Starting in 2025, Medicare is introducing a new way to pay for your prescription drugs: the Medicare Prescription Payment Plan.
This optional program aims to make medication costs more predictable and manageable, especially for those with high drug expenses.
How the Medicare prescription payment plan works
This program fundamentally changes how you pay for your medications:
- No more paying the pharmacy directly:
- Consistent monthly payments:
- Enrollment required:
When you pick up your prescriptions, you won’t have to pay the full cost upfront. Instead, your out-of-pocket costs will be billed to you in equal monthly installments.
Costs are calculated based on the $2,000 annual out-of-pocket maximum, divided into 12 equal payments. This means you’ll pay no more than $167 per month, regardless of the timing or cost of your prescriptions.
You’ll need to opt into the program through your Medicare Part D plan provider. This won’t happen automatically, so it’s important to take action if you want to participate.
What does it mean for premiums?
The payment plan itself doesn’t raise your monthly premiums. However, the overall implementation of the $2,000 out-of-pocket cap (starting in 2025) may contribute to slight premium increases over time as plan providers adjust to these changes.
Even if premiums rise slightly, the financial predictability and protection from large upfront payments could outweigh the incremental cost increase.
Who can use the payment plan?
This option is available to anyone enrolled in:
- Medicare Part D prescription drug plan or
- Medicare Advantage plan that includes prescription drug coverage.
- People with high-cost medications who want to avoid large, unpredictable expenses.
- Those on fixed incomes who need consistent, budget-friendly payments.
How would it work in practice?
Imagine you’re prescribed a medication like Humira, which costs $7,000 a month:
Without the payment plan:
You’d pay your coinsurance amount upfront each time you fill the prescription, which could be over $1,750 per fill until you hit the $2,000 annual cap.
These large payments could strain your finances, especially if multiple prescriptions are involved.
With the payment plan:
Instead of paying a large sum at the pharmacy, you’ll receive a bill for your monthly installment of $167.
This makes your costs predictable and spread out, avoiding the financial shock of paying large amounts all at once.
Is it right for you?
If you can afford large up-front costs, it might make sense to pay your share quickly and hit the cap sooner.
If up-front costs are unaffordable, the payment plan allows you to budget and avoid financial hardship, while still taking advantage of the cap.
Does this plan save money?
While the payment plan doesn’t reduce your total medication costs, it makes paying for them more manageable. Combined with the upcoming $2,000 cap, it ensures you’ll never face unlimited out-of-pocket drug expenses.
Are there options to lower out-of-pocket expense?
Even with the $2,000 cap, you may be eligible for manufacturer and foundation-driven assistance programs. These can significantly reduce your prescription costs, especially for expensive specialty drugs.
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