NEW: Introducing The Medicare Prescription Drug Payment Program

That amounts to millions of people having to compromise their health because they can’t afford the medications they depend on. But cost-related medical non-compliance leads to much more severe and expensive medical problems down the road. It’s a problem we’ve been needing to address for a long time.

If you’re in this predicament, I have great news:

Effective January 1st, 2025, Medicare has rolled out a new Prescription Drug Payment Program for Medicare prescription drug insurance beneficiaries. This new program allows you to spread your out-of-pocket costs for prescription drugs over time.

That means you’ll no longer have to pay your entire deductible and all copays upfront before your Medicare Part D plan. Instead, you can make payments over the rest of the year. This should go a long way to making prescription drugs more affordable for millions of Americans. 

Medicare Part D Out-of-Pocket Costs

Your out-of-pocket costs for prescription drugs under Medicare Part D come in two forms: deductibles and copays. 

Part D Deductibles

As of 2025, your Part D deductible for 2025 can be up to $590. You’ll need to pay this amount before your plan starts sharing the costs of your medications.

Some plans may have lower deductibles. But the lower your deductible, the higher your premium will probably be.

Once you meet your deductible, you’ll move into the initial coverage phase, where you pay copays or coinsurance for prescriptions.

Part D Copays

The copay or coinsurance amounts depend on your plan’s formulary and the drug’s tier. Lower-tier drugs, such as generics, usually have smaller copays, while higher-tier drugs, including brand-name and specialty medications, often require coinsurance—a percentage of the drug’s cost.

For example, you might pay $10 for a generic drug but 25% of the cost for a brand-name drug, which can potentially cost tens of thousands of dollars, or even more for certain newly-developed drugs.

The Part D Out-Of-Pocket Cap 

Fortunately, however, your total out-of-pocket costs for 2025 can’t exceed $2,000. After your combined deductibles and copays reach that cap, your prescription drug plan will cover 100% of the cost for the rest of the year.

Nevertheless, all Medicare beneficiaries potentially have a $2,000 problem if they need to fill one or more prescriptions. And some people simply have trouble affording all of that at once.

That’s why they created the Medicare Prescription Drug Payment Plan. 

How the Medicare Prescription Payment Program Works

1. Who Can Use It?
   • The program is available to anyone in a Medicare Part D plan, including those enrolled in Medicare Advantage plans with prescription drug coverage.
2. How to Enroll:
   • Contact your Part D or Medicare Advantage plan provider. Their number should be on your prescription card. 
   • Enroll at the beginning of the year or as soon as your plan allows.
   • Provide details about your prescriptions, so your plan can estimate your total costs.
3. Payment Methods:
   • Your plan divides your estimated out-of-pocket costs into equal monthly payments.
   • Payment options include automatic bank drafts, online payments, mail-in payments, or over-the-phone payments. Automatic bank draft is the most reliable way to avoid missed payments.
4. Adjustments During the Year:
   • If your prescription changes, your plan may adjust your monthly payments and notify you of the changes.

Example

• Drug Example: Imbruvica, a medication used to treat certain types of cancer, costs approximately $180,000 annually.
• Annual Deductible: In 2025, the standard Medicare Part D deductible is projected to be up to $590.
• Out-of-Pocket Maximum: Medicare Part D will implement a $2,000 annual out-of-pocket cap in 2025.
• Total Out-of-Pocket Costs: The beneficiary’s total out-of-pocket expenses for the year would be $2,000, which includes the deductible.
• Monthly Smoothing Payments: Instead of paying the $590 deductible upfront and the remaining costs immediately, the beneficiary can opt to spread the total $2,000 out-of-pocket maximum over 12 months.
• Calculation: $2,000 ÷ 12 months = approximately $166.67 per month.
• Benefit: This payment structure allows beneficiaries to manage their medication expenses more predictably and avoid large upfront payments.

It’s important to note that while the smoothing program spreads out-of-pocket costs over the year, it does not reduce the total amount owed. Beneficiaries should consider their monthly budgets and healthcare needs when deciding whether to opt into this program.

Need help? Contact your MediGap Advisors Personal Benefits Manager who sent you this newsletter, or make an appointment using our online app. One of our expert PBMs will be happy to assist. No charge. 

What Happens If You Miss a Payment?

If you miss a payment, you risk being removed from the program.

This means you would have to pay your full out-of-pocket costs upfront at the pharmacy for the rest of the year. To avoid this, it’s a good idea to set up automatic payments or reminders. If you have trouble making a payment, contact your plan immediately to explore your options.

Is the Medicare Prescription Drug Payment Plan Available to Medicare Advantage Beneficiaries?

Yes.

All Medicare prescription drug plans, including both stand-alone Part D plans as well as Medicare Advantage plans, are required to offer the plan as an option. However, missing payments could cause you to be removed from the payment plan. 

What to Tell Your Pharmacist

When you enroll in the program, your plan will notify your pharmacy.

Once that happens, you won’t need to pay your full deductible and copays upfront. Instead, the pharmacy will process your prescriptions as usual, and your plan will bill you for the monthly payments.

If your pharmacy still rings up the full price of your drug, or at least your deductible and copay, tell your pharmacist you’re in the Medicare Prescription Drug Payment Program and ask them to call your plan and confirm.

Other Ways to Reduce Prescription Drug Costs

While the Prescription Drug Payment Program is helpful, there are additional ways to save:

• Use Generic Drugs. Ask your doctor or pharmacist if a lower-cost generic version of your medication is available.
• Compare Pharmacies. Prices for the same drug can vary between pharmacies. Look for preferred pharmacies in your plan’s network.
• Prescription Discount Programs. As a MediGap Advisors client, you’re eligible for deep discounts via our MediGap Advisors  Rx discount card program. 

This exclusive MediGap Advisors benefit can get you discounts of up to 80% on prescription drugs at thousands of pharmacies nationwide.

You can also try GoodRx, and the Mark Cuban Cost Plus Drug Company, which offers discounts on hundreds of common generic drugs.

Note: In some cases, amounts you pay via a discount may not count toward your deductible or the annual out-of-pocket limit. However, using a discount plan may be a good move if you don’t expect to meet your deductible this year. 

• Apply for Extra Help. If your income is limited, you may qualify for Medicare’s Extra Help program to lower drug costs.

Wrapping Up

As you probably know, I’m usually pretty skeptical when the government rolls out a new program to “help” people.

But with millions of people skipping doses or delaying filling and refilling prescriptions because of cost, this payment plan is long overdue. I encourage everyone to sign up and take advantage of this program. It lowers payments, and costs nothing.

Essentially, it’s an interest-free loan from the government. And I’m sure most of you have better things to do with the cash over the course of the year.

Any questions? Your MediGap Advisors Personal Benefits Manager who forwarded you this newsletter article is there to help you.

In fact, it’s a good idea to take a look at your Medicare plans each year or two and make sure you are still in the best and most cost-effective plan for you.

Thanks as always for being a MediGap Advisors client, and have a very happy and healthy 2025

Here’s to your health and wealth,

Wiley P. Long, III
President – MediGap Advisors

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