Time To Budget For 2025 Medicare Costs

As 2024 draws to a close, it’s time to plan for the New Year. One important budget item that many are reluctant to address is Medicare costs. A quick overview of the 2025 costs should provide a head start.

Costs That Apply to Anyone on Medicare

There are some costs that any Medicare beneficiary faces.

Part B Premium

The increase in this premium has been all over the news. In 2025, the Part B premium will be $185, an increase of $10.30 from this year and $20.10 more than in 2023.

Part D Deductible

Next year, the deductible will be $590 and plans can charge any amount up to that. KFF reported that over 80% of those with stand-alone Part D plans and 60% of Medicare Advantage members will face a deductible in 2025.

Part B IRMAA

Since 2007, higher-income beneficiaries have paid more for Part B (in addition to the monthly premium) because of IRMAA, the Income-related Monthly Adjustment Amount. When the Part B premium goes up, the adjustments will follow.

• The threshold in 2025 for single filers is $106,000 and, for married individuals filing jointly, it’s $212,000. The monthly adjustments range from $74-$443.90.
• The threshold for a married individual filing a separate return is also $106,000; however there are only two tiers of adjustments, $406.90 and $443.90.

Part D IRMAA

Medicare Part D prescription drug coverage can be provided through either a stand-alone drug plan, a Medicare Advantage plan that includes prescription drug coverage, some other coverage, such as a Federal Employees Health Benefits (FEHB) plan. These beneficiaries can also pay more. The thresholds are the same as for Part B IRMAA (above) and the Part D IRMAA will range from $13.70-$85.80 a month for single and joint filers and, for married individuals filing separately, $78.60 and $85.80.

(Find complete IRMAA information here.)

Part A Premium

This premium applies to any beneficiaries who do not qualify for premium-free Part A. They or a spouse have not earned 40 Social Security credits (10 years of paying taxes) and must pay a monthly premium if they want Part A.

• Those who have at least 30 quarters of coverage, or are married to someone who does, can buy Part A for $285 a month, a $7 increase from 2024.
• Those with fewer than 30 quarters will pay $518, up from $505 this year.

Costs That Apply to Those with Original Medicare

Those who are enrolled in Medicare Part A and Part B with or without a Medicare supplement insurance plan (Medigap policy) face these additional costs.

Part A Cost Sharing

• The Part A hospital deductible will be $1,676 per-benefit period. This year, it was $1,632. Some Medigap policies, like Plan G, can cover this cost.
• The copayment for additional days 61-90 will be $419 and, for days 91-150, $838. This year, those were $408 and $816, respectively. FYI: Any Medigap policy in the country covers these costs.
• Medicare covers the first 20 days of a skilled nursing facility stay, then the beneficiary is responsible for $209.50 a day for days 21-100, an increase of $5.50. This is another cost that certain Medigap plans can pay.

Part B Deductible

This will be $185 in 2025, compared to $170 this year. This is an out-of-pocket cost that most beneficiaries face because, since 2020, newly eligible beneficiaries cannot purchase a Medigap plan that covers this cost.

(Find complete Part A and Part B cost information here.)

Costs For Those With Medicare Advantage

Medicare Advantage plans handle costs differently.

Approximately 60% of members will have a zero-dollar premium in 2025. But, then it’s pay as you go, writing checks to cover deductibles, copayments and coinsurance. These plans establish their own cost sharing but Medicare does step in to establish the maximum out-of-pocket limits, how much a plan member must pay in a year. Once a member meets the limit, plans cover costs for covered medical services for the remainder of the calendar year. Plans can set any limit up to the government’s maximum. In 2025, those limits will be $9,350 for in-network and $14,000 for in- and out-of-network combined, increases of 40% since 2020.

The best way to budget for Medicare Advantage costs is to set up a fund that matches the plan’s out-of-pocket limit. In a healthy year, there’ll be money left over for the holiday. But, if health worsens or something unexpected happens, the fund can cover the bills.

Start Planning Today

There’s no getting around the fact that Medicare will cost more in 2025, so now is the time to figure out how to manage those costs.

• Begin with a serious assessment of your health and where you think it might be a year from now.
• Study your coverage and determine your financial exposure.
• Establish a budget for the predictable costs.
• Set up an emergency fund for the unexpected or unpredictable ones.
• Then, track your expenses and maintain records.

None of us can predict the future with much accuracy. But you know yourself and your health. A realistic budget for your medical care can help you handle whatever comes your way.