US Medicare Announces Decrease in Part D and Advantage Premiums for 2025, According to Reuters

By Ahmed Aboulenein

WASHINGTON – The Centers for Medicare and Medicaid Services announced on Friday that average premiums and benefits for Medicare’s prescription drug program and private Medicare plans are expected to remain stable in 2025, with a slight decrease in premiums.

Significance

These premiums are crucial for consumers enrolled in Medicare Advantage plans, which are managed by private insurers compensated by the government. The health plans determine their premiums and benefits based on these reimbursement rates. The government has been working to align Medicare Advantage (MA) prices with those of traditional Medicare, which serves individuals aged 65 and older.

Private health insurers previously argued that reducing their rates would limit the benefits they could provide. However, the latest government projections indicate that the premiums will remain stable. Following the announcement of rates in April, shares of health insurers dropped between 6% and 12%.

Context

Medicare is the U.S. government’s health insurance program for seniors and individuals with disabilities. Medicare Advantage plans are available through private insurers who receive a fixed rate from the government to manage healthcare services for beneficiaries wanting enhanced benefits not included in standard Medicare.

Medicare also offers an optional prescription drug coverage, known as Part D. The Centers for Medicare and Medicaid Services confirmed in April that the final 2025 rates for MA payments would include a 0.2% reduction as part of a three-year strategy to align MA payments more closely with traditional Medicare.

Statistics

Medicare Advantage enrollment is projected to reach 35.7 million people by 2025, representing 51% of all Medicare beneficiaries, an increase from 50% in 2024. Average monthly premiums for MA plans are expected to decrease by $1.23, from $18.23 in 2024 to $17 in 2025.

Nearly 60% of beneficiaries will have zero-dollar premiums in 2025, and 83% will either maintain their current premiums or pay less if they remain with their existing plans, including 20% who will see a reduction in premiums.

Average premiums for Part D are anticipated to fall by $7.45, bringing the average down to $46.50 from $53.95 in 2024.