With the 2025 Medicare open enrollment season wrapped up, it may be tempting to put health care and prescription drug-related costs on the back burner.
But, as with all retirement expenses, monitoring and planning for future drug costs should be an ongoing process.
Here are five takeaways for 2025.
1. Medicare Part D premiums are down for basic plans, but they continue to rise for policies with more coverage.
Our Medicare Part D Premiums Data Report, which reviewed 357 plans from three major national carriers, shows average basic plan costs declined by 4% for 2025.
This reflects government underwriting and efforts to stabilize the prices of these policies following a 41% increase in 2024. Basic policies, which generally come into effect after a deductible has been paid, continue to be offered at low cost (at an average of $54 per month) and for a small number at no cost.
For mid-level and high-end plans, the picture is different. These policies increased by 4% and 23% respectively in 2025 over 2024 rates.
Over two years, plans with broader coverage which tend to be selected by advised clients have increased by more than 50% or an average of $505 more a year.
2. Shrinkflation is eroding the benefits.
Deductibles are increasing. In our review of popular low-end plans, in 2025 about $600 has to be spent on covered prescription drugs before coverage begins. Drugs that are not covered by plans do not count toward this total.
Based on the objective measure of Medicare's Part D Star ratings, the level of coverage continues to trend lower.
Average star ratings across all Part D plans offered declined for the third consecutive year, down from 3.70 in 2022 to 3.06 in 2025.
One plan included in our research dropped by a full Medicare star in 2025 despite the premium more than doubling in at least one state.
3. Medicare Advantage has limits.
The rapid increase in popularity of Medicare Advantage plans versus traditional Medicare is driven by the allure of low-cost or "no-cost" plans with some form of drug coverage.
There remains a lot of work to ensure clients fully understand limitations around in-network health care; what drugs will and will not be covered; the impact of deductibles; options to change plans; and uncovered out-of-pocket costs for these plans in 2025.
It's important to pay attention to potential changes to policies that can happen during the year, as well as the shrinking pool of health care providers accepting Medicare Advantage.
4. The Inflation Reduction Act could change.
President-elect Trump has discussed the repeal of the Inflation Reduction Act, which includes three significant provisions to slow the increase of drug-related costs in retirement: the ability of the Centers for Medicare and Medicaid Services to negotiate directly with pharmaceutical companies to reduce the cost of common high-cost medications, capping the rate of increase of drugs, and lowering annual out-of-pocket costs from $8,000 to $2,000 on covered prescriptions.
Although changes to the cost-sharing methodology between carriers and the government are one of the factors driving premiums higher, overall, Inflation Reduction Act provisions are expected to slow the rate of increase of drugs in retirement.
