How Does the Medicare Prescription Payment Plan Work?

Pharmacist helping beneficiary with their Medicare Prescription Payment plan

Starting January 1, 2025, the Centers for Medicare & Medicaid Services (CMS) will offer a new payment option designed to help you manage your Part D prescription drug expenses. This plan allows you to distribute your out-of-pocket Part D costs over the course of the year, making it easier to budget.

Although the Medicare Prescription Payment Plan doesn’t reduce the total cost of your covered Part D medications, it provides flexibility by allowing you to spread your payments throughout the remaining months of the calendar year. This can be particularly useful for those who prefer a more manageable payment schedule.

How the Medicare Prescription Payment Plan Works

When you choose to participate in the Medicare Prescription Payment Plan, you will no longer need to pay your pharmacy directly when filling your covered Part D prescriptions. Instead, your plan will handle the payments on your behalf and send you a monthly invoice for your share of the costs. If you have a monthly premium for your plan, that will be billed separately.

It’s also important to note that the Inflation Reduction Act (IRA) of 2022 brings significant changes to Part D coverage. Starting in 2025, the Coverage Gap (often referred to as the “donut hole”) will be eliminated, and out-of-pocket prescription drug costs for covered Part D medications will be capped at $2,000 for the year. This change applies to everyone with Part D coverage, regardless of whether you sign up for the Medicare Prescription Payment Plan.

Your monthly payment may vary, as it is calculated based on the amount you owe for your prescriptions, divided by the remaining months in the year. Even if your payment is delayed, you won’t be charged any interest or fees on the balance.

It’s important to prioritize paying your plan’s premium first. Do not combine the payment for your Medicare plan premium with your Medicare Prescription Payment Plan payment. These payments should be made separately.

As you continue to fill prescriptions throughout the year, your future payments will increase to reflect the additional costs. All Medicare Part D prescription drug plans apply the same calculation method for determining your monthly payment under the Medicare Prescription Payment Plan.

Participation in the Medicare Prescription Payment Plan is entirely optional and may not suit everyone’s needs. You have the flexibility to join or leave the program at any time during the year.

The Medicare Prescription Payment Plan could be a great option for you if:

  • You have significant out-of-pocket costs for your covered Part D medications.
  • You expect to reach the $2,000 annual out-of-pocket limit before September.
  • You prefer to divide your Part D prescription drug expenses over the remaining months of the year.

The Medicare Prescription Payment Plan may not be the right choice for you if:

  • Your annual covered Part D drug costs are relatively low and consistent each month.
  • You don’t anticipate reaching the $2,000 annual out-of-pocket cap.
  • You qualify for Extra Help or another assistance program designed to reduce your covered Part D prescription drug costs.

How to Join the Medicare Prescription Payment Plan

If you believe this payment option suits your needs, there are several ways to sign up. First, you’ll need to join any Medicare Part D plan. Once enrolled, you can:

  • Register or log in to your member account on the carrier’s website.
  • Call the toll-free member number listed on your member ID card.
  • Complete and mail the Medicare Prescription Payment Plan Participation Request Form and mail it to your carrier.

If you find that the Medicare Prescription Payment Plan no longer meets your needs, you can opt-out at any time.

Opting out of the program won’t affect your Medicare drug coverage or other benefits. You’ll simply return to paying the pharmacy directly for your covered Part D prescription drug costs.

If you decide to switch plans or insurance providers, you’ll still be responsible for paying any outstanding balance. You can either pay the remaining amount in full or continue making monthly payments through the end of the year. For instance, if your plan year ends in December, you will receive a final bill in January.

It’s important to note that if you miss a payment, you will be removed from the program. Monthly bills will continue to be sent until your balance is paid off. To rejoin the program, you must first settle your outstanding balance.

Medicare Prescription Payment Plan form

What Other Programs Can Help Lower Drug Costs?

There are several programs available that may help reduce the cost of your prescription drugs:

  • Medicare Savings Program: A state-managed initiative that helps eligible individuals with limited income and resources pay for some or all of their Medicare premiums, deductibles, and coinsurance.
  • Extra Help: A Medicare program designed to assist individuals with limited income and resources by covering part of their prescription drug costs.
  • Manufacturer’s Pharmaceutical Assistance Programs (PAPs): These programs, offered by drug manufacturers, aim to reduce prescription costs for eligible individuals.
  • State Pharmaceutical Assistance Programs (SPAP): These state-run programs may assist with paying your Medicare drug plan premiums or out-of-pocket costs. Contributions from SPAPs may count toward your Medicare drug coverage’s out-of-pocket limit. 

Is the Prescription Payment Plan Right for You?

Deciding whether the Medicare Prescription Payment Plan is the right choice for you can be a complex decision, especially with all the options available to manage your prescription drug costs. At Carolina Senior Benefits, we understand the challenges that come with navigating Medicare and prescription drug coverage. Our team of experts is here to help you explore all the options and determine if the Medicare Prescription Payment Plan aligns with your needs.

If you’re unsure about how to proceed, or if you need personalized guidance, don’t hesitate to reach out. We can help you evaluate your coverage and ensure that you’re making the best choice for your health and budget. Contact Carolina Senior Benefits today, and let us guide you toward the right solution.