Medicare Premiums For 2025 Rise 5.9%, Other Out-Of-Pocket Costs Increase

The Centers for Medicare and Medicaid Services (CMS) announced the 2025 inflation-adjusted amounts for Medicare Parts A, B, and D.

The base monthly premium for Part B will be $185.00, an increase of $10.30 (5.9%) from $174.70 in 2024. The premium is adjusted each year so that, based on the projected expenses of Medicare Part B, the premiums will pay 20% of the total expected costs.

Part B covers physicians’ services, outpatient hospital services, some home health services, durable medical equipment, and some other services. Part A covers primarily hospital services.

The annual deductible for Part B will be $257 in 2025, up from $240 in 2024. Part B doesn’t pay for many services until after the beneficiary pays for services up to the annual deductible.

Also updated was the Medicare premium surtax (also known as the Income-Related Monthly Adjustment Amount or IRMAA) that is imposed on higher-income individuals.

CMS estimates that about 8% of Part B beneficiaries are subject to the surtax, paying both the base monthly Part B premium and the IRMAA.

A beneficiary can elect either to have IRMAA deducted from Social Security benefits or be billed and pay the surtax directly to Medicare.

IRMAA for 2025 is based on modified adjusted gross income (MAGI) on tax returns filed in 2023. Different monthly surtaxes are imposed at different MAGI levels.

IRMAA begins when MAGI exceeded $106,000 in 2023 for single taxpayers and $212,000 for married taxpayers who filed jointly. The highest IRMAA is imposed on single taxpayers with MAGI of $500,000 or more and married taxpayers filing jointly with IRMAA of $750,000 or above.

The total monthly premium for those subject to IRMAA will range from $259.00 to $628.90.

The Part A deductible for a beneficiary admitted to a hospital in 2025 will be $1,676, an increase from $1,632 in 2024. The deductible is the beneficiary’s share of costs for the first 60 days of Medicare-covered inpatient hospital care.

After the 60^th day, the beneficiary pays $419 per day through day 90 (compared to $408 in 2024). Medicare doesn’t pay for hospital stays exceeding 90 days.

An original Medicare beneficiary will have other out-of-pocket costs. Medicare has significant coverage gaps, the largest being that it pays only 80% of most covered costs. The beneficiary is responsible for the other 20%.

That’s why many beneficiaries also take out Medicare supplement, or Medigap, policies from private insurers. These policies pay all or some of the gaps in original Medicare, and the premiums are determined by the insurers.

Prescription drugs are another coverage gap in Part B. Many participants in original Medicare also take out Part D prescription drug policies issued by private insurers.

Higher-income beneficiaries with Part D prescription drug policies also pay IRMAA in addition to the monthly premiums on the insurance policies.

For single individuals, the Part D IRMAA begins when MAGI in 2023 exceeded $106,000, and the IRMAA is $13.70 per month until MAGI exceeded $133,000. The top Part D IRMAA of $85.80 per month is imposed on single taxpayers with MAGI greater than $500,000.

For beneficiaries who are married and filed joint returns with their spouses in 2023, the lowest Part D IRMAA of $13.70 per month is imposed when MAGI exceeded $212,000 and was no more than $266,000.

The top Part D IRMAA of $85.80 per month is imposed on a married beneficiary when IRMAA was $750,000 or more.

Medicare beneficiaries should receive letters in December informing them of their 2025 premiums and whether they are subject to IRMAA.