Big changes are coming to Medicare and Social Security in 2025, and if you’re on Medicare—or soon will be—you need to know how these updates could impact your costs and coverage. Financial Sense’s Jim Puplava recently spoke with Medicare expert Brian McArthur to get an update on the rising premiums, deductible increases, and the major shift in Medicare Part D, including a new $2,000 out-of-pocket cap. They also explore why Medicare Advantage plans are cutting benefits and how to navigate your options wisely.
Listen to the full audio interview and discussion here: Big Changes Are Coming to Medicare in 2025.
Medicare Part B: A Modest Hike with Income-Tiered Twists
McArthur, president of Design My Medicare, kicked off by addressing the updates to Medicare Part B, which covers outpatient services like doctor visits. “The benefits tend to get a little bit more expensive every year,” he noted, setting the stage for what’s new in 2025. The monthly premium, a key figure for most beneficiaries, has climbed from $175 in 2024 to $185—a $10 increase that McArthur deems “not unexpected.” The annual deductible, meanwhile, has ticked up from $244 to $257.
But the real nuance lies in the income-related adjustments. McArthur emphasized that Medicare adjusts Part B premiums across six income tiers, meaning a spike in earnings—like a hefty capital gain in 2024—could nudge someone into a higher bracket. “A lot of your clients are probably going to pay a little bit more for their Part B premium at their current income level in 2025 than they did in 2024,” he explained. For Puplava’s audience of savvy investors, this serves as a reminder: past financial moves can ripple into present healthcare costs.
Part D’s Game-Changer: The $2,000 Cap and Its Trade-Offs
What about Medicare Part D, the prescription drug program? “There is now a $2,000 annual out-of-pocket maximum on Medicare Part D,” McArthur said, calling it a headline achievement of the Inflation Reduction Act. Historically, Part D had no such ceiling, leaving some beneficiaries—particularly those on costly cancer medications—facing bills as high as $7,000 to $8,000 annually. Now, that burden is capped, a clear win for those reliant on expensive drugs.
Yet McArthur pointed out that this cap in drug costs has now been shifted elsewhere. “As two critical thinkers, Jim, you and I know there are trade-offs to everything,” he quipped. The catch? Premiums for Part D plans have surged—some by 50% or even 100%—as insurers offset the cost of the cap. “Most of the cost of the Inflation Reduction Act is really going to be passed on to the majority of Medicare beneficiaries by way of monthly premiums,” he explained. For those not on high-cost meds, the math might not pencil out favorably, while the smaller cohort with hefty drug bills reaps the benefits.
Farewell to the Donut Hole: Smoother Cash Flow Ahead
One of McArthur’s most relatable breakdowns came with the demise of the Part D “donut hole,” a notorious coverage gap that once blindsided beneficiaries mid-year. “It was a deductible that kind of showed up in the middle of the year, which is not usually when we pay deductibles,” he said, painting a vivid picture of its unpredictability. After meeting an initial deductible—say, $590 in 2025—beneficiaries might enjoy lower copays, only to tumble into the donut hole, where costs spiked again. “Every time you thought you had an idea what your copay would be next month, it changed,” he recalled.
Now, that rollercoaster is history. The Inflation Reduction Act has flattened the curve, delivering “way more linear and cash outflow friendly” copays, capped at that $2,000 limit. It’s a relief for budget-conscious retirees, though McArthur reiterated that higher premiums remain the trade-off.
Medicare Advantage: Scaling Back the Extras
Turning to Medicare Advantage (Part C), McArthur tackled a fork-in-the-road decision many face: stick with original Medicare (Parts A and B) plus a supplement and Part D, or opt for an all-in-one Advantage plan? While Advantage plans have lured millions with perks like vision, dental, and gym memberships—often at low or no premiums—2025 brings a reckoning. “The cost of providing that drug coverage has now gone through the roof,” he said, explaining how the Part D overhaul strains insurers’ budgets.
The result? A trimming of those extras. Dental benefits are vanishing, vision coverage is weakening, and copays are creeping up. McArthur likened it to a balancing act: insurers receive roughly $800 to $900 monthly per enrollee from Medicare, covering everything from the government’s 80% share to the additional 20%, drugs, and perks. With drug costs soaring, something had to give. Still, he resists painting Advantage as a villain. “Both Medicare supplement and Medicare Advantage will be the best health insurance you’ve ever had,” he insisted. “There are trade-offs between two good options.”
Prevention Over Cure: Medicare’s Quiet Push
McArthur also weighed in on Medicare’s nod toward preventive care, a topic Puplava framed as “Medicine 2.0”—think exercise, diet, and sleep over traditional surgery and drugs. Most plans, especially Advantage, offer free gym memberships like Silver Sneakers. Preventive services often carry low or no copays, reflecting a broader aim to keep beneficiaries healthy rather than fix them later. While diet resources exist online, he admitted they’re not revolutionary—just part of Medicare’s steady, if unspectacular, prevention focus over his nine years in the field.
Decision Time: Supplements vs. Advantage
For those nearing Medicare eligibility, McArthur’s advice is clear: education is king. “They keep this Medicare thing just complicated enough that we’ll always have a job tomorrow,” he joked, underscoring the need for guidance. He favors an agnostic approach, helping clients weigh options without bias. Many of Puplava’s clients lean toward original Medicare with a supplement—often the popular Plan G—for its simplicity. “You can go see any doctor in the country, no referrals, no networks,” he said, touting its set-it-and-forget-it appeal. Bills are rare, and the premium feels “pretty modest” for the freedom it buys.
Advantage plans, though, remain a strong contender—provided your doctors stay in-network. McArthur flagged a rising wrinkle: medical groups are pushing back on renewals, creating “more disruption than there ever has been.” In San Diego, for instance, Anthem Blue Cross lost its tie with Scripps Clinic, sparking confusion. For those rattled by such shifts, a window exists until March 31, 2025, to switch to original Medicare with a supplement—if health underwriting allows.
Timing It Right: Medicare and Social Security
McArthur also fielded a practical query from Puplava about a client turning 65 but waiting until 67 for full Social Security benefits. His advice? Start Medicare at 65—delaying risks gaps in coverage—but hold off on Social Security if finances permit. “Tell me when you’re going to die, and I’ll tell you when to draw Social Security,” he quipped, nodding to the nuanced calculus his team leaves to Puplava’s experts.
For mid-year enrollees, McArthur clarified that initial enrollment hinges on your birth month (e.g., June 1 for a June 20 birthday) or losing employer coverage—open enrollment from October 15 to December 7 isn’t a factor. It’s a flexibility that suits Puplava’s industrious clients, many of whom work past 65 until “it stops being fun.”
The Bottom Line: Optimism Amid Complexity
McArthur’s takeaway is one of cautious hope. “On the whole, it’s very good news,” he said of Medicare’s offerings. Whether you choose a supplement’s predictability or Advantage’s bundled benefits, you’re in for top-tier coverage—just know the trade-offs. For more, he directs listeners to designmymedicare.com, where his team stands ready to guide under the watchful eye of advisors like Puplava.
As Medicare continues to adapt, Brian McArthur’s forthright and insightful approach stands as a vital resource for beneficiaries. Reflecting on the program’s annual adjustments, Jim Puplava noted, “Every single year they make changes.” McArthur, with a seasoned perspective, reaffirms his commitment to providing clear, expert guidance with each new twist and turn.
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