Part D price explosion is delayed

I have been warning people that their Medicare Part D premiums will double or triple (or more) for 2025, but recently I’ve stated that’s no longer true. The government announced a new demonstration project that Medicare Part D plans can participate in. This will allow them to get a hefty subsidy so the cost of Part D doesn’t skyrocket in 2025.

Retirees can expect their Part D premiums to be stable for 2025 after all. If their insurance plan participates in the government project, they will get over $100 per member per month to keep rates low. But not all companies may participate.

Prices will go up over 2024 prices, but not as high as the industry has forecast. There are thousands of different Medicare Part D plans out there; most will go up modestly and some may not go up at all. If your insurance company participates in the project, it cannot raise your Part D rates more than $35 over 2024 prices. A $35 monthly increase is still not good news for people on a fixed income.

The government announced that the average base premium for the nation will only be $2 more in 2025. What is the Average National Base Premium for Medicare Part D and why does it matter?

For 2025 it will be $36.78 per month. If you are getting a late Part D penalty, your calculation is always based on this annual amount. Many don’t realize that your late penalties go up and get worse each year.

Let’s calculate a late Part D penalty for the many people who are thinking about dropping Part D:

Take the base premium for that year and multiply it by the number of months that you were eligible for Medicare Part D but failed to enroll without a good reason. If you are a year late it’s about $4 extra you pay per month right now. The late penalty lasts for the rest of your life. It never goes away.

Many people will drop their Medicare Part D drug coverage this year. Afterall, they don’t use it. They might not take any prescription medications, so why continue to pay for a plan they don’t use? Think long and hard before you make that decision. Do all the people in your family die without ever having taken expensive medications? If the answer is no, then realize that you are not buying insurance because you need it now. It’s for the future you who is older and sicker. You can always get back into the Medicare Part D program later, but you might have a waiting period.

If you turn 65 and start Medicare this September, you have until December to enroll into a drug plan. You don’t want to pay $50 a month because you take only two cheap prescriptions that you get for under $10 at Meijer. In January you get diagnosed with rheumatoid arthritis. Your medication will cost you $17,000. Immediately, you can get drug insurance, but since it’s January, you must wait until October to enroll and your coverage won’t begin until next January.

You buy insurance and hope you never need to use it. That’s why I recommend that you enroll into a Part D drug plan even if you don’t see a value now. An expensive illness may be right around the corner and the Medicare Part D out-of-pocket maximum for 2025 is only $2,000.

Sylvia Gordon is known as Medicare Mama on social media. She and the Noblesville-based TheMedicareFamily.com have amassed nearly one million followers online where she teaches about Medicare, Social Security, and retirement.