What Is the New Medicare Prescription Payment Plan and Could It Help You?
Overview
Effective January 1, 2025, Medicare beneficiaries with traditional Medicare who have a stand-alone Part D Prescription Drug Plan AND Medicare beneficiaries with a Medicare Advantage Plan that includes Part D prescription drug coverage (sometimes called Part C) have a new option to pay their out-of-pocket prescription drug expenses in monthly payments instead of paying them at the pharmacy when getting their drug. This new option is called the Medicare Prescription Payment Plan (“Payment Plan”). The period to opt into the 2025 Payment Plan began on October 15, 2024 and continues throughout 2025. Both the Medicare Prescription Payment Plan and the new $2,000 cap on out-of-pocket expenses for covered Part D prescription drugs go into effect on January 1, 2025.
Why Was the Medicare Prescription Payment Plan Created?
The out-of-pocket expenses for prescription drugs that treat cancer and other serious or chronic conditions can be expensive and difficult for many Part D enrollees to pay for all at once. These affordability challenges can delay people getting and taking their prescription drugs on time, which is important to treating and managing their condition. The Medicare Prescription Payment Plan allows participants to get their covered prescription drugs from the pharmacy (including different pharmacy types such as mail order or specialty pharmacies) without paying anything to the pharmacy. Instead, participants in the Medicare Prescription Payment Plan will receive capped monthly invoices from their Part D plan. Opting into the Payment Plan can help ease the cost burden many Medicare beneficiaries face when trying to afford their prescription drugs and improve people’s ability to get and take their prescription drugs on time.
How Does the Medicare Prescription Payment Plan Work?
Anyone enrolled in a Medicare Part D plan, either a stand-alone Part D plan (stand-alone PDP) or a Medicare Advantage plan with Part D coverage (MA-PD) is eligible to participate in the Medicare Prescription Payment Plan. If a Part D enrollee’s out-of-pocket expenses reach $600 for a single prescription, the Part D plan has the additional obligation to notify the pharmacy, and the pharmacy is then required to inform that enrollee that they are eligible for the Medicare Prescription Payment Plan and how to opt-in. Participation in the Payment Plan is free, but enrollment is not automatic. Part D enrollees MUST OPT INTO the Medicare Prescription Payment Plan before being permitted to pay $0 at the pharmacy and billed monthly for their out-of-pocket prescription drug expenses. It is not currently possible to opt into the Medicare Prescription Payment Plan at the pharmacy. The participant must opt into the Payment Plan in advance and the application must be processed before an enrollee picks up their prescription drug at the pharmacy.Requests to opt into the Payment Plan made in calendar year 2025 must be processed within 24 hours. Requests to opt into the Payment Plan made in 2024 must be processed within 10 calendar days. The Payment Plan goes into effect on January 1, 2025. The Medicare Prescription Payment Plan does not lower the amount a Part D enrollee owes in out-of-pocket prescription drug expenses – it only spreads out the amount owed into smaller monthly payments. Medicare beneficiaries with limited incomes and resources should determine if they are eligible for programs like the Low-Income Subsidy (LIS)/Extra Help program or the Medicare Savings Program, which lowers the cost of prescription drugs instead of just spreading the cost out over time. The income criteria to qualify for LIS/Extra Help has expanded to cover enrollees who earn less than 150% of the Federal Poverty Level, which means more people may now qualify for this program.
How Is the Amount Due Each Month Determined and Who Gets Paid?
The capped monthly payment owed by a participant in the Payment Plan is determined by adding the out-of-pocket costs for all prescription drugs purchased in a month to the balance owed for prescription drugs purchased in the previous month and then dividing that amount by the number of remaining months in the year. All stand-alone PDPs and MA-PDs will use the same calculation method when determining the amount due each month. Although it is possible to opt into the Medicare Prescription Payment Plan anytime from October 15, 2024 and throughout 2025, the more months in 2025 that someone participates in the Payment Plan, the lower their monthly payments will be. The capped monthly payment will change each month if a new drug(s) is purchased or an existing prescription(s) gets refilled in another month. Monthly premium payments, if any, due for an enrollee’s Part D plan coverage are NOT included in the Medicare Prescription Payment Plan’s monthly invoice. Part D enrollees will continue to receive a separate bill from their Part D plan for any premium payment they owe for their Part D plan, and they must pay that separate bill to maintain their Part D plan coverage.
What Happens if a Payment Is Missed or Late?
If a participant in the Payment Plan fails to pay their monthly bill in a timely manner, they will receive a reminder from the stand-alone PDP or the MA-PD, but they will not be billed late fees or interest payments. However, if they fail to pay the amount due by the date in the reminder notice, they will be removed from the Payment Plan (but not removed from their Part D Prescription Drug Plan).
Can a Person Opt Out of the Medicare Prescription Payment Plan?
A Part D enrollee who previously opted into the Payment Plan can also opt out of the Payment Plan at any time. Any remaining amount owed from their participation in the Payment Plan must still be paid to the Part D plan. The balance can be paid in one lump sum or billed monthly. Once a person opts out of the Payment Plan, they must pay the pharmacy the full amount due, if any, for the covered prescription drugs filled after opting out of the Payment Plan.
What Factors Should Part D Enrollees Consider in Deciding Whether or Not to Opt Into the Medicare Prescription Payment Plan?
Not all Part D enrollees may want or need to opt into the Medicare Prescription Payment Plan. People with low prescription drug costs may prefer to pay their out-of-pocket prescription drug expenses in full at the pharmacy counter when they pick up their prescription drug(s). Others may not want to add a new monthly bill to their to-do list. Part D enrollees who currently have or anticipate having high out-of-pocket prescription drug expenses in 2025 – whether resulting from one prescription or the combination of several prescriptions – may benefit from opting into the Medicare Prescription Payment Plan. The extent of that benefit may depend on the number of months remaining in the calendar year when they opt-in. The fewer months remaining in the year to spread out prescription drug expenses reduces – but does not necessarily eliminate – the benefit of participating in the Payment Plan. Each Part D enrollee must evaluate their own situation and determine if the Medicare Prescription Payment Plan may benefit them. As mentioned previously, for those who qualify for Extra Help or the Medicare Savings Program, these programs lower the enrollee’s expenses and therefore provide a greater benefit than the Payment Plan. In addition to Extra Help and the Medicare Savings Program, non-profit foundations and manufacturer pharmaceutical assistance programs may also offer help that lowers out-of-pocket expenses for qualified enrollees with Medicare, which may be more beneficial than the Medicare Prescription Payment Plan. If a Part D enrollee previously opted into the Medicare Prescription Payment Plan but later qualifies for a more advantageous program, they should ask a representative from that program how best to proceed and whether it may be in their best interest to opt out of the Medicare Prescription Payment Plan.
Additional Resources
Medicare Prescription Payment Plan (CancerCare)
What’s the Medicare Prescription Payment Plan? | Medicare
https://www.cms.gov/inflation-reduction-act-and-medicare/part-d-improvements/medicare-prescription-payment-plan
Call 1-800-MEDICARE (1-800-633-4227), 24 hours a day, 7 days a week. TTY users can call 1-877-486-2048.
This guest blog post was written by Kim Czubaruk, JD, CancerCare's Associate Vice President of Policy.