Budgeting for Medicare can be tricky because expenses can vary yearly. While most enrollees don’t pay a premium for Part A, which covers hospital services, there are premiums for Part B (outpatient care) and Part D (prescription drugs).

In 2025, the average Medicare Part B premium will rise from $174.70 to $185. Additionally, those on Part A will see increases in hospital care costs through higher deductibles and coinsurance. Here’s what you should know about potential price hikes for your Part D drug coverage next year.

1. Rising premiums for your plan

The premiums for Medicare Part D aren’t fixed, which means that even if you remain with the same plan, costs may increase in 2025.

If your premium has gone up, it’s a good idea to explore new Part D plans during Medicare’s open enrollment period, which lasts until December 7. This gives you time to find a potentially cheaper option for your drug coverage.

2. Prescription costs may increase due to tier changes

Medicare Part D categorizes prescriptions into various tiers, which ultimately affect your out-of-pocket costs for the medications.

If your medications are classified in a higher tier for 2025, you can either look for a new plan that has better classification for your drugs or consider switching to more affordable medications or generics.

3. Income surcharges for higher earners

The cost of your Medicare Part D coverage will depend on your selected plan. However, higher earners may face an additional charge known as the income-related monthly adjustment amount (IRMAA).

Remember that IRMAA is based on your income from two years prior. If your income increase was temporary, you might be able to appeal that Part D IRMAA for a potential reduction.

As a retiree on a fixed income, it’s essential to manage your budget carefully to cover essential expenses. Be aware of factors that could raise your Part D costs in 2025 so you can react accordingly to minimize financial strain.

The Motley Fool has a disclosure policy.

The Motley Fool is a YSL News content partner providing financial news, insights, and analysis aimed at helping individuals manage their financial futures. Their content is produced independently from YSL News.

The $22,924 Social Security bonus most retirees overlook

Offer from the Motley Fool: Many people are behind on their retirement savings. Yet, a few little-known “Social Security secrets” might help increase your retirement income. For instance, one simple method could yield an extra $22,924 annually! Learning how to maximize your Social Security benefits can lead you toward a worry-free retirement.