If you have opted for an NYC Medicare Part D voluntary prescription drug rider for 2025, you may potentially spend less out of pocket for prescription drugs. Under the federal Inflation Reduction Act of 2022, beneficiaries now have a spending cap of $2,000 on covered drugs, after which Medicare pays 100% of the cost for the rest of the year.

This change was included by the Biden administration in the Inflation Reduction Act, with the intention of fully closing what was known as the “donut hole” or “coverage gap,” the second part of a three-phase system in which beneficiaries often had to spend thousands of dollars before they became eligible for “catastrophic” coverage. The coverage gap was previously narrowed by the 2010 Affordable Care Act, but even when catastrophic coverage applied, patients were subject to cost-sharing.

Under the new system, effective on Jan. 1, 2025, the rules are streamlined significantly: After the $2,000 cap is hit, the patient pays nothing.

All NYC Medicare Part D riders for 2025 should have this $2,000 cap, but note that the riders can still vary significantly in copayment structure and their formularies (i.e., which drugs are covered). The next open enrollment period for New York City retirees will be in the fall of 2025.