Part A has specific cost-sharing amounts for each benefit period, which is a 60-day cycle that begins when you’re admitted to the hospital. For 2025, the inpatient hospital deductible will be $1,676 per benefit period. After the deductible, you’ll pay coinsurance for the following:
- First 60 days: $0 per day
- Days 61-90: $419 per day
- Lifetime Reserve Day: $838 per day (up to 60 additional days available per lifetime)
For skilled nursing facility care, the deductible remains the same, but coinsurance differs. The first 20 days of care are fully covered. For days 21-100, you’ll pay $209.50 per day. After 100 days, you’re responsible for all costs.
While many people with premium-free Part A will find these costs manageable, the deductibles and coinsurance can quickly add up, especially if extended care or hospitalization is needed. Reviewing your coverage options and considering a Medigap plan to help cover the gaps in Part A costs can offer added protection from unexpected medical expenses.
Part B Premiums and Costs in 2025
Medicare Part B provides coverage for outpatient services, including doctor visits, preventive care, diagnostic tests, and durable medical equipment. Unlike Part A, Part B requires monthly premiums and includes additional costs such as deductibles and coinsurance. For 2025, there are some important updates to consider.
The standard monthly premium for Medicare Part B in 2025 will be $185, an increase from $174.70 in 2024. However, some beneficiaries may pay more due to the Income-Related Monthly Adjustment Amount (IRMAA), which applies to higher-income individuals. The amount you pay will be based on your modified adjusted gross income (MAGI) from two years prior. For 2025, the premium tiers are as follows: Individuals with a MAGI of up to $106,000 (or married couples up to $212,000) will pay the standard $185 premium, while those in higher income brackets will pay between $259 and $628.90, depending on their income level.
The Part B deductible for 2025 will be $257, up from $240 in 2024. Beneficiaries must pay this deductible before Medicare covers most Part B services. After meeting the deductible, you will typically pay 20% of the Medicare-approved amount for most Part B-covered services, although some preventive services are fully covered with no cost-sharing.
The increase in Part B premiums and deductibles may slightly raise healthcare costs for individuals who frequently use outpatient services. Beneficiaries with higher incomes should also be prepared for the impact of IRMAA on their premiums. To manage these costs, options like Medicare Advantage plans or state assistance programs may provide additional financial relief.
Medicare Advantage Updates in 2025
Medicare Advantage plans, also known as Part C, are private insurance options that offer an alternative to Original Medicare. These plans typically combine coverage for Part A, Part B, and sometimes Part D (prescription drugs), along with additional benefits such as vision, dental, and hearing care. While the costs of these plans can vary significantly, there are some key trends and updates for 2025 that you should be aware of.
The average monthly premium for Medicare Advantage plans is projected to be around $17 in 2025, continuing a trend of affordability when compared to Original Medicare. Many plans still offer $0-premium options, although these may come with higher out-of-pocket costs. In terms of out-of-pocket limits, the median out-of-pocket maximum for in-network services under Medicare Advantage plans will be $5,400, with some plans offering lower limits. If your plan includes Part D for prescription drugs, your drug costs will be capped at $2,000 for the year.
One of the main benefits of Medicare Advantage plans is the additional services they often include. These may cover vision care, such as eye exams and glasses; dental services like cleanings, fillings, and sometimes dentures; hearing aids and exams; and wellness programs like gym memberships or health coaching.
Medicare Part D Updates in 2025
Medicare Part D provides coverage for prescription medications and is available either as a standalone plan or bundled within a Medicare Advantage plan. In 2025, beneficiaries will notice several important changes to Part D, including updates to costs and coverage, as well as federal policy changes designed to make medications more affordable.
The average monthly premium for Part D plans is expected to be around $45 in 2025, though this can vary based on the specific plan and region. It’s important for beneficiaries to compare available plans to find the best balance between premiums and the coverage they need for their medications. As with Medicare Part B, Part D premiums are also subject to the Income-Related Monthly Adjustment Amount (IRMAA), which ranges from $13.70 to $85.80 per month, depending on income.
The maximum deductible for Part D plans in 2025 will increase to $590, though some plans may waive this deductible for certain drug tiers, such as generic medications. One of the most notable changes for 2025 is the elimination of out-of-pocket costs in the catastrophic coverage phase. Previously, beneficiaries still had to pay a small percentage of drug costs after reaching this phase. Under the new rule, once beneficiaries hit the $2,000 maximum out-of-pocket threshold, they will no longer be responsible for any further drug costs.
The Inflation Reduction Act continues to bring significant changes to Medicare Part D. Key provisions for 2025 include a continued cap on insulin prices at $35 per month, with no deductible, and expanded drug price negotiations, which may result in lower costs for certain high-cost medications. Additionally, Part D plans will fully cover recommended vaccines without any cost-sharing.
These updates are designed to provide relief to beneficiaries managing high prescription drug costs, especially with the removal of out-of-pocket expenses in the catastrophic coverage phase. However, it’s still important for beneficiaries to review their plan’s formulary to ensure that their medications are covered at the lowest possible cost.
Stay Updated with Carolina Senior Benefits
At Carolina Senior Benefits, we are committed to guiding you through the complexities of Medicare, helping you find the coverage that best suits your needs and budget. We understand how overwhelming managing healthcare costs can be, and we’re here to simplify the process for you. Our team is available to offer personalized advice and support every step of the way.
Take advantage of our free consultations, where we’ll assess your individual situation and ensure that you’re maximizing your Medicare benefits. Let us help you make confident, informed decisions about your healthcare coverage.