The Medicare Prescription Payment Plan Starts in 2025

Medicare Part D plans are changing. The Medicare Prescription Payment Plan program debuts in 2025, as required by prescription affordability provisions in the Inflation Reduction Act of 2022, to help people manage their prescription costs. This is important because when people can’t pay what they owe upfront at the pharmacy, they often skip or delay taking needed medications.

Instead of paying their pharmacies when filling prescriptions, the payment plan will allow people with Medicare Part D coverage to spread out-of-pocket costs over the remaining months of the year.

What is the Medicare Prescription Payment Plan?

The Medicare Prescription Payment Plan is an option to be billed for your portion of covered medication costs instead of paying your pharmacy directly. This new Medicare program can help you manage your out-of-pocket costs, but it doesn’t save you money or reduce your medication prices. You can participate if you have a standalone Part D plan or prescription coverage included in a Medicare Advantage plan. All plans will offer a payment plan.

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Another change for 2025 is the Medicare Part D $2,000 out-of-pocket limit, after which your prescription plan picks up 100% of the costs of your covered medications. People who may find the greatest relief under the payment plan have medications that will cost them $2,000 or more out of pocket in January and are enrolled to start participating that month. Under that scenario (Example 2 shown later in this piece), you’ll pay about $167 every month to your prescription plan from January to December instead of $2,000 upfront to the pharmacy.

Key points

There are some key points to know about the Medicare Prescription Payment Plan and how it works:

• Participation is voluntary, but you must opt in.

• There is no cost to participate.

• If you join during open enrollment in 2024, which runs through December 7, your payment plan participation will begin on January 1, 2025. You can also join at any time in 2025.

• Your payments will be spread out across the year.

• Depending on the medications you fill, your payments can change throughout the year.

• You must sign up annually to participate in the program for a plan year.

• You still pay your plan premium, in addition to your monthly bill for the payment plan.

• There is no interest or fees on late payments, but you can be dropped from your payment plan if you don’t make your monthly payments. Exiting the payment plan doesn’t disenroll you from your Medicare Part D coverage.

• You can enroll retroactively if you have an urgent prescription to fill.

• You can leave the plan at any time. If you owe a balance, you can pay the full amount at once or continue to receive a monthly bill.

• Your payment plan ends if you switch to another prescription plan.

• Every prescription plan will have a grievance process if you are dissatisfied with your payment plan.

When will Medicare Part D prescription payment plans be available?

The Medicare Prescription Payment Plan program became available when Medicare open enrollment for the 2025 coverage year began on October 15, 2024. If you join during open enrollment, which ends on December 7, 2024, you will be eligible to participate in the payment plan as of January 1, 2025.

You also can contact your Medicare prescription plan to join at any time in 2025.

Required enrollee notifications

Your Part D plan is required to provide notifications to you regarding the Medicare Prescription Payment Plan before and during the coverage year. This is especially true if your history of out-of-pocket spending shows that you may benefit from the program. Once your prescription plan determines that you’re eligible for the payment plan option, you should receive a notification when filling a prescription that you are likely to benefit from a prescription payment plan.

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• There are ways to save on medications if you have Medicare Part D. You may be able to reduce your Part D prescription costs if you qualify for the Extra Help program, state pharmaceutical assistance programs, or patient assistance programs.

• Switching Medicare plans: Choosing another Part D standalone plan or a different Medicare Advantage plan that covers the medications you need may be a reason to change your prescription plan during open enrollment.

• Explore Medicare prescription plan options: The Medicare Plan Finder can help you compare Part D coverage during open enrollment in standalone plans or within Medicare Advantage plans.

Medicare prescription plan payment options

Once you request the payment plan, your prescription plan will send you a letter confirming your participation. When you fill a prescription covered by Part D, your retail, mail-order, or specialty pharmacy will receive an automatic notification that you have the Medicare Prescription Payment Plan. This means you will receive your medication without paying the pharmacy directly. Even though you’re not paying when you fill your prescription, the pharmacy can tell you how much your medication costs.

Your plan will send you a bill each month with the amount you need to pay for your prescriptions, as well as the due date. The statement will also tell you how to make payments. Your payments will be calculated on the cumulative balance owed and the number of months remaining in the year.

You will get a separate bill for your monthly plan premium, if you have one.

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Who can benefit from a payment plan?

The Medicare prescription plan enrollees most likely to benefit from a payment plan have high medication costs early in the year. Spreading your out-of-pocket costs over the year can help you manage your budget. You can use this Medicare tool and answer a few questions to figure out if you’re likely to benefit from a payment plan.

A payment plan may benefit you if:

• You have a high monthly cost (more than $600) for one or more covered medications.

• You expect to meet your out-of-pocket maximum of $2,000 early in the year.

• You want to spread your medication costs over the year.

• You aren’t bothered by an additional monthly bill.

• You don’t receive any additional assistance, such as the Extra Help low income subsidy, to reduce your pharmacy costs.

Why a payment plan may not be right for you

The Medicare Prescription Payment Plan may not be the best choice for every enrollee. The program may not be a good fit for you if any of the following describes your situation:

• Your annual prescription medication costs are low.

• Your prescription costs are the same every month.

• You plan to join after September.

• You don’t want to change how you pay for prescriptions.

• You prefer to pay the pharmacy and don’t want another monthly bill to pay.

• You are eligible for Extra Help, which provides lower out-of-pocket prescription costs for people with limited incomes and resources.

• You qualify for a Medicare Savings Program.

• You get help with medication costs from a state pharmaceutical assistance program,  coupons such as those from GoodRx, pharmaceutical assistance program, other prescription assistance programs, or other health coverage.

Payment plan examples

When you need prescriptions during the year and how much they cost will determine how your payment plan is structured.

The charts below illustrate month-by-month examples to help you understand how these plans work:

• You start your payment plan in January, with high costs early in the year (Example 1): This option may help you spread out costs if you’re concerned about spending $500 monthly at the pharmacy in January, February, March, and April.

• You start your payment plan in January, with medication costs of $2,000 or more (Example 2): This option may be helpful if you encounter a medication equaling or exceeding $2,000 in the first month of the year and need to spread the cost into predictable, equal payments over 12 months of the year.

• You start your payment plan in January, with consistent costs throughout the year (Example 3): Your payments will escalate later in the year, so you may have more manageable costs if you pay the pharmacy directly as you fill prescriptions.

• You start your payment plan in April or later, with varied costs during the year (Example 4): This option may be helpful if you encounter a large upfront cost in the spring or summer and need the rest of the year to make affordable payments.

Example 1

Payment plan starts in January, with high medication costs early in the year

Example 2

Payment plan starts in January, with medication costs of $2,000 or more

Example 3

Payment plan starts in January, with consistent medication costs throughout the year

Example 4

Payment plan starts in April, with varied medication costs during the year

What are insurance plans telling their enrollees?

Medicare Part D plans are explaining the Medicare Prescription Payment Plan on their websites with enrollment details, direct links to join, information about how to file a grievance, and toll-free numbers to call for more details. Here is a sampling of those pages:

• Aetna

• Florida Blue

• HealthTeam Advantage

• Humana

• Medica

• SummaCare

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Written by:

Cindy George, MPH

Cindy George is the senior personal finance editor at GoodRx. She is an endlessly curious health journalist and digital storyteller.

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