Don't Ignore the Letter You Just Got From Your Medicare Part D Provider

Key Takeaways

• Medicare is undergoing sweeping changes in 2025, with the most significant changes coming to Part D.
• Your Part D plan in 2025 may change in out-of-pocket costs, coverage, pharmacy options, and which drugs are offered.
• Average premiums are falling slightly, while deductibles are increasing sharply for Part D plans, though there are still plans with $0 deductibles to choose from.
• Your Annual Notice of Change (ANOC) letter, which you should have received by mail or email, will outline these changes. 
• If you don’t like your plan’s changes, you can shop for a new Part D plan or a Medicare Advantage plan with Part D.
  

It can be easy to ignore the Annual Notice of Change (ANOC) letter your Medicare Part D provider sends, but this is the year to pay attention.

There are a lot of changes coming to Medicare that may affect you. While average premiums for stand-alone Part D and Medicare Advantage plans with Part D are falling slightly, deductibles, especially for Medicare Advantage plans with Part D, will see big increases. Your Medicare Part D letter contains details about your specific premiums, copays, and drug lists starting Jan. 1. It can help give you an accurate estimate of what to expect.

How Your Part D ANOC Letter Works

The private insurer that manages your Part D coverage sends an Annual Notice of Change letter every year in September. It should also be available on the company's website. (If you haven't gotten yours by now, you should contact your provider.)

"Unfortunately, most people don't look at the ANOC," said Lori Howell, founder of Howell Medicare Advisors, a fee-only Medicare advisor providing Medicare beneficiaries nationwide with insights and advice. 

"They may take a cursory look and accept the changes,” she said. “Then, they're often unaware that a different insurance company may offer another, more cost-effective plan that better meets their needs."

Your letter typically features five to seven parts, including  

• Summary of important costs 
• Changes to benefits and expenses for the next plan year
• Administrative changes
• Information on changing plans
• Information on programs offering free counseling about Medicare
• Information on programs that help pay for prescription drugs
• Contact information for questions 

"It's vital that people are aware of the changes occurring within their plans in 2025," Howell said. "The fear is that the Part D plans will increase monthly premiums and limit what medications they cover. The devil is in the details.”

Here’s how to review the detailed information in your ANOC letter.

1. Review Your New 2025 Premium 

Your ANOC shows you the monthly premium for your plan in 2025. The premium amount shown may be higher or lower than what you actually pay, depending on your income and whether you receive payment assistance through the Extra Help program. 

The federal Centers for Medicare & Medicaid Services (CMS) says the average stand-alone Part D monthly premium is projected to fall from $41.63 in 2024 to $40.00 in 2025. If you have a Medicare Advantage plan with Part D, monthly premium costs will decrease from $15.56 in 2024 to $13.50 in 2025.1

However, these are just averages. Actual premiums vary, and you may be able to find a plan with a lower premium than what you’re paying now if you have a Part D plan. In Arkansas, Kansas, Maine, Michigan, and Louisiana, 100% of people with a stand-alone Part D plan have access to a plan with a lower premium than what they paid in 2024, though you may have to switch plans. In Nebraska, North Dakota, Colorado, and Minnesota, only roughly 54% to 59% of people will have access a lower-premium Part D plan in 2025.2

Premiums are not the only factor you should consider when choosing a Part D plan. Look at what the plan offers as well. You may find a plan with a lower premium doesn’t offer the same coverage for medications you take, or it may have a higher deductible.

2. Review Your New 2025 Deductible

Compare your deductible or the amount you pay before your plan starts to pay. Deductibles vary by plan, but Medicare requirements stipulate that your deductible can’t be more than $590 in 2025.3

Investopedia's analysis of data from the Centers for Medicare & Medicaid Services (CMS) finds that the average annual deductible for stand-alone Part D plans will rise nearly 22% to 466, while Medicare Advantage Part D deductibles will nearly double, to $306 on average.

We found that 15.8% of standalone Part D plans will have a $0 deductible in 2025. That’s up slightly from 15.1% in 2024. The percentage of Medicare Advantage plans with prescription drug coverage (MAPDs) that offer $0 deductibles has fallen much further, going from 56% in 2024 to 28% in 2025.

Your plan provider should explain the new, three-stage approach to medication coverage and how it impacts your costs, which eliminates the “donut hole.” The three stages are: 

• Deductible Stage: If you have a deductible to meet, you’ll pay up to that amount. 
• Coverage Stage: You split the cost of medications with your insurer, paying either a flat copay or a coinsurance percentage. After you reach $2,000 in out-of-pocket drug expenses, you go to the next stage. 
• Catastrophic Coverage Stage: After you’ve paid $2,000 out of pocket for drugs, you pay nothing else.  

Some plans offer supplemental Part D drug coverage beyond Medicare, such as coverage for erectile dysfunction. As of 2025, paying for these supplemental benefits counts toward your out-of-pocket costs for the year, helping you reach the $2,000 cap.

The drug plan deductible doesn’t apply to most recommended Part D vaccines, including shingles and tetanus, or covered insulin products. Vaccines are fully covered and insulin costs are capped at $35 a month.

If you get your Part D through a Medicare Advantage plan with drug coverage, you won’t get a separate Part D Annual Notice of Change letter. You can find your changes in your Medicare Advantage plan Annual Notice of Change letter.

3. Review Your New 2025 Drug Costs

You’ll want to estimate the monthly 2025 drug costs your Part D plan will charge and: 

• Ensure the drugs will be covered next year 
• See if any new restrictions apply to your medications
• Check whether your drug has been moved to a different cost-sharing tier
• Learn whether lower-cost medication alternatives are available

Although out-of-pocket costs may be limited to $2,000 in 2025, that only applies to plan-covered medications. "If you have a medication that is no longer on your plan's formulary, you're responsible for the full cost, and those costs will not go towards the $2,000 limit," Howell said. 

Your ANOC letter will describe the different drug tiers and their costs. Each tier’s percentages or copays could go up or down in 2025 compared to 2024. Your flat copay for a tiered drug could become a coinsurance percentage instead. 

Your plan’s drug prices vary by tier, type of drug (generic, preferred brand, non-preferred brand), and where you pick up your medications. You may discover that the least-expensive pricing listed isn’t available at your favorite pharmacy or the one closest to you. 

To accurately estimate your personalized drug costs, you’ll need to review the plan documents below. 

Check Out Your 2025 Pharmacy Network Changes

Your plan generally only covers prescriptions if you fill them at an in-network pharmacy. Within that network, you may pay less for prescriptions at some pharmacies. The network can change from year to year, so ensure your favorite pharmacy still shows up. 

Unfortunately, changes to your pharmacy network probably aren’t found within your ANOC. Instead, you need to look online or ask your plan for a 2025 Pharmacy Directory.

Check Out Your 2025 Formulary Changes

Every plan has a formulary or drug list. Within that document, you’ll find rules about how to get medications covered, frequently asked questions about drug coverage, and a list of the drugs covered alphabetically and by condition. 

Each drug name will be accompanied by the tier your insurance company assigns the drug and any requirements or limits, which can change annually. 

In 2025, drug plans can immediately replace original biological drugs with certain biosimilar drugs without the typical 30-day notice.4

Starting Oct. 1, you can also use the Medicare Plan Finder site to add prescriptions and compare Part D pricing.

Note

Changes that Medicare Part D providers can make to drug lists include removing or adding drugs; adding new or different restrictions for drug coverage; requiring prior authorization, step therapy or quantity limits; and moving medications to a different cost-sharing tier. These kinds of changes happen every year, and some can even occur throughout the year with proper notification.

4. Decide Whether to Enroll in a Monthly Drug Payment Plan 

In this section of your ANOC letter, your plan will explain the new, optional 2025 payment plan, also called the Medicare Prescription Payment Plan, which spreads out your drug costs throughout the year. 

You don’t pay anything when picking up your medication at the pharmacy. Instead, your plan sends you a monthly bill with your owed amount, due date, and payment instructions.  

You can learn more about a payment plan by visiting your plan’s website, calling your plan, or calling or visiting Medicare.gov.

5. Consider Changing Plans in 2025

After reading through your ANOC letter and drug and pharmacy lists, compare your choices. You can switch to a different Part D plan or a Medicare Advantage Plan with Part D coverage during Medicare open enrollment, which lasts from Oct. 15 until Dec. 7, with the change effective Jan. 1, 2025. 

Medicare recipients can access an average of 15 stand-alone Part D plans per region. If you’re interested in switching to a Medicare Advantage plan with Part D, you can choose from an average of 34 plans per county. 

You can:

• Switch to a different Medicare prescription drug plan offered by the same insurance company or a different company
• Switch to a different Medicare prescription drug plan provided by a different company
• Change to a Medicare Advantage plan with prescription drug coverage
• Drop your Medicare prescription drug coverage altogether for another type of drug coverage (such as TRICARE)

If you qualify for a special enrollment period, you may be able to change your Part D plan outside of open enrollment. Situations might include qualifying for Medicaid or Extra Help, leaving employer coverage due to retirement, or moving out of your Medicare Advantage or Part D service area. 

Reviewing your Annual Notice of Change for 2025 Part D coverage and familiarizing yourself with how the changes could impact your monthly budget for insurance, services, and medications is crucial. While you can take advantage of the new monthly payment plan, you’ll also need to ensure your medications are covered at a price you find affordable. Compare plans through the Medicare site and give yourself plenty of time to switch if necessary.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

1. CMS. “Medicare Advantage and Medicare Prescription Drug Programs to Remain Stable as CMS Implements Improvements to the Programs in 2025.”
2. CMS. “Medicare Part D Landscape State Fact Sheet.”
3. CMS. “Final CY 2025 Part D Redesign Program Instructions Fact Sheet.”
4. CMS. “Contract Year 2025 Medicare Advantage and Part D Final Rule (CMS-4205-F).”