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CMS Updates Medicare Part D for 2025

The Inflation Reduction Act made several changes to Medicare Part D (Medicare’s prescription drug program). The Centers for Medicare and Medicaid Services (CMS) has released a fact sheet dated April 1, 2024, on the calendar year 2025 Part D Redesign Program Instructions to conform with changes made by the Act. Some of the changes that go into effect Jan. 1, 2025, are:

  • A new standard Part D benefit consisting of three phases (annual deductible, initial coverage, and catastrophic coverage)
  • A lower out-of-pocket threshold of $2,000 (down from $8,000 in 2024)
  • A new manufacturer discount program which replaces the coverage gap discount program

What this means is the 'coverage gap' is gone and once you have $2000 worth of out of pocket expenses, you go straight into the catastrophic phase.  This is a HUGE difference for those of us that need to take a lot of expensive drugs and may no longer have to choose between food and medicine.  Here is a chart from the CMS comparing the differences:


Part D Benefit in CY 2025 and Past Years (Non-Low Income Subsidy Beneficiary)


CMS also changed the regulatory definition of creditable coverage based on the redesign. 

Individuals who are still working and have employer prescription drug coverage may postpone enrolling in Medicare Part D without penalty if the employer plan is creditable coverage. Creditable coverage means that the actuarial value of a group health plan’s prescription drug coverage equals or exceeds the actuarial value of the Medicare Part D coverage under the new CMS guidelines. Plan sponsors are required to disclose to enrollees whether their prescription drug coverage is creditable.