Millions of People With Medicare Drug Coverage to Save With New Cap in 2025

A new report from the Department of Health and Human Services Assistant Secretary for Planning and Evaluation (ASPE) projects that around 11 million people with Medicare Part D will reach the new $2,000 out-of-pocket cap in 2025, with an average savings of $600 for the year. Once enrollees reach this cap, they no longer have out-of-pocket expenses for covered Part D drugs.

Report Methodology

The report breaks down savings by drug taken, enrollment status for the low-income subsidy (LIS) (also known as Extra Help), health condition, enrollee demographics, and state or territory. For example, it projects that enrollees who do not have help paying for their drugs through programs like Extra Help, will save an average of $1,100 for the year.

Costlier Health Conditions to See Greater Savings

Enrollees with some conditions that cause higher drug spending should see greater savings than the average. For example, ASPE projects that non-LIS individuals with cystic fibrosis will save about $6,700 annually. People with conditions like immune disorders, organ transplants, and multiple myeloma or other cancers also are likely to see greater savings.

For example, ASPE projects that non-LIS individuals with cystic fibrosis will save about $6,700 annually.

And these savings are crucial. In 2023, over 40% of calls to Medicare Rights’ national helpline were about how to afford Medicare premiums, cost-sharing, or prescription drugs.

Cap as Part of a Larger Medicare Affordability Strategy

The out-of-pocket cap is new for 2025 and joins other Medicare improvements from the Inflation Reduction Act (IRA), like zero cost sharing for recommend vaccines, drug price negotiation, and another new program—the Medicare Prescription Payment Plan—that allows people with high drug costs to spread their payments out across the year.

The Medicare Prescription Payment Plan does not lower costs and may not be a good choice for people who have stable costs from month-to-month or who only incur high costs in the latter portion of the year.

Note: This program does not lower costs and may not be a good choice for people who have stable costs from month-to-month or who only incur high costs in the latter portion of the year. People who have or may be eligible for Extra Help (monthly incomes up to $1,903 for individuals in 2025 or $2,575 for couples) should apply for that program first to ensure they have the most affordable coverage possible.

Each of these changes mark important improvements in Medicare affordability. We will work with policymakers to protect and build upon these protections for current beneficiaries and future generations.

Further Reading

Read the ASPE report.

Read more about the IRA.

Read our Helpline Trends Report for 2023.