This Medicare Change Will Let Seniors Spread Out-of-Pocket Costs

This Medicare Change Will Let Seniors Spread Out-of-Pocket Costs

Seniors who face high costs at the pharmacy will see relief starting in 2025, thanks to a new program designed to help seniors have more predictable drug costs throughout the year.

Called the Medicare Prescription Payment Plan, the program requires all Medicare Part D plans to provide the option to pay out-of-pocket prescription costs in monthly installments. Seniors who opt-in will start paying for their prescriptions the month they fill them, and the cost of each prescription will be divided over the rest of the calendar year. The Center for Medicare & Medicaid Services, the agency responsible for implementing the program, expects the plan to be beneficial for seniors with frontloaded drug costs.

To understand why and how the plan will work in action, see Example 1 in the table below.

If a senior filled a prescription with a cost of $1,200 in January, they would divide that cost across all 12 months to $100 a month. If they filled an additional $600 prescription in July, that $600 would be divided across the year’s final six months, adding an additional $100 to the monthly payment, bringing it to $200.

       Medicare Prescription Payment Plan Impact Examples

Likewise, in Example 2, we can see how the plan would work for someone whose drug costs are spread more evenly throughout the year.

In this example, the senior would not begin making monthly payments until they filled their first prescription in March. Then, they’d start paying $40 per month until they filled their next prescription for another $400 in April. And, when they filled their next prescription for $1,400 in September, their payments would rise to $390 per month. When they filled a third prescription to hit their out-of-pocket maximum in November, their monthly payments would be $490 for the rest of the year.

Any Medicare Part D enrollee will be eligible for the program. Seniors will first be able to sign up during open enrollment for 2025. However, they will be able to opt into the program at any time, whether that’s prior to the start of a new Medicare Part D Plan year or in any month during the year. To sign up, seniors should contact their Medicare Part D sponsor, who will guide them through the process to opt into the program.

To learn more, visit the Medicare Prescription Payment Plan press releases on the Centers for Medicaid & Medicare Services website.