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Rob Dobi Facebook Twitter LinkedIn

Gayle Hays has paid north of $8,000 a year for her and her husband’s prescription medications. One drug alone has cost the couple nearly $7,000 annually in out-of-pocket expenses.

But this year is going to be different. A provision in the AARP-backed prescription drug law that went into effect Jan. 1 caps annual out-of-pocket spending on prescription medications at

$2,000 in 2025 for people like Hays and her husband who have a Medicare Part D drug plan. As a result, she expects to shell out a lot less at the pharmacy counter in 2025.  

“That $2,000 cap,” which will be adjusted annually for inflation, “is fabulous,” says Hays, 75, of Bailey Island, Maine.  

For people with Medicare drug plans, the law:  

$2,000 in 2025Expands Medicare’s low-income subsidyAllows Medicare to negotiate directly with drug manufacturers to lower the price of some of the costliest and most commonly used

prescription drugsKeeps price hikes in check by requiring drug companies who raise their prices faster than the rate of inflation to pay a penalty to Medicare

Source: Centers for Medicare & Medicaid Services

A 2024 report from AARP found that Hays is one of more than 3.2 million Part D enrollees who is expected to benefit from the new cap in 2025. By 2029, that number will rise to more than 4

million. And new research from AARP released on Jan. 16 finds that the vast majority (94 percent) of people who reach this $2,000 cap will see lower total out-of-pocket costs, meaning

premiums plus cost-sharing, this year, saving an average of $2,474 in 2025. That’s a 48 percent reduction in their total out-of-pocket costs.

While average total premiums for Medicare Part D plans decreased slightly for 2025 — and benefits and plan choices remained stable — premiums for some plans increased. AARP’s report,

however, shows that any Part D plan premium changes “have been more than offset” by lower cost-sharing for most enrollees who reach the new out-of-pocket spending cap.

“This report shows that most Part D enrollees who hit the new out-of-pocket spending cap this year will see substantial savings even after taking 2025 plan premiums into account, freeing up

funds to invest in their families, spend on their broader health needs or simply save to achieve greater financial stability,” says Nancy LeaMond, AARP’s chief advocacy and engagement

officer. “AARP was instrumental in Congress passing the prescription drug law of 2022 to lower prices and out-of-pocket costs for Medicare enrollees, and we couldn’t be prouder that the day

has finally arrived for this provision to go into effect and that the law is working as intended.”

Gayle Hays at the Curtis Memorial Library in Brunswick, ME. Michale D. Wilson