Changes to Medicare Part D Help Make Medicines More Affordable For Seniors
September 18, 2024 Posted by: Eli Lilly and Company

Medicare Part D, the program that provides prescription drug coverage for our nation’s seniors, is being updated to make medicines more affordable and accessible for beneficiaries. Patients, caregivers and health care providers should be aware of three key changes that will go into effect in 2025:
1. $2,000 out-of-pocket maximum and elimination of coverage gap phase1
In 2025, the annual out-of-pocket maximum will be $2,000 for Part D medications, down from $3,300 in 2024,1 and the coverage gap phase will be eliminated. This means that once the enrollee has spent $2,000 on covered Part D prescription medications, they won’t face any more out-of-pocket costs for the rest of the plan year. This lower annual cap will particularly benefit those with high prescription costs.
The change will automatically apply to everyone enrolled in Medicare Part D for the 2025 plan year.

2. New monthly prescription payment plan3
The Medicare Prescription Payment Plan (M3P), also referred to as “smoothing,” is a new program for the 2025 plan year that allows enrollees to pay for out-of-pocket prescription costs in the form of capped monthly installment payments. What does this look like? Instead of paying the pharmacy directly when a prescription is picked up, enrolled Medicare beneficiaries who opt-in can pick up their prescriptions right away at no charge. They’ll then get a bill from their Part D prescription drug plan for their share of the cost incurred while in the program.
It is important to remember that enrollment in M3P is not automatic for Part D enrollees. Those who wish to participate must opt in to the program in addition to enrolling into their Medicare prescription insurance. They can do this either during the Fall Open Enrollment period or any time after it through their drug plan. Open Enrollment for 2025 is October 15-December 7, 2024.
3. Expanded eligibility for the Low-Income Subsidy (LIS) program1
LIS, also called Extra Help, is a program that helps people with limited income lower or cut Part D costs. If you are LIS-eligible, you’ll pay reduced or no premiums and deductibles, and you’re free of the coverage gap. More than 14 million people are currently enrolled in Extra Help, representing approximately 27% of Medicare Part D enrollees.4
Previously, the income cutoff for eligibility was set at 135% of the federal poverty level (FPL), but it was raised to 150% on January 1, 2024.1 This change means that more Medicare beneficiaries can now qualify for valuable assistance. The FPL is subject to change each year, but in 2024 an individual with an income of $22,590 or less or a married couple with an income of $30,660 or less may qualify for LIS.5
Beneficiaries can check your eligibility and apply for LIS benefits any time before or after enrolling in Part D.
LIS benefits and cost-sharing in 20252:
Phase
|
Standard Benefit
|
Full Subsidy
|
Dual-Eligible
|
---|---|---|---|
Deductible Phase
|
Standard Benefit:
$590
|
Full Subsidy:
$0
|
Dual-Eligible:
$0
|
Initial Coverage Phase
|
Standard Benefit:
25% coinsurance
|
Full Subsidy:
$4.90 generic, $12.15 branded
|
Dual-Eligible:
$1.60 generic, $4.80 branded
|
Catastrophic Phase
|
Standard Benefit:
0% coinsurance
|
Full Subsidy:
$0 generic, $0 branded
|
Dual-Eligible:
$0 generic, $0 branded
|
BONUS TIP: Know your right to appeal.
There is an appeals process that doctors can follow if a patient’s health insurance company denies a prescribed medicine or service.
The Star Ratings Program requires insurance plans to report on the timeliness and consistency of their appeals to ensure access to appropriate therapy is not delayed.6
Medicare Part D’s appeals process is broken into 2 different routes:
Standard: The drug plan must make a determination within 72 hours. Used in most cases when the timing of the review will not seriously impact the patient’s health.7
Expedited: The drug plan must make a determination within 24 hours. This process is reserved for instances when a delay in treatment could be life-threatening.7
Frequently Asked Questions
References
1.Cubanski J, Neuman T. Changes to Medicare Part D in 2024 and 2025 Under the Inflation Reduction Act and How Enrollees Will Benefit. KFF. Published April 20, 2023. Accessed July 30, 2024. https://www.kff.org/medicare/issue-brief/changes-to-medicare-part-d-in-2024-and-2025-under-the-inflation-reduction-act-and-how-enrollees-will-benefit/
2.Announcement of Calendar Year (CY) 2025 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies. Centers for Medicare & Medicaid Services. April 1, 2024. Accessed June 26, 2024. https://www.cms.gov/files/document/2025-announcement.pdf
3.Medicare Prescription Payment Plan. Centers for Medicare & Medicaid Services. Accessed June 26, 2024. https://www.cms.gov/inflation-reduction-act-and-medicare/part-d-improvements/medicare-prescription-payment-plan
4.2023 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. Centers for Medicare & Medicaid Services. March 31, 2023. Accessed June 26, 2024. https://www.cms.gov/oact/tr/2023
5.Help With Drug Costs. Medicare.gov. Accessed August 8, 2024. https://www.medicare.gov/basics/costs/help/drug-costs
6.Chavez-Valdez AL. Information to review data used for Medicare Part C and D Star Ratings and display easures. Centers for Medicare & Medicaid Services. Published June 4, 2020. Accessed August 7, 2024. https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hpms_sponsorsstardata_2020_9.pdf
7.Coverage Determinations and Exceptions. Centers for Medicare & Medicaid Services. Accessed June 26, 2024. https://www.cms.gov/Medicare/Appeals-and-Grievances/MedPrescriptDrugApplGriev/Exceptions
8.Biden-Harris Administration Issues Final Guidance to Help People with Medicare Prescription Drug Coverage Manage Prescription Drug Costs. Centers for Medicare & Medicaid Services. Accessed August 7, 2024. https://www.cms.gov/newsroom/press-releases/biden-harris-administration-issues-final-guidance-help-people-medicare-prescription-drug-coverage
9.Apply for Medicare Part D Extra Help Program. Centers for Medicare & Medicaid Services. Accessed August 7, 2024. https://www.ssa.gov/medicare/part-d-extra-help
10.Medicare Prescription Payment Plan: Final Part Two Guidance on Select Topics, Implementation of Section 1860D-2 of the Social Security Act for 2025, and Response to Relevant Comments. Centers for Medicare & Medicaid Services. Published February 15, 2024. Accessed July 30, 2024. https://www.cms.gov/files/document/medicare-prescription-payment-plan-final-part-two-guidance.pdf
11.Medicare Prescription Payment Plan: Final Part One Guidance on Select Topics, Implementation of Section 1860D-2 of the Social Security Act for 2025, and Response to Relevant Comments. Centers for Medicare & Medicaid Services. Published February 29, 2024. Accessed July 30, 2024. https://www.cms.gov/files/document/medicare-prescription-payment-plan-final-part-one-guidance.pdf
12.State Pharmaceutical Assistance Programs. NCSL. Updated October 26, 2022. Accessed August 7, 2024. https://www.ncsl.org/health/state-pharmaceutical-assistance-programs