Medicare

By Jeanine Skowronski

 Published August 28, 2025

Medicare rules, costs, and benefits change every year, but some coming up in 2026 could have a bigger impact on your health and your wallet than usual. Along with having to pay fairly standard price increases, you may be affected by uncertainty across the health insurance market because of changes related to the “One Big Beautiful Bill Act” have created. These ripple effects may make your plan choices and access to care more complicated. Here’s what to know about the major ways Medicare is changing in 2026 and how it might affect your coverage. 

Key Takeaways

• Medicare Part B and Part D prices will rise, with some increases hitting double digits. 
• You’ll face slightly higher maximum out-of-pocket drug costs, but new negotiated drug prices could save you on insulin and other expensive drugs.
• Medicare Advantage plans are scaling back on extra perks, while Original Medicare is testing new prior-approval requirements, introducing new trade-offs.
• Recent Medicaid cutbacks could directly impact people who qualify for both Medicare and Medicaid, and indirectly affect all Medicare users.    
• Open enrollment starts October 15. Prepare by reviewing these changes, exploring all options, and consulting with a Medicare expert.

1. You’ll Pay More for Medicare Parts B and D 

Premiums for Medicare Part B (medical insurance that helps pay for doctor visits and medical equipment) are projected to rise 11.6%, from $185 to $206.50, while Part D (optional prescription drug coverage) base beneficiary premiums are expected to increase by an estimated 6% on average, from $36.78 to $38.99. 

But the base beneficiary premium is just the starting place for calculating the plan-specific premiums. Part D plans are offered by private companies, which haven’t yet released the actual premiums. Yours could be higher or lower than the base beneficiary premium. Many Part D plans, especially those offered with Medicare Advantage plans, have $0 premiums. 

Other costs are getting more expensive, too, with Part B’s deductible expected to rise by 12%, from $257 to $288, and Part D’s deductible slated to go from $590 to $615.

Medicare year-over-year cost increases aren’t new. They’re typically tied to inflation – specifically, the rising cost of health care. (Last year, the Part B premium increased by $10.30.) Still, the cost hikes can strain budgets, particularly for cash-strapped seniors.

2. Part D’s Catastrophic Threshold Is Going Up

The Inflation Reduction Act (IRA) instituted a cap on out-of-pocket drug costs for people with Medicare Part D. This catastrophic threshold is similar to an out-of-pocket maximum in other health plans, but it just applies to prescription drugs. After you meet it, the plan pays 100% of your costs. The threshold will increase in 2026 from $2,000 to $2,100. 

3. It’ll Get Easier to Participate in Prescription Payment Plans

Last year, you had the chance to sign up for the Medicare Prescription Payment Plan (MPPP), which allows you to spread your out-of-pocket drug costs across the calendar year instead of paying everything at once at the pharmacy if you have a Part D plan. 

This year, if you sign up for the payment plan, it’s going to be easy to keep the payment plan going in the future without having to think about it. If you enroll in 2026, you’ll automatically stay enrolled in 2027 unless you opt out. You’ll get a renewal notice at the end of each election period outlining any new terms and conditions. If you decide to leave, providers must process your request within three calendar days.   

4. Your Medicare Advantage Plan Might Have Fewer Supplemental Benefits

Beginning in 2026, Medicare Advantage (MA) Plans, a long-time alternative to Original Medicare, are getting new guardrails on what they can offer under Special Supplemental Benefits for the Chronically Ill (SSBCI). SSBCI are non-medical benefits that are supposed to contribute to the well-being and functioning of people with certain chronic conditions. Now, they must exclude: 

• Non-healthy food
• Alcohol
• Tobacco
• Life insurance

The new provisions continue a trend that has seen private insurers pare back MA plan supplemental benefits, including for over-the-counter medications, transportation services, nutrition services, and meals, in recent years.  

5. You Might Face Prior Authorization Requirements for Original Medicare

Six states—Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington – will test a new model that effectively requires you to get pre-authorization for an expanded set of services if you have Original Medicare (Parts A and B). In other words, Medicare must approve the treatment before you can get care.

These services include, but are not limited to, skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis. They exclude inpatient and emergency services. Historically, Original Medicare only required pre-authorization for durable medical equipment and certain outpatient hospital department services. 

Prior authorization rules are already common among Medicare Advantage plans, with 99% of enrollees shouldering prior authorization requirements for at least some services, including hospital stays, nursing facility stays, and chemotherapy. 

 In response to growing scrutiny, UnitedHealthcare pledged to cut 10% of its prior authorization requirements this year, following a lawsuit alleging it used artificial intelligence to unfairly deny care to Medicare Advantage patients. Similarly, the Trump Administration encouraged a coalition of major health insurers to commit to reforming the prior authorization process and reducing the number of claims subject to prior authorization by January 1, 2026. Clearly, this is not the last we’ll hear about changes in prior authorization policies.

6. 10 Negotiated Drug Prices Should Fall – With More Price Cuts to Come

The Inflation Reduction Act gave Medicare the authority to directly negotiate the price of high-cost, single-source drugs with pharmaceutical manufacturers. Previously, it relied on commercial prices set by private health insurance companies. In 2026, the first set of negotiated prices will take effect. They apply to the following prescriptions: 

• Eliquis
• Enbrel
• Entresto
• Farxiga
• Imbruvica
• Januvia 
• Jardiance
• Fiasp/NovoLog
• Stelara
• Xarelto

Given that the list of drugs is relatively short, next year’s cost savings may be minimal – and the program’s long-term effects remain hard to gauge. Broadly speaking, however, “the price negotiation program, combined with other provisions of the [IRA] is expected to make prescription drugs more affordable for millions of seniors, particularly those with high medication costs,” said Luke Eckley,chief revenue officer at Apollo Insurance Group. 

The Centers for Medicaid and Medicare (CMS) announced in January that its 2027 slate of 15 drugs for price negotiations would include weight loss drugs Ozempic, Rybelsus, and Wegovy. 

7. Insulin Costs Could Drop Even More

The IRA introduced a hard $35 cap on what you pay for monthly insulin supplies covered under Part B and Part D back in 2023. It also required insulin to be covered before you meet your deductible. Starting in January 2026, this cap gets more flexible to allow for deeper savings, with Medicare enrollees paying the lesser of:

• $35
• 25% of the maximum fair price established for the covered insulin product under the Medicare Drug Price Negotiation Program; or
• 25% of the negotiated price under the standalone Medicare prescription drug plan (PDP) or MA plan with prescription drug coverage (MA-PD plan).

8. You’re Still Eligible for Free Vaccines, Though They May Be Harder to Come By

In 2023, the IRA eliminated deductibles, copays, and coinsurance for all adult vaccines recommended by the Advisory Committee for Immunization Practices (ACIP). This rule will stay in effect in 2026. However, there is uncertainty as to whether the current list, which includes the COVID-19, RSV, and Shingles vaccines, will change. ​

9. Some Dual-Eligible Enrollees Will Lose Access to Medicaid and Medicare

The GOP’s big bill introduced stringent work and enrollment requirements for all Medicaid recipients.  OBBBA exempts seniors 65 and over or with disabilities from work requirements, but if you’re in this group, you still must follow new enrollment and eligibility verification rules. The administrative burden of meeting these requirements every six months could prove too much for some people, especially those with disabilities. That could cost them their Medicaid coverage, even though they’re eligible for it.

Medicaid “covers a range of services that Medicare does not, such as long-term care, home and community-based services, dental, vision, and hearing care,” Eckley said. “The loss of Medicaid would mean losing access to these critical benefits.”

The OBBBA also delayed the implementation of a Biden administration rule aimed at reducing barriers to enrollment in the Medicare Savings Programs (MSPs), which allow Medicaid to cover Medicare premiums and other out-of-pocket expenses for low-income individuals.

So, even if you are able to keep your Medicaid plan, if you’re not able to enroll in the MSP and receive the subsidies, you could find you’re not able to afford Medicare. 

10. The Ballooning National Deficit Could Force Medicare Cuts

Trump’s megabill didn’t make many direct changes to Medicare, but its effects on the national deficit could trigger deep cuts to program funding. Expected to add $3.4 trillion to the deficit by 2034, the bill’s provisions could lead to the “sequester cliff,” which triggers automatic spending cuts under the Pay-As-You-Go law once the deficit reaches a certain amount. 

Even if Congress addresses this issue, the bill’s drastic changes to the Medicaid program are expected to reduce access to health care by driving up health care costs, forcing reductions in services, and causing hospital closures.

How to Prepare for 2026 Medicare Enrollment

Medicare open enrollment begins Oct. 15 and runs until Dec. 7. During that time, you can join, drop, or switch Medicare Advantage or Part D drug plans. You can also return to Original Medicare from a Medicare Advantage plan.

You can navigate forthcoming changes to Medicare – and your health insurance – by taking these steps. 

• Avoid blindly re-enrolling in your current plan, as it can change significantly year to year. You may feel very loyal to your plan, but then suddenly find out that its provider network has shrunk and your doctor is no longer included, Thompson said. Confirm that your plan still offers the best coverage for your area and budget compared to alternatives. 
• Read the list of covered medications in Part D plans carefully. These lists are called formularies.“Medicare Part D plans and pharmacy benefit managers (PBMs) may need to re-evaluate their formularies and pricing strategies,” in light of negotiated drug prices, Eckley said. As a result, it’s essential to check if the medication you’re taking is covered before joining a plan in 2026. 
• Seek assistance. Work with a Medicare insurance broker. An independent broker (one who doesn’t just work for one insurance company) can help you understand your options, particularly if you’re considering a switch from Medicare Advantage to Original Medicare plus a Medigap plan. 

The Bottom Line

On paper, the 2026 Medicare changes seem fairly routine. Premiums, deductibles, and other cost-sharing expenses tend to rise year-over-year, and some changes, such as negotiated drug prices and free vaccinations, simply expand or formally introduce provisions of the IRA. However, uncertainty looms, given the OBBBA’s impact on the national deficit and the health care system in general. Prepare for open enrollment by familiarizing yourself with the changes – and your options in best-or worst-case scenarios.

Medicare related fraud is on the rise.

According to the Department of Health and Human Services, over $100 billion was lost to “improper payments” across the Medicare and Medicaid programs in 2023.  It can raise health insurance premiums, expose you to unnecessary medical procedures, and increase taxes. The FBI is the primary agency for investigating health care fraud for both federal and private insurance programs.

Medicare beneficiaries are often targets of scams designed to acquire personal information that can be used to impersonate you and steal your money. Besides medical identity theft there are several other forms of Medicare fraud. Some examples are:

• Ambulance Fraud – Medicare will cover an ambulance ride to the hospital to diagnose or treat symptoms of an illness in an emergency. However, Medicare will not cover the cost of an ambulance if the reason for using the ambulance is not medically necessary, meaning the ride is not to treat or identify an illness. It will also not be covered by Medicare if other forms of transportation can move you safely or if it is for a ride to your doctor’s office, a community mental health center, or other health care appointments.
• COVID-19 Fraud – As the COVID-19 Public Health Emergency comes to an end, fraudsters are still attempting to bill Medicare for sham tests or treatments and are targeting individuals to illegally obtain money or Medicare numbers.
• Durable Medical Equipment Fraud – Durable medical equipment (DME) and orthotics companies offer a valuable service by providing wheelchairs, surgical supplies, catheters, and respiratory nebulizers as well as nutrition and tube feeding supplies and other health care equipment. DME and/or orthotics are considered medical equipment prescribed by your doctor that can withstand repeated use, serve a medical purpose, and can be used in the home. However, many fraudulent companies across the country are charging Medicare beneficiaries for this equipment without showing the medical necessity and sometimes without even sending the equipment to the beneficiaries.
• Genetic Testing Fraud – Scammers are offering Medicare beneficiaries cheek swabs for genetic testing to obtain their Medicare information for fraudulent billing purposes or possibly medical identity theft. Genetic testing fraud occurs when Medicare is billed for a test or screening that was not medically necessary and/or was not ordered by a beneficiary’s treating physician. Here are several ways genetic testing is advertised:

• Cancer screening/test             
• DNA screening/test
• Hereditary cancer screening/test
• Dementia screening/test
• Pharmacogenetics (medication metabolization)
• Parkinson’s screening/test

• Hospice Fraud – Hospice is an important benefit for the Medicare population. Hospice fraud threatens this benefit for all beneficiaries. Scammers are getting beneficiaries to agree to hospice care even though they do not qualify for the benefit. Hospice fraud occurs when Medicare Part A is falsely billed for any level of hospice care or service.
• Nursing Home Fraud – Medicare doesn’t generally pay for long-term nursing home care. However, Medicare Part A covers medically necessary, short-term care in a skilled nursing facility (SNF) within a nursing home under certain conditions. SNFs play a crucial role in providing therapy and rehabilitation after you or a loved one has suffered a debilitating illness or stroke. After a qualifying stay in the hospital, Medicare beneficiaries frequently need some time in a SNF to regain their strength. However, some unscrupulous facilities (even some associated with national chains) have engaged in fraudulent billing.
• Outpatient Mental Healthcare Fraud – Medicare Part B covers outpatient mental health services in places such as a doctor’s office or other health care provider’s office, a hospital outpatient office, or a community mental health center. Medicare only covers visits when provided by a health care provider who accepts the Medicare-approved amount as full payment for any covered service provided.  Some examples of this type of fraud are:

• You were picked up by bus or van along with other beneficiaries and taken out for a meal and Medicare is billed for a mental health evaluation.
• You spend all day watching TV or playing games at a facility and Medicare is billed for group therapy.
• You see on your Medicare Summary Notice (MSN) or Explanation of Benefits (EOB) charges for mental health services:

• With time spent listed as more than what you received
• That you did not receive
• That were not provided in a health care office or by a licensed professional such as a psychiatrist, psychologist, social worker, nurse specialist, or nurse practitioner

• Pharmacy and Prescription Drug Fraud – Medicare drug coverage (Part D) helps cover the cost of prescription drugs; some prescriptions are also covered under Part B. Pharmacy and prescription drug fraud schemes can happen in both. A common scheme is if someone’s Medicare plan was billed for medication that was not received, or if they were given a different drug than the medical provider ordered.
• Telehealth Fraud – Medicare covers telehealth services (also known as teledoc services or telemedicine). This could include medical appointments, therapy, consultations, and other medical or health services. These services are provided through an interactive, live, two-way communication system with audio and video. Criminals are using telehealth services to steal from beneficiaries and the Medicare program.
• Medicare Marketing Violations and Misleading Marketing – Health insurance companies try to reach people in various ways, like television commercials, radio ads, events, mailings, phone calls, and texts. The Centers for Medicare & Medicaid Services (CMS) has rules for marketing Medicare Advantage plans and Part D plans, though. These rules protect Medicare beneficiaries from aggressive or misleading marketing.  For example, without your permission marketers are forbidden to call or text you.

It’s important to know the signs of a Medicare scam so you can protect yourself.  To get your personal information, like your Medicare number, scammers may call, text and email saying things like:

• “You need to activate or renew your Medicare card”.
• “We’d like to send you a free genetic testing kit”.
• “Medicare has authorized us to send you a free (knee, back or elbow brace)”.
• “You qualify for a refund on your Medicare costs”.

Remember, never give your Medicare card or number to anyone except your doctor or people you know should have it.  And keep in mind that caller IDs and email addresses can be faked, so if you’re not sure who’s calling, call Medicare at 1-800-633-4227, and remember, Medicare will never contact you unless you have contacted them first.

Reduce your risk by:

• Only share your Medicare and Social Security numbers with people you trust.
• Carry your Medicare card only when you need it.
• Keep a record of all your medical visits and procedures.
• Carefully review Medicare statements for mistakes and charges you don’t recognize.
• Trust your instincts and report any suspected fraud.
• Ask for help – If you have questions about how to protect yourself, need to report fraud, or want help determining whether you’ve been a victim, Senior Medicare Patrol (SMP) can help.  SMP provides free, unbiased, one-on-one assistance to Medicare beneficiaries, their families, and caregivers.  SMP has offices in all 50 states. You can find your local SMP at https://smpresource.org/

Aug. 15, 2024 – CMS.gov Newsroom

In August 2022, President Biden signed the Inflation Reduction Act of 2022 (P.L. 117-169) into law. The law makes improvements to Medicare by expanding benefits, lowering drug costs, and improving the sustainability of the Medicare program for generations to come. The law provides meaningful financial relief for millions of people with Medicare by improving access to affordable treatments and strengthening Medicare, both now and in the long run.

For the first time, the law provides Medicare the ability to directly negotiate the prices of certain high expenditure, single source drugs without generic or biosimilar competition. The Centers for Medicare & Medicaid Services (CMS) selected ten drugs covered under Medicare Part D for the first cycle of negotiations for initial price applicability year 2026 and engaged in voluntary negotiations with the drug companies for the selected drugs. Below is the list of negotiated prices, which the statute refers to as Maximum Fair Prices (MFPs), for 10 drugs covered under Medicare Part D that will go into effect beginning January 1, 2026, based on negotiations and agreements reached between CMS and participating drug companies.

CMS negotiated in good faith consistent with the requirements of the law on behalf of people with Medicare and the Medicare program. Throughout the negotiation process, the CMS team considered the factors outlined in the law in negotiating these prices, which supports the need for innovation and drug development with better prices for people with Medicare and the Medicare program.

CMS engaged in genuine, thoughtful negotiations with each participating drug company. CMS developed an initial offer for each drug, consistent with the process described in the statute and the agency’s guidance, and each manufacturer responded with a counteroffer. CMS held three meetings with each participating drug company to discuss the offers and counteroffers, discuss evidence, and attempt to arrive at a mutually acceptable price for the drug. During the negotiation process, CMS revised its offers for each of the drugs upward in response to these discussions. Likewise, many drug companies revised their counteroffers for their drugs downward, based on the discussions with CMS. For five of the selected drugs, this process of exchanging revised offers and counteroffers resulted in CMS and the drug company reaching an agreement on a negotiated price for the drug in association with a negotiation meeting. In four of these cases, CMS accepted a revised counteroffer proposed by the drug company. For the remaining five selected drugs, CMS sent a written final offer to those drug companies, consistent with the process described in its guidance, and in each instance, the drug company accepted CMS’s offer on or before the statutory deadline.

List of the first ten drugs whose 30-day supply price has been negotiated lower with Medicare:

Januvia – $113 down from $527; used by 843,000 enrollees in 2023

NovoLog – $119 down from $495; used by 785,000 enrollees in 2023

Farxiga – $178 down from $556; used by 994,000 enrollees in 2023

Enbrel – $2,355 down from $7,106; used by 48,000 enrollees in 2023

Jardiance – $197 down from $573; used by 1,883,000 enrollees in 2023

Stelara – $4,695 down from $13,836; used by 23,000 enrollees in 2023

Xarelto – $197 down from $517; used by 1,324,000 enrollees in 2023

Eliquis – $231 down from $521; used by 3,928,000 enrollees in 2023

Entresto – $295 down from $628; used by 664,000 enrollees in 2023

Imbruvica – $9,319 down from $14,934; used by 17,000 enrollees in 2023

For those enrolled in a Medicare Advantage plan with Rx drug coverage as well as those enrolled in a stand-alone Part D Rx drug plan, the new negotiated price becomes the new “retail” price for purposes of calculating the co-insurance amount billed to the insured.  For example, assuming Xarelto is a tier 3 drug according to your plan’s drug formulary and the tier 3 co-insurance is 22% of retail, you will pay $43.34 for a 30-day supply ($197 x .22).

Projected Savings for People with Medicare Part D Coverage:

When the negotiated prices go into effect Jan. 1, 2026, collectively people enrolled in Medicare prescription drug coverage using these medications will save an estimated $1.5 billion. These savings are in addition to savings from the $2,000 maximum out-of-pocket limit on all drugs for those with Medicare prescription drug coverage which went into effect Jan. 1, 2024.

Senior.com

February 24, 2025

By Jeff Dailey

Osteoarthritis is a common degenerative joint condition that affects millions of older adults in the United States. Managing osteoarthritis often requires a combination of medical treatments, therapy, and, in some cases, surgical intervention. Medicare covers many osteoarthritis-related treatments, but beneficiaries should be aware of potential deductibles and out-of-pocket costs. This article outlines the latest Medicare guidelines on osteoarthritis treatments and their associated costs.

Medicare-Covered Osteoarthritis Treatments

Doctor Visits and Specialist Care

Medicare Part B covers necessary doctor visits, including consultations with primary care physicians, rheumatologists, and orthopedic specialists. After meeting the annual Part B deductible ($257 in 2025), beneficiaries are responsible for 20% of the Medicare-approved amount for services, while Medicare pays the remaining 80%.

Medications

Prescription medications like nonsteroidal anti-inflammatory drugs (NSAIDs) and corticosteroids can help manage osteoarthritis symptoms. Medicare Part D (Prescription Drug Plan) or Medicare Advantage plans with drug coverage help cover the costs. Each plan has its formulary, so beneficiaries should check if their prescribed medication is covered and the copayments.

Physical and Occupational Therapy

Physical therapy can help improve joint function and mobility. If deemed medically necessary, Medicare Part B covers outpatient therapy services, including physical and occupational therapy sessions. After the Part B deductible is met, patients pay 20% of the Medicare-approved amount for each session.

Durable Medical Equipment (DME)

For individuals who require mobility aids, Medicare Part B covers durable medical equipment, such as walkers, braces, and canes, if prescribed by a doctor. After the deductible is met, coverage follows the 80/20 cost-sharing structure.

Joint Injections and Pain Management

If deemed medically necessary, Medicare covers joint injections such as corticosteroid and hyaluronic acid injections. However, coverage for hyaluronic acid injections varies, and prior authorization may be required. Costs are subject to Part B deductibles and 20% coinsurance.

Surgical Procedures (Joint Replacement Surgery)

If non-surgical treatments fail to relieve, Medicare covers joint replacement surgery, including knee, hip, and shoulder replacements.

• Inpatient Surgery: Medicare Part A covers hospital stays related to joint replacement surgery. The 2025 deductible for inpatient care is $1,676 per benefit period.
• Outpatient Surgery: If performed as an outpatient procedure, Medicare Part B covers the surgery, with 20% coinsurance after meeting the deductible.

Chronic Care Management (CCM)

Medicare offers chronic care management services under Part B for individuals with multiple chronic conditions, including osteoarthritis. These services involve personalized care plans, provider coordination, and ongoing monitoring. A monthly copayment may apply.

What Medicare Does Not Cover

• Acupuncture: Medicare only covers acupuncture for chronic lower back pain, not for osteoarthritis.
• Stem Cell Therapy: Experimental treatments, including stem cell therapy, are not covered.
• Over-the-counter Medications and Supplements: Medicare does not cover supplements such as glucosamine and chondroitin.

Final Considerations

While Medicare provides substantial coverage for osteoarthritis treatments, beneficiaries should always verify coverage details with their specific plan provider. Out-of-pocket costs can vary based on plan selection, copayments, and deductibles. For additional assistance, it is recommended that beneficiaries contact Medicare (1-800-MEDICARE) or review the latest Medicare guidelines online.

Annika Kim Constantino

Jan. 16,2025

Key Points

• Most Medicare patients who hit the new $2,000 cap on out-of-pocket spending for prescription drugs could see significant savings, according to a report from AARP. 
• The findings suggest the spending maximum could be hugely beneficial for older adults in Medicare who struggle to afford high-cost drugs for cancer, rheumatoid arthritis and other serious conditions.
• It is one of the most consequential provisions in President Joe Biden’s 2022 Inflation Reduction Act, designed to cut high drug costs.

Most Medicare patients who hit the new $2,000 cap on out-of-pocket spending for prescription drugs could see big savings, despite changes in premiums, according to a report today by AARP. 

The findings suggest the cap could be a huge benefit to older adults in Medicare who struggle to afford high-cost drugs for cancer, rheumatoid arthritis and other serious conditions. Those seniors and other U.S. patients pay two to three times more for prescription drugs than people in other developed nations.

The limit went into effect Jan. 1, 2025. It’s one of the most consequential provisions in the 2022 Inflation Reduction Act, designed to cut high drug costs – along with a $35 monthly cap on insulin and Medicare price negotiations with big pharma.

The report found that 94% of the more than 1 million enrollees in Medicare Part D expected to reach the new cap in 2025 will have lower out-of-pocket costs – including premiums and cost-sharing – and save an average of $2,474. That’s a 48% decrease on average in their total out-of-pocket costs, according to the report, which analyzed plan enrollment and premium data, among other information. 

That 1 million tally excludes Medicare beneficiaries who receive a low-income subsidy and those in employer waiver plans.

An estimated 62% of those 1 million enrollees will save an average of more than $1,000 in 2025, while 12% will save more than $5,000, the report said. The remaining 6% of Part D enrollees who are projected to reach the new cap are expected to have higher out-of-pocket costs, with an average of $268 in additional spending in 2025, the report said. 

Notably, the share of Part D enrollees expected to reach the cap and have lower total out-of-pocket costs in 2025 is estimated to be 95% or higher in 33 states and Washington, D.C.

“When you’re able to provide these types of savings, that frees up those funds for other really important things that maybe [patients] were having to make trade-offs for, paying for their food or paying for their rent,” Leigh Purvis, prescription drug policy principal at AARP, said in an interview. “It’s a really meaningful impact, especially for a population that’s on a fixed income.” She added that the median income of Medicare beneficiaries is around $36,000 a year. 

Those savings come despite changes to Part D premiums in 2025, AARP said. Purvis said the new prices for the first 10 medications selected for Medicare negotiations – and the lower costs expected from them – do not go into effect until 2026, so premiums have increased in some cases.

She said critics have been trying to blame the law for those premium increases and higher costs for Medicare enrollees overall. But the report said the lower out-of-pocket costs for most patients who reach the $2,000 cap will more than offset higher premiums.

The positive effect “will only grow larger” as new negotiated prices for the first round of drugs go into effect in 2026, according to the report. 

“The Medicare program is going to be saving a lot of money, so this is really a story that is much bigger than it appears, just because these savings go to a lot of different people in a lot of different ways,” Purvis said. 

A separate report from AARP found that 3.2 million Medicare recipients are expected to see savings from the out-of-pocket cap in 2025. By 2029, the number is expected to increase to 4.1 million enrollees.

Medicare covers about 66 million people in the U.S., and 50.5 million patients are enrolled in Part D plans, according to 2023 data from health policy research organization KFF.

The new price cap applies to all prescription drugs under Medicare Part D but doesn’t include drugs given to patients in the hospital or other health-care settings such as anesthesia and chemotherapy. 

Before the change, people on Medicare typically had to spend $7,000 or more out of pocket on prescription medications before they qualified for so-called “catastrophic coverage,” when insurance kicks in and covers most of the drug’s cost. Under this coverage, patients are charged a small co-payment or a percentage of a drug’s cost, usually 5%.