Managing prescription costs can feel overwhelming, but 2025 brings some exciting changes to Medicare Part D that’ll put more money back in your pocket. The biggest change is a new $2,000 cap on annual out-of-pocket prescription drug expenses, which will help an estimated 3.2 million people save money on their covered medications this year. Here’s how to make the most of these savings opportunities.

Understand the New $2,000 Out-of-Pocket Cap

This year marks a major shift in how you’ll pay for medications. After you reach your plan’s deductible (up to $590 maximum), you’ll pay 25% coinsurance for generic and brand-name drugs until your out-of-pocket spending reaches $2,000. Once you hit that $2,000 limit, you won’t pay anything more for covered drugs for the rest of the year.

Part D enrollees who reach the cap will save an average of $1,500 in 2025, and some will see savings of $3,000 or more. If you take expensive medications for conditions like cancer or diabetes, you might reach this limit early in the year and then get your medications at no cost for the remaining months.

Take Advantage of the Medicare Prescription Payment Plan

If you’re facing high drug costs, the new Medicare Prescription Payment Plan can help spread those expenses throughout the year. Instead of paying large amounts at the pharmacy counter, you’ll receive monthly bills from your drug plan.

This payment plan won’t save you money, but it can make budgeting much easier. It’s less beneficial to people who sign up later in the year, when there are fewer months to spread out the payments. You can enroll anytime during the year, and it works especially well if you expect to hit that $2,000 cap.

Apply for Extra Help if You Qualify

The Extra Help program is like having a financial safety net for your prescriptions. To qualify in 2025, you need less than $23,475 in annual income and $17,600 in resources if you’re single, or less than $31,725 in income and $35,130 in resources if you’re married.

With Extra Help, you’ll pay dramatically less for your medications:

• No monthly premiums for benchmark plans

• No deductibles

• Significantly reduced copays for all covered drugs

• No Part D late enrollment penalty

Up to 3 million seniors and people with disabilities who aren’t currently enrolled could benefit from the Extra Help program. You can apply for Extra Help through Social Security anytime, and many people qualify automatically if they receive Medicaid or Supplemental Security Income.

Choose Generic Medications When Possible

Generic drugs offer the same therapeutic benefits as brand-name medications but cost significantly less. To keep Medicare costs low, CMS encourages Part D plan members to take the less expensive generic drugs. Most plans place generics in Tier 1 with the lowest copays, often around $5 to $10 for a monthly supply.

When to Consider Generics

Ask your doctor if there’s a generic version of your current medication. Your pharmacist can also substitute a generic automatically in many cases. If you prefer the brand-name version, you’ll typically need to file an exception request with your plan and pay higher costs.

Compare Plans During Open Enrollment

The average Medicare beneficiary has a choice of 48 Medicare plans with Part D drug coverage in 2025, including 14 stand-alone prescription drug plans. Plans vary significantly in their monthly premiums, formularies (covered drug lists), and pharmacy networks.

Use Medicare’s Plan Finder to compare costs based on your specific medications. The average stand-alone Part D plan premium decreased to $40 in 2025, but your individual costs depend on which plan covers your drugs most affordably.

What to Look For

• Monthly premium costs

• Whether your medications are covered (on the formulary)

• Which tier your drugs are placed in

• Preferred pharmacy networks that offer lower copays

Explore Additional Savings Programs

Your state might offer extra help through State Pharmaceutical Assistance Programs (SPAP). These programs provide additional coverage to help pay premiums, deductibles, and copays. SPAP contributions may count toward your Medicare drug coverage out-of-pocket limit.

Don’t forget to check if the pharmaceutical company that makes your medication offers patient assistance programs. Many drug manufacturers provide discounts or free medications for people with Medicare who meet certain income requirements.

Avoid the Late Enrollment Penalty

The Part D late enrollment penalty is calculated by multiplying 1% times the national base beneficiary premium ($36.78 in 2025) times the number of full, uncovered months you were eligible but didn’t have coverage. This penalty stays with you as long as you have Medicare drug coverage.

Even if you don’t take many medications now, consider enrolling in a low-premium plan to avoid this permanent penalty. It’s much more affordable to maintain basic coverage than to pay increasing penalties year after year.

The changes in 2025 represent the most significant improvements to Medicare Part D since the program began. Between the $2,000 out-of-pocket cap, expanded Extra Help benefits, and new payment options, there are more ways than ever to manage your prescription costs effectively. Take time during the next open enrollment period to review your options and make sure you’re getting the best value for your healthcare dollars.