Starting in 2025, Medicare is introducing a new Medicare Prescription Payment Plan to help you manage your out-of-pocket drug costs more easily.
This program won’t lower your medication costs, but it lets you pay your deductible, copays, and coinsurance in smaller monthly amounts instead of all at once. If you’re on a budget or facing a cash crunch, this benefit can help you manage expenses more easily.
It’s particularly valuable if you need to take an expensive brand-name drug.
Here’s a step-by-step guide to using the Medicare Prescription Payment Plan to your advantage.
1. Confirm Eligibility
To use the Medicare Prescription Payment Plan, you need to meet the following criteria:
- You must be enrolled in a Medicare Part D prescription drug plan or a Medicare Advantage plan with drug coverage.
- The plan is available to all Medicare beneficiaries who face high out-of-pocket prescription drug costs.
2. Enroll in the Payment Program
Enrollment is simple but requires action at the right time:
- Check with your Part D plan provider to confirm they offer the Prescription Payment Plan.
- You’ll typically need to enroll at the beginning of the year or when you first join the plan.
- Ask your plan for details on how to set up monthly payments.
Need help? If you’re a MediGap Advisors client, just contact your Personal Benefits Manager, and we’ll be happy to assist.
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3. How the Medicare Prescription Payment Plan Works
What Costs Are Included?
- Deductibles: If your plan has a deductible (up to $590 in 2025), this cost can be split into monthly payments.
- Copays and Coinsurance: Your share of the cost for each prescription can also be included in your monthly payment plan.
- Annual Out-of-Pocket Maximum: The program helps you manage up to the $2,000 annual cap on out-of-pocket drug costs in 2025.
Important: This program doesn’t discount your costs. You’ll pay the same total amount over time but spread it across the year in predictable monthly installments. However, if your income qualifies, you could receive assistance through the Medicare Part D Extra Help program.
How Are Monthly Payments Calculated?
- Your monthly payments are based on your estimated annual out-of-pocket drug costs under your plan.
- The total amount is divided into equal monthly payments over the rest of the year.
- Payments are recalculated if your prescription needs change significantly during the year.
Example 1:
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- Your deductible is $590.
- Instead of paying $590 all at once in January, you could pay about $49 per month over 12 months.
Example 2:
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- Your total estimated out-of-pocket drug costs for the year are $2,000.
- You’d pay about $167 per month if you spread the cost evenly across the year.
Note: Payments may change if you start the program later in the year.
How are Payments Made
- Payments are usually made directly to your Part D plan provider each month.
- Plans may offer automatic payments, online payment portals, or traditional billing by mail.
- Missing payments could result in being removed from the program, leaving you responsible for your full costs upfront.
Flexibility and Adjustments
- If your prescription needs to increase or decrease during the year, your plan may adjust your remaining monthly payments.
- For example, if you start a new, expensive medication mid-year, your monthly payments might increase slightly to cover the additional cost.
- At the end of the year, your plan will reconcile your payments with your actual drug spending to ensure accuracy.
Things to Keep in Mind
- Enrollment Timing: You usually need to opt into this program at the start of the year or when you enroll in a new Part D plan.
- Stay on Track: Timely payments are required to remain in the program.
- Budget-Friendly: This program is ideal if paying large upfront costs is challenging for you. But it does require monthly budgeting discipline.
4. Stay Enrolled by Keeping Up With Payments
- You must make your payments on time to stay enrolled in the plan.
- Missed payments could result in losing access to the program. That means you could have to pay upfront next time you pick up a prescription.
Need Help?
If you have questions or want to review your current coverage, don’t wait.
Contact a MediGap Advisors Personal Benefits Manager today. They can walk you through the payment program, help you compare plans, and ensure you’re making the best choice for your needs.
Take control of your prescription costs in 2025—plan ahead, spread out your payments, and avoid unnecessary financial stress.
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Tom Lockwood is a Personal Benefits Manager at MediGap Advisors. Tom has a passion for bringing clarity to those confused about Medicare. He is an authority on Medicare, Medicare supplement plans, Medicare Advantage plans, and Part D prescription drug plans. Read more about Tom on his Bio page.