When Medicare makes changes to its program, it often involves premium increases. But the changes for 2025 could potentially help millions of Medicare beneficiaries save money.

Here are three key changes:

Medicare Prescription Cap

Beneficiaries won’t pay more than $2,000 out of pocket annually for prescription drugs. Once they reach that limit, their plan will pay any additional cost for covered medications. This cap applies to stand-alone prescription drug plans (Part D) and drug coverage through private Medicare Advantage plans.

The Department of Health and Human Services estimates that the cap will affect more than 11 million people, who will save an average of about $600 annually.¹ The cap, which is part of the Inflation Reduction Act of 2022, could provide even greater savings for those requiring expensive medications. For example, HHS reports that people with cystic fibrosis spend an average of about $9,500 a year on medications.¹

Benefits Alert

Private Medicare Advantage plans often tout their supplemental benefits that are not offered under Original Medicare, which consists of Parts A and B. These perks may include gym memberships, meal delivery, and transportation, as well as vision, hearing, and dental coverage. Yet, many enrollees generally don’t take advantage of these benefits, which are largely funded by rebates from the federal government.

Now, Medicare Advantage plans must notify enrollees annually between June 30 and July 31 of any supplemental benefits they haven’t used during the first half of the year. These notifications must also provide information on cost-sharing and how to access these benefits, along with a customer service number that enrollees can call for assistance.

Medicare Dementia Patient and Caregiver Benefits

The Centers for Medicare & Medicaid Services is expanding a pilot program to improve the lives of Original Medicare enrollees with dementia and their unpaid caregivers. The program, Guiding an Improved Dementia Experience or GUIDE, started with 96 participating health care providers in 2024 and increased to 390 by July 2025.²

Under GUIDE, dementia patients and their caregivers will be assigned a care navigator to help them access support services. GUIDE also includes training for caregivers and provides up to $2,500 annually for respite services to give caregivers a temporary break.³

CMS reports that more than 6.7 million Americans suffered from dementia in 2023.² The number of projected cases is expected to increase to 14 million by 2060.² One of GUIDE’s goals is to help dementia patients remain in their homes and communities longer.

Disclosures

¹ “Inflation Reduction Act Research Series: Projecting the Impact of the $2,000 Part D Out-of-Pocket Cap for Medicare Enrollees With High Drug Spending.” Office of the Assistant Secretary of Planning and Evaluation, U.S. Department of Health and Human Services, January 2025.

² “Guiding an Improved Dementia Experience by Clearing the Path for Comprehensive, High-Quality Dementia Care,” Centers for Medicare & Medicaid Services, July 8, 2024.

³ “Guiding an Improved Dementia Experience Model,” Centers for Medicare & Medicaid Services, June 2024.

⁴ Participants with account balances of $100,000+ can receive a personalized financial plan. A fee of up to $175 may be assessed for participants with account balances less than $100,000.