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AARP REPORT: NEW $2,000 CAP ON OUT-OF-POCKET DRUG COSTS COULD SAVE PATIENTS THOUSANDS

According to a report issued by AARP on January 16, most Medicare beneficiaries who hit the new $2,000 cap on out-of-pocket spending for prescription drugs could see significant savings even with the increased premiums for some Part D plans.

This analysis finds that an estimated 94% of all Part D enrollees expected to reach the $2,000 out-of-pocket cap in 2025 will have lower total out-of-pocket costs, saving an average of $2,474. This amount represents a 48% reduction in their total out-of-pocket costs. The analysis also found that, on average, 62% of the enrollees will save more than $1,000 and 12% will save more than $5,000.

The remaining 6% of these Part D enrollees are projected to have higher total out of-pocket costs in 2025. Notably, they would have had the opportunity to avoid some or all of these additional costs by switching to a different Part D plan during Medicare Annual Enrollment.

These results confirm that recent Part D plan premium changes have been more than offset by lower cost sharing for most of this enrollee population. This positive offset will only grow larger as lower prescription drug prices start to become available in 2026 and cause enrollees’ premiums and cost sharing to decrease. 

It's also important to note that the benefits of the 2025 changes to prescription drug plans extend beyond the Part D enrollees who reach the new $2,000 out-of-pocket spending cap. Federal research indicates that nearly 19 million Part D enrollees will save an estimated $7.4 billion in annual out-of-pocket costs once the law’s Part D coverage-related provisions are fully implemented. 

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 senior and other U.S. patients pay two to three times more for prescription drugs than people in other developed nations.

US PROPOSES PAYMENT RATE FOR 2026 MEDICARE ADVANTAGE INSURERS

This excerpt from an article that appeared in Reuters on January 10 contains potentially good news for Medicare Advantage beneficiaries. Note that this could be changed by the new Administration, but Republican administrations have generally been more supportive of Medicare Advantage plans than Democratic administrations, and Dr. Oz [who has been nominated to head the Centers for Medicare and Medicaid Services (CMS)] is a known Medicare Advantage supporter.

The U.S. government on January 10 proposed 2026 reimbursement rates for Medicare Advantage plans run by private insurers that will result in a 2.2% increase in payments, compared with a decline of 0.2% last year.

The government payment rate affects how much insurers charge for monthly premiums, which plan benefits they offer and, ultimately, how much they can profit.

The total increase in payments is estimated at 4.3%, or over $21 billion, when factoring in a 2.1% "risk score", an adjustment that accounts for potentially higher payments for patients with more severe health conditions.

The payment rate is used by carriers such as UnitedHealth, Humana, Elevance and Aetna to prepare bids for contracts for Medicare Advantage plans they will sell in 2026.

"Overall, this was a highly favorable release given the contentious political environment and the recent proposals under this administration…,” Oppenheimer analyst Michael Wiederhorn wrote in a research note.

About sixty-five million people are enrolled in the government's Medicare program for people aged sixty-five and older or who are disabled, and more than half of them are enrolled in Medicare Advantage plans.

FOURTEEN THINGS THAT ARE FREE WITH MEDICARE

Click the forward arrow below to access a slideshow prepared by Money Talks News to learn about fourteen items that are free with Medicare to those on Original Medicare with or without Medicare Supplement plans. These items are also generally free with Medicare Advantage plans, but rules could differ between plans and carriers. Note that the “What’s Covered” app applies to Original Medicare, so this tool may not be useful for those on Medicare Advantage plans.

14 Things That Are Free With Medicare

About Paul Cholak

Paul is a licensed, independent health and life insurance agent and has over forty years of benefits experience and specializes in helping Medicare beneficiaries obtain health insurance. However, he offers a complete array of life and health insurance products to individuals of all ages.

He guides Medicare beneficiaries through the steps of getting insurance and is available to help clients both BEFORE and AFTER they've made their purchase decision.

Disclaimer for Part C and D plans: "We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE (TTY: 1-877-2048) to get information on all your options."

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