Medicare Prescription Payment Plan

The Medicare Prescription Payment Plan is a new payment option in the prescription drug law that works with your current drug coverage to help you manage your out-of-pocket Medicare Part D drug costs by spreading them across the calendar year (January-December). Starting in 2025, anyone with a Medicare drug plan or Medicare health plan with drug coverage (like a Medicare Advantage Plan with drug coverage) can use this payment option. All plans offer this payment option and participation is voluntary.

If you select this payment option, each month you’ll continue to pay your plan premium (if you have one), and you’ll get a bill from your health or drug plan to pay for your prescription drugs (instead of paying the pharmacy). There’s no cost to participate in the Medicare Prescription Payment Plan.

Learn more about the Medicare Prescription Payment Plan

Will this help me?

It depends on your situation. Remember, this payment option might help you manage your monthly expenses, but it doesn’t save you money or lower your drug costs.

You’re most likely to benefit from participating in the Medicare Prescription Payment Plan if you have high drug costs earlier in the calendar year. Although you can start participating in this payment option at any time in the year, starting earlier in the year (like before September), gives you more months to spread out your drug costs. Go to http://Medicare.gov/prescription-payment-plan/will-this-help-me to answer a few questions, and find out if you’re likely to benefit from this payment option.

This payment option may not be the best choice for you if:

Your yearly drug costs are low.
Your drug costs are the same each month.
You’re considering signing up for the payment option late in the calendar year (after September).
You don’t want to change how you pay for your drugs.
You get or are eligible for Extra Help from Medicare.
You get or are eligible for a Medicare Savings Program.
You get help paying for your drugs from other organizations, like a State Pharmaceutical Assistance Program (SPAP), a coupon program, or other health coverage

What to know if I'm participating

What happens after I sign up?

Once your health or drug plan reviews your participation request, they’ll send you a letter confirming your participation in the Medicare Prescription Payment Plan. Then:

When you get a prescription for a drug covered by Part D, your plan will automatically let the pharmacy know that you’re participating in this payment option, and you won’t pay the pharmacy for the prescription. Even though you won’t pay for your drugs at the pharmacy, you’re still responsible for the costs. If you want to know what your drug will cost before you take it home, call your plan or ask the pharmacist.
Each month, your plan will send you a bill with the amount you owe for your prescriptions, when it’s due, and information on how to make a payment. You’ll get a separate bill for your monthly plan premium (if you have one)

How do I pay my bill?

After your health or drug plan approves your participation in the Medicare Prescription Payment Plan, you’ll get a letter from your plan with information about how to pay your bill.

What happens if I don’t pay my bill?

You’ll get a reminder from your health or drug plan if you miss a payment. If you don’t pay your bill by the date listed in that reminder, you’ll be removed from the Medicare Prescription Payment Plan. You’re required to pay the amount you owe, but you won’t pay any interest or fees, even if your payment is late. You can choose to pay that amount all at once or be billed monthly. If you’re removed from the Medicare Prescription Payment Plan, you’ll still be enrolled in your Medicare health or drug plan.

Always pay your health or drug plan monthly premium first (if you have one), so you don’t lose your drug coverage. If you’re concerned about paying both your monthly plan premium and Medicare Prescription Payment Plan bills, Review the Extra Help section of the Medicare Prescription Payment Plan Fact Sheet for information about programs that can help lower your costs.

Call your plan if you think they made a mistake about your Medicare Prescription Payment Plan bill. If you think they made a mistake, you have the right to follow the grievance process found in your Member Handbook or Evidence of Coverage

How do I sign up?

Visit your health or drug plan’s website, or call your plan to start participating in this payment option:

In 2024, for 2025: If you want to participate in the Medicare Prescription Payment Plan for 2025, contact your plan now. Your participation will start January 1, 2025.
During 2025: Starting January 1, 2025, you can contact your plan to start participating in the Medicare Prescription Payment Plan anytime during the calendar year.

Remember, this payment option may not be the best choice for you if you sign up late in the calendar year (after September). This is because as new out-of-pocket drug costs are added to your monthly payment, there are fewer months left in the year to spread out your payments.

How do I leave?

You can leave the Medicare Prescription Payment Plan at any time by contacting your health or drug plan. Leaving won’t affect your Medicare drug coverage and other Medicare benefits. Keep in mind:

If you still owe a balance, you’re required to pay the amount you owe, even though you’re no longer participating in this payment option.
You can choose to pay your balance all at once or be billed monthly.
You’ll pay the pharmacy directly for new out-of-pocket drug costs after you leave the Medicare Prescription Payment Plan.

Program Example

You take several high-cost drugs that have a total out-of-pocket cost of $500 each month. In January 2025, you join the Medicare Prescription Payment Plan through your Medicare drug plan or Medicare health plan with drug coverage.

We calculate your first month’s bill in the Medicare Prescription Payment Plan differently than your bill for the rest of the months in the year:

First, we figure out your “maximum possible payment” for the first month:

$2,000 [annual out-of-pocket maximum] – $0 [no out-of-pocket costs before using this payment option]
= $2,000 / 12 [remaining months in the year]

Then, we figure out what you’ll pay for January:

Compare your total out-of-pocket costs for January ($500) to the “maximum possible payment” we just calculated: $166.67.
- Your plan will bill you the lesser of the two amounts. So, you’ll pay $166.67 for the month of January.
- You have a remaining balance of $333.33 ($500-$166.67).

For February and the rest of the months left in the year, we calculate your payment differently:

$333.33 [remaining balance] + $500 [new costs] = $833.33 /11 [remaining months in the year]
Your payment for February would be $75.76

We’ll calculate your March payment like we did for February:

$757.57 [remaining balance] + $500 [new costs] = $1,257.57 /10 [remaining months in the year]
Your payment for March would be $125.76

In April, when you refill your prescriptions again, you’ll reach the annual out-of-pocket maximum for the year ($2,000 in 2025). You’ll continue to pay what you already owe and get your prescription(s), but after April you won’t add any new out-of-pocket costs for the rest of the year.

$1,131.81 [remaining balance] + $500 [new costs] = $1631.81 / 9 [remaining months in the year]
Your payment for April and all remaining months in the year would be $181.31

Even though your payment varies each month, by the end of the year, you’ll never pay more than:

The total amount you would have paid out-of-pocket.
The total annual out-of-pocket maximum ($2,000 in 2025).

Remember, this is just your monthly payment for your out-of-pocket drug costs. You still need to pay your health or drug plan’s premium (if you have one) each month

What if my request for participation in the Medicare Prescription Payment Plan is urgent?

A retroactive election must be processed if all the following conditions are met:

The Part D enrollee believes that any delay in filling the prescription(s) due to the 24 hours timeframe required to process their request to opt in in may seriously jeopardize their life, health, or ability to regain maximum function; and
The Part D enrollee requests retroactive election within 72 hours of the date and time the urgent claim(s) were adjudicated.

Once the enrollee’s Medicare Prescription Payment Plan election has been effectuated, the Part D sponsor must process the reimbursement for all cost sharing paid by the enrollee for the urgent prescription and any covered Part D prescription filled between the date of adjudication of the urgent claim and the date that the enrollee’s election is effectuated within 45 calendar days of the election date.

If the Part D sponsor determines that an enrollee failed to request retroactive election within the required timeframe, it must promptly notify the individual of its determination and provide instructions on how the individual may file a grievance.

Visit our Appeals and Grievances page for more information on filing a grievance.

What programs can help lower my costs?

If you have limited income and resources, find out if you’re eligible for one of these programs:

Extra Help: A Medicare program that helps pay your Medicare drug costs. Visit http://ssa.gov/medicare/part-d-extra-help to find out if you qualify and apply. You can also apply with your State Medical Assistance (Medicaid) office. Visit http://Medicare.gov/ExtraHelp to learn more.
Medicare Savings Programs: State-run programs that might help pay some or all of your Medicare premiums, deductibles, copayments, and coinsurance. Visit http://Medicare.gov/medicare-savings-programs to learn more.
State Pharmaceutical Assistance Programs (SPAPs): Programs that might include coverage for your Medicare drug plan premiums and/or cost sharing. SPAP contributions may count toward your Medicare drug coverage out-of-pocket limit. Visit http://go.medicare.gov/spap to learn more.
Manufacturer Pharmaceutical Assistance Programs (sometimes called Patient Assistance Programs (PAPs)): Programs from drug manufacturers to help lower drugs costs for people with Medicare. Visit http://go.medicare.gov/pap to learn more.

Many people qualify for savings and don’t realize it. Visit http://Medicare.gov/basics/costs/ help, or contact your local Social Security office to learn more. Find your local Social Security office at http://ssa.gov/locator/.

Where can I get more information?

Your health or drug plan: Visit your plan’s website, or call your plan to get more information.
Medicare: Visit http://Medicare.gov/prescription-payment-plan , or call 1-800-MEDICARE (1-800-633-4227), 24 hours a day, 7 days a week. TTY users can call 1-877-486-2048.

Medicare Prescription Payment Plan Fact Sheets

We have gathered a collection of fact sheets that explain the details of the Medicare Prescription Payment Plan. These fact sheets are available in various languages to ensure that everyone can access clear and easy-to-understand information about the program.

Medicare Prescription Payment Plan Election Request Forms

If you believe you are eligible for the Medicare Prescription Payment Plan, taking action and submitting an election request form is essential. We provide these forms in multiple languages, including English, Spanish, and more, to make the process as straightforward as possible for you.

Have More Questions?

Navigating healthcare decisions can be overwhelming, but you don’t have to do it alone. Our team is here to support you every step of the way. If you have any questions about the Medicare Prescription Payment Plan or need assistance with your healthcare options, please reach out to us. We are dedicated to empowering you with the information you need to make confident choices about your health and well-being.

This page was last modified on October 25, 2024.