Quick answer: What changed in 2025—and who should switch?
In 2025, Medicare Advantage (MA) still covers over half of eligible beneficiaries. The Inflation Reduction Act added a $2,000 annual out-of-pocket cap for Part D drugs and a new Prescription Payment Plan that lets you spread drug costs over the year—changes that affect both MA-PD and Traditional Medicare + PDP users. Meanwhile, CMS finalized a +5.06% average MA payment change for 2026, and 2026 Star Ratings just posted, reshuffling future bonus dollars. Bottom line: compare now, especially if you take expensive meds, had network friction in MA, or want the broadest provider access. Sources: KFF; CMS (Rate Announcement, PPP); Reuters (Star Ratings). Last checked: Oct 10, 2025. Reuters+3KFF+3Centers for Medicare & Medicaid Services+3
Bottom line: If your drug costs are high, the 2025 $2,000 cap + PPP could lower cash-flow pain in either path; if you value any-doctor access and no prior auth, Traditional + Medigap still wins.
Enrollment reality check: MA vs Traditional in 2025
- How big is MA now? In 2025, 54% of eligible beneficiaries are in MA—continuing a decade-long rise. Source: KFF, last checked: Oct 10, 2025. KFF
- Is growth slowing? Analysts and policymakers are watching MA’s growth moderate as rules tighten and plans balance benefits vs. profitability; MedPAC continues to flag coding intensity and favorable selection as budget pressures. Source: MedPAC March 2025, last checked: Oct 10, 2025. medpac.gov
Bottom line: MA is the majority choice in 2025, but policy headwinds and quality/payment changes are nudging plans to re-tool benefits—making annual comparison essential.
Drug costs in 2025: $2,000 Part D cap & the new PPP installments
- Cap: Starting Jan 1, 2025, your Part D out-of-pocket drug costs can’t exceed $2,000 for the year (indexed after 2025). Applies to stand-alone PDP and MA-PD alike. Source: KFF IRA explainer; KFF Part D 2025 preview. Last checked: Oct 10, 2025. KFF+1
- Cash-flow help: The Medicare Prescription Payment Plan (PPP) lets you split drug costs into monthly payments through your plan—voluntary, available to all Part D and MA-PD enrollees. Source: CMS PPP guidance + Medicare.gov fact sheet. Last checked: Oct 10, 2025. Centers for Medicare & Medicaid Services+2Medicare+2
- Plan dynamics: With Medicare paying less of catastrophic costs after the redesign, plans and manufacturers shoulder more—affecting premiums and formularies. Source: KFF Part D snapshot (2025). Last checked: Oct 10, 2025. KFF
Bottom line: If your meds are pricey, both MA-PD and PDP got safer in 2025; PPP smooths spikes, while the $2,000 cap limits the annual hit.
Payments & quality: 2026 rate bump and the fresh Star Ratings
- Payments: CMS’s CY 2026 Rate Announcement projects an average +5.06% MA payment change—fuel for 2026 bids and benefits. Source: CMS Fact Sheet, Apr 7, 2025; last checked: Oct 10, 2025. Centers for Medicare & Medicaid Services+1
- Quality: CMS released 2026 Star Ratings in Oct 2025; early tallies show shifts in the share of members in 4- and 5-star plans by big carriers (e.g., CVS/Aetna, UnitedHealth, Elevance, Humana). This influences 2027 bonus payments and likely 2027 benefits—but it’s a signal you can consider now. Source: Reuters roundup of CMS ratings, Oct 9, 2025; last checked: Oct 10, 2025. Reuters
Bottom line: Higher 2026 base payments plus Star Ratings shifts suggest uneven benefit changes by carrier and county—shop locally, not by brand reputation alone.
Side-by-side: Medicare Advantage vs Traditional + Medigap (2025)
| Factor | Medicare Advantage (MA-PD) | Traditional Medicare + PDP + Medigap |
|---|---|---|
| Monthly cost predictability | Often lower or $0 premiums; MOOP (medical) caps total in-network OOP; drug costs subject to $2,000 cap | Part B + PDP premiums + Medigap premium; no MOOP on Part A/B (but Medigap typically shields you) |
| Drug coverage | Integrated MA-PD; $2,000 cap applies; PPP available | Stand-alone PDP; $2,000 cap applies; PPP available |
| Provider choice | Networks (HMO/PPO); prior auth common | Any provider that takes Medicare; no prior auth in most cases |
| Referrals & prior auth | Frequent; varies by plan | Rare; typically not required |
| Out-of-state travel | Limited out-of-network; PPOs vary | National acceptance of Medicare; Medigap helps with cost shares |
| Extra benefits | Often dental/vision/hearing, OTC, gym | Usually not included; buy standalone if needed |
| Quality signals | Star Ratings (plan-level) | No Star Rating; use provider quality data |
| Best for… | Budget certainty, bundled extras, lower premiums | Maximum choice/access, heavy medical users, snowbirds, complex conditions |
Sources: CMS policy/rules, KFF program primers and 2025 updates; last checked: Oct 10, 2025. Centers for Medicare & Medicaid Services+1
Bottom line: If you value extras and simplicity, MA is appealing; if you prioritize unfettered access and minimal utilization hurdles, Traditional + Medigap usually wins.
When MA makes sense vs when Traditional wins (real-world scenarios)
- MA usually wins if:
- You prefer lower monthly premiums and a predictable medical MOOP.
- Your doctors are in-network and you’re comfortable with prior authorization.
- You like bundled add-ons (dental/vision/hearing, OTC cards, fitness).
- Traditional + Medigap wins if:
- You see multiple specialists or travel frequently and need broad access.
- You’ve been denied or delayed by prior auth in MA.
- You can afford a Medigap premium to avoid surprises.
Bottom line: Choose MA for budget + benefits; choose Traditional + Medigap for access + flexibility.
2025 Open Enrollment checklist (use this before you switch)
- List your doctors & hospitals—verify in-network status for each MA plan you’re considering.
- List every medication—check formulary tier, prior auth, and specialty pharmacy rules.
- Estimate annual costs—premium + deductible + copays + worst-case MOOP (MA) vs Medigap premium + PDP costs (Traditional).
- Use the new drug rules—factor in the $2,000 cap; consider PPP to spread costs. Source: CMS/KFF, last checked: Oct 10, 2025. KFF+1
- Quality check—look at Star Ratings (2026) for the plans in your county. Source: Reuters on CMS ratings, last checked: Oct 10, 2025. Reuters
- Consider travel—snowbirds: favor Traditional + Medigap or a broad PPO.
- Extra benefits audit—value dental/vision/hearing? Price standalone coverage in Traditional to compare apples to apples.
- Customer service—review complaint rates and denials.
- Enrollment windows—Open Enrollment: Oct 15–Dec 7; MA Open Enrollment (Jan 1–Mar 31) allows one switch.
- Get unbiased help—call your State Health Insurance Assistance Program (SHIP).
Bottom line: A 30-minute apples-to-apples check each fall can save you hundreds and headaches next year.
Sources & verification
- KFF — Medicare Advantage in 2025: Enrollment Update and Key Trends; Health Policy 101. Source: KFF, last checked: Oct 10, 2025. KFF+1
- CMS — CY 2026 MA & Part D Rate Announcement (Apr 7, 2025); Prescription Payment Plan (2025) guidance and fact sheet. Source: CMS, last checked: Oct 10, 2025. Medicare+3Centers for Medicare & Medicaid Services+3Centers for Medicare & Medicaid Services+3
- KFF — Part D redesign and $2,000 cap (2025); 2025 Part D snapshot. Source: KFF, last checked: Oct 10, 2025. KFF+1
- MedPAC — March 2025 Report to Congress (MA status, coding intensity, favorable selection). Source: MedPAC, last checked: Oct 10, 2025. medpac.gov+1
- News — 2026 Star Ratings (Oct 2025) roundup. Source: Reuters, last checked: Oct 10, 2025. Reuters
Disclaimer: This article is educational and not financial, legal, or medical advice. Medicare rules and pricing change; verify specifics with Medicare.gov, your plan, or a licensed advisor.
FAQs
1) Is Medicare Advantage better than Traditional Medicare in 2025?
It depends. MA often has lower or $0 premiums, a medical MOOP, and added benefits; Traditional + Medigap buys you broad access and fewer prior auth hurdles. Compare total annual costs, networks, and meds. Source: CMS & KFF, last checked: Oct 10, 2025. KFF+1
2) How many people are in Medicare Advantage in 2025?
About 54% of eligible beneficiaries are enrolled in MA in 2025. Source: KFF, last checked: Oct 10, 2025. KFF
3) Does the $2,000 Part D cap apply if I’m in Medicare Advantage?
Yes—MA-PD enrollees and PDP enrollees both get the $2,000 annual out-of-pocket cap for covered drugs starting 2025. Source: KFF IRA explainer, last checked: Oct 10, 2025. KFF
4) What is the Medicare Prescription Payment Plan (PPP)?
A 2025 program that lets you pay your Part D costs in monthly installments, available in all Part D and MA-PD plans (opt-in). Source: CMS, last checked: Oct 10, 2025. Centers for Medicare & Medicaid Services
5) What did CMS change for 2026 payments to MA plans?
CMS finalized an average +5.06% payment change for 2026—a factor in next year’s bids and benefits. Source: CMS, last checked: Oct 10, 2025. Centers for Medicare & Medicaid Services
6) Do Star Ratings affect my choice for 2025?
2026 Star Ratings (released Oct 2025) affect 2027 bonuses, not this year’s benefits, but they can signal plan quality momentum. Source: Reuters/CMS, last checked: Oct 10, 2025. Reuters
7) When should I choose Traditional + Medigap over MA?
Consider Traditional + Medigap if you want maximum provider choice, travel frequently, or have complex conditions requiring many specialists.
8) Can I try MA now and switch later?
Yes. After fall Open Enrollment (Oct 15–Dec 7), there’s MA Open Enrollment (Jan 1–Mar 31) to switch MA plans or return to Traditional once. Medigap underwriting rules may limit switching into Medigap later in some states—check first.