January first marks not only the start of a new year, but for those 65 years and older, the first is when Medicare plans restart, leading to numerous copay and coverage-related questions. The general confusion for both customers and pharmacy staff is challenging, and it is necessary for me as a pharmacist to be educated regarding any changes. I wanted to take this opportunity to share some of these changes that will affect your copays at the pharmacy this year.
Medicare Part D (drug) plans are making some big changes, the most significant being the removal of the coverage gap or “donut hole.” Since Part D plans came into existence in 2006, copays have been determined based on your phase of coverage (and phases are based on total spending). The first phase, starting January first, is, and has traditionally been, the deductible phase. Deductibles are a set amount of money you must pay out-of-pocket for medication before your standard coverage or copays kick in, and this amount has increased over these past 18 years from $250 per year in 2006 to $590 per year in 2025. Once this threshold has been met, the second phase begins. On average, you pay 25% of the cost of your medications and your insurance plan pay 75% (this is also where you pay a traditional copay structure). In 2024, once total spending exceeded $5,030, you were in the third phase, the coverage gap or “donut hole,” where you historically paid anywhere from 25% to 100% of the cost of the medication until you reached your out-of-pocket max ($8000 in 2024). The final phase is considered catastrophic coverage, where you are responsible for 0 to 5% of the costs of your medication. Fortunately or unfortunately, most Medicare recipients don’t make it to catastrophic coverage before their plans restart every January first.
The second most significant change for 2025 is the out-of-pocket maximum. In 2006, your out-of-pocket max was $3600. In 2025, this number will decrease for the first time in 18 years to $2000. However, with the removal of the “donut hole” and drastic cut in out-of-pocket max, premiums may increase or some medications that were covered for an individual in previous years may not be.
The third change is insurance plans are allowing individuals to enroll in payment plans to spread out the $2000 out-of-pocket max. This may be a good option for those with limited monthly income who find it difficult to pay high copays due to the deductible at the start of the year. You basically pay nothing at the pharmacy and your plan bills you monthly for the medication costs in smaller increments.
These are just some of the big changes happening this year. We can look forward to more changes in 2026 when based on negotiations between Medicare and drug companies, ten commonly used expensive medications are supposed to drastically reduce their prices to a “maximum fair price,” which is estimated to save people enrolled in Medicare $1.6 billion in out-of-pocket costs…but I’m not holding my breath. ꝶ
