What You Actually Need to Know From the 2025 Medicare Trustees Report

Another year, another summary of the Medicare Trustees Report from the New Horizons team!

After all, it’s a few hundred pages long, and who has time for that?

Join us for all the key highlights, including the new estimated depletion date, Medicare Advantage trends, and Medicare numbers over time.

→ Read the full, official report from CMS

New to the industry? Start here: Step-by-Step Guide to Getting Started In Medicare Sales

Highlights From the 2025 Medicare Trustees Report

Each year, we read the report and summarize it as briefly as we can. If you're short on time and can't read this full article, here's the gist.

• Medicare Part A (the HI trust fund) is projected to be depleted by 2033 (p. 5). At that point, it is estimated that HI revenues will cover 89% of incurred program costs, leaving a funding gap that would require legislative action to address.

• COVID-19-related adjustments have been phased out of this year’s projections, as utilization and cost patterns have normalized.

• Medicare Advantage continues to grow – 50.5% of beneficiaries had it in 2024, and 57.8% are expected to choose MA by 2034 (p. 159).

If you want a little more than that, you can read some more in-depth information from the report below. Don’t worry – we’ve translated the report into layman’s terms so you can quickly understand what’s going on.

Inflation Reduction Act Impact

The IRA has created a mixed financial picture for Medicare Part D prescription drug coverage.

Starting in 2023, the law began increasing federal spending by redesigning benefits to reduce what seniors pay out-of-pocket for medications. The full changes took effect in 2025, making prescription drugs more affordable for patients but more expensive for Medicare.

At the same time, a separate rule change in 2024 shifted how pharmacy discounts work. Instead of insurance companies keeping these savings behind the scenes, the discounts now reduce what patients pay at the pharmacy counter. While this helps patients immediately, it also increases overall Medicare spending.

To prevent these benefit improvements from causing big premium increases for seniors, Medicare created a temporary 3-year program starting in 2025. This program keeps monthly drug plan costs manageable for patients while having Medicare pay insurance companies extra money to cover the difference.

However, the IRA's money-saving features will kick in starting in 2026. The law gives Medicare new power to negotiate prescription drug prices directly with drug companies and forces companies to pay penalties if they raise prices faster than inflation. These cost-cutting measures will slowly include more medications over several years.

By the end of the 10-year projection period, these savings are expected to be larger than the extra money Medicare is spending now, creating a net benefit for the program.

Related: 2025 Part D Changes Every Agent Should Know

Healthcare Tech Is Advancing

The Board explains that making projections is increasingly difficult because healthcare technology is advancing rapidly.

From genetic breakthroughs to novel therapies, it’s nearly impossible to predict long-term costs accurately. While new innovations often drive costs up initially, they could also improve efficiency and lower costs in the long run.

So... the bottom line is still: who knows what the future holds?

Medicare Numbers Over Time

Want to sound smart at your next Medicare trivia night? Here’s a quick comparison of Medicare stats from this year’s report versus prior years (p. 6):

Enrollees

Finances

Part B and Part D

What has actually happened (p. 7):

• Over the last 5 years, Part B costs have grown by 8.4% annually
• Over the last 5 years, Part D costs have grown by 8.4% annually

What is projected to happen over the next 5 years:

• Part B costs will grow by 8.8% annually
• Part D costs will grow by 7.1% annually

Medicare Advantage

Medicare Advantage continues its explosive growth, with 50.5% of Medicare beneficiaries choosing MA in 2024. The Trustees project that private plan enrollment will keep climbing to 57.8% in 2034 (p. 159). 

The Trustees explain:

"The increases that are expected in private plan penetration rates for 2025 through 2034 are partly due to higher relative rebates, which are used to lower premiums and expand benefits."

Here's what’s happening under the hood:

• SNP enrollment is expected to grow by 11 percent in 2025 after increasing by 13 percent in 2024. In 2026 and later years, the enrollment growth rate for these plans is expected to slow, ranging from 8 percent in 2026 to 1 percent in 2034.
• LCCP-HMOs is expected to grow at a slower rate, increasing by 2.4 percent in 2025 following growth of 0.2 percent in 2024.
• LCCP-PPO enrollment is expected to increase by 4 percent in 2025 after growth of 11 percent in 2024.

Estimated Depletion Date

The Trustees still agree that there’s not enough money to keep funding Medicare Part A long term.

• The depletion date for the HI trust fund is now 2033, three years earlier than last year’s projection.

• Once depleted, incoming payroll taxes will only cover 89% of program costs.

(Image taken from Page 27.)

As always, the projections come with lots of fine print and caveats:

“There is substantial uncertainty in the economic, demographic, and health care projection factors for HI trust fund expenditures and revenues.” (p. 27)

But here’s the bottom line:

To eliminate the funding shortfall, the Trustees suggest one of two drastic options (p. 31):

• Increase the payroll tax immediately from 2.9% to 3.32%

• OR reduce HI spending immediately by 9%

In other words, Medicare needs to balance the checkbook, and there are only two ways to do it – get more coming in or spend less. Both of which are difficult to do.