Stagger your Part D payments with the Medicare Prescription Payment Plan

Last year, CMS announced a new program to spread Part D prescription drug out-of-pocket costs over the whole year. Costs hitting you all at once at the pharmacy counter would be a thing. Let's get into the details of how this will affect you.

This program, now named the Medicare Prescription Payment Plan, will be available to you in 2025. It comes in a package deal of other provisions designed to lower prescription drug costs for those with Part D. To completely understand how it helps you, first understand the other portion that works in tandem with it: the out of pocket drug cost cap.

Starting in January 2025, Medicare will set a $2,000 limit for out-of-pocket expenses on Part D prescription medications. This doesn’t include the premiums you still need to pay. But, it could help cut the costs significantly if you are someone who was hitting that number annually. So, the Medicare Prescription Payment Plan allows you to pay that $2,000 throughout the year instead of right when you purchase your drugs.

Behind the scenes, Part D plans will be fronting the costs of these medications to the pharmacies. You’ll essentially be paying those plans back over your plan year. This doesn’t change how much the drug will cost. It won’t disqualify you from participating in any Cost Savings programs or Extra Help.

Of course, if drug costs are a struggle for you, we can help you check out those programs with this payment plan option. We'll make sure you are getting all the needed support.

For example, let's say Ben is taking Eliquis, a drug that the Inflation Reduction Act's drug cost negotiations are currently targeting for a price drop. But until that final cost goes into effect in 2026, Ben will pay full price. This drug is currently about $600 a month.

Ben will hit his out of pocket max in April at the latest, assuming he never gets prescribed anything else. Instead of coughing up $600 a month for four months on top of paying his premium, he can sign up for the Medicare Prescription Payment Plan.

You can now divide that $2,000 into 12 monthly installments. Adding in his premium, which is $55.50 on average according to CMS, he will pay about $222 a month for Part D. Without this plan, he would pay about $655.50 from January to April, then $55.50 for the rest of the year. And if Ben is a senior on a fixed income, the old-fashioned way might be difficult to swing if he didn’t plan for it.

Participating pharmacies, providers, and advocates must tell you about this program. You can opt in by contacting your Part D benefit sponsor. For the pharmacy, you must be on a prescription costing $600 or more to get the reminder. But remember, this program starts in 2025, so you will have to wait until January 2025 to enroll.