Medicare Costs Rise in 2025 With Higher Part D Premiums, Advantage Deductibles

Medicare enrollees are experiencing extensive cost increases this year, with Part D premiums rising 24% and Medicare Advantage deductibles more than doubling, according to eHealth’s latest analysis of enrollment trends.

The analysis by eHealth, an online marketplace for health insurance, focusing on costs and plan selection trends, was collected from more than 250,000 submitted applications from 2024’s fall annual enrollment period (AEP) between October 15 and December 7, 2024.

During last year’s enrollment period, millions of Medicare beneficiaries reviewed their coverage options and selected new Medicare plans for the 2025 calendar year due to changes including the plans being offered, increases in premiums and more, according to the analysis.

One major finding was that Part D plan premiums had a significant increase.

The average monthly premium for Part D plans selected by Medicare beneficiaries at eHealth has increased 24% year over year, from $29 for 2024 coverage to $36 for 2025 coverage.

This marks the highest Part D premium eHealth has ever recorded since it began tracking premium trends in 2018.

A 2024 KFF analysis shared during last year’s enrollment period highlighted similar trends, noting that the Inflation Reduction Act’s introduction of a $2,000 out-of-pocket spending cap contributed to rising costs for Part D plans.

This cap, while beneficial for enrollees who reach high prescription drug costs, led insurers to increase premiums to make up for potential losses.

As a result, some standalone Part D plans raised their monthly premiums by up to $35, the maximum allowed under new federal guidelines.

While the average monthly premium for Medicare Advantage plans dropped from $9 to $5—mainly due to more beneficiaries (87%) opting for zero-dollar premium plans compared to 84% the previous year—Medicare Advantage enrollees at eHealth also faced cost challenges, as lower premiums do not necessarily mean lower overall costs.

The financial strain is most prominent in the average deductible, which surged this year to $315, up from $132 last year and $107 in 2023—a 139% increase in just two years.

According to the KFF analysis, the share of Medicare Advantage Prescription Drug (MA-PD) enrollees in plans charging a deductible for Part D coverage nearly tripled for 2025, from 21% to 60%, supporting eHealth’s findings that beneficiaries are paying more out of pocket despite lower premiums.

Fran Soistman, CEO of eHealth, provided further insight into these cost increases.

Fran Soistman, CEO of eHealth.

“We believe that a significant part of the increases we’re tracking are attributable to rising medical costs and utilization following the COVID pandemic," he told MHE.

He also pointed to CMS reimbursements failing to keep pace with medical cost inflation, as well as the Inflation Reduction Act increasing Part D benefits, which led to higher premiums.

For Medicare Advantage plans, higher deductibles appear to be a response to inflation and increased utilization while keeping zero-dollar monthly premiums.

As for next year’s AEP, the future seems foggy as coverage is still months away, and factors such as regulatory shifts and pending court rulings could influence final premiums and cost-sharing requirements

In the past, it’s taken time for policy changes to be reflected in consumer costs, leaving many Medicare enrollees concerned about affordability.

“CMS’s final rate notice, expected to come out on or before April 7, will provide important insight into what plans will need to do to prepare for the 2026 AEP,” Soistman said. “The new administration has expressed interest in reducing government regulations generally, but we’ll see what that means for Medicare next month.”

With premiums, deductibles and other out-of-pocket costs continuing to fluctuate, cautious plan decisions during future enrollment periods could be critical in the long run.