Medicare Prescription Payment Plan

In 2025 the out-of-pocket max is going to be lowered to $2,000 for the whole year, but there is always still a concern about the upfront cost of medications, especially if you are going to be meeting that out-of-pocket max in the first month! Starting in 2025 Medicare is going to be introducing the  Medicare Prescription Payment Plan which is going to be a new payment option that allows you to split that $2,000 out-of-pocket max over 12 months. This will be available to everyone with a stand-alone drug plan and Medicare Advantage plan!

So How does this work? You will have to enroll into the program as enrollment into the Medicare Prescription Payment Plan is voluntary and completely your choice. You can enroll with the help of your local insurance agent/broker. Once you are enrolled you will be able to go to the pharmacy and pick up your prescription. Here’s where it is a little different. You will not pay the pharmacy, instead you will receive a bill each month from your drug plan and they will pay the pharmacy. This allows you to have smaller more predictable payments rather than the larger one time lump sum. Something to keep in mind is that you are still responsible for the cost of your medications, but you will just be paying the insurance company rather than the pharmacy, and this expense is still YOUR responsibility.

You also might be asking how is my monthly bill calculated? Your bill will be calculated by what you would have paid for your prescription, plus your previous month balance, divided by the number of months left in the year. So if your medication in $500 a month and you are starting the program in January it will look like this:

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First month they figure out your “maximum possible payment” and then the following months they will use the equation mentioned above. The remaining balance is calculated by taking the monthly cost and subtracting what the payment plan payment is. So for February it was $500 – $166.67 to get $333.33. Then, after April the monthly price is going to be a bit different since the out-of-pocket max will be met in April so all months following April will be the same payment of $181.31.

The important thing to understand with the payment plan, is the prices may not be the same from month to month depending on the medication, and you will NEVER pay more than the $2,000 out-of-pocket max. Your payments might change every month, so while you might not know what your exact bill will be ahead of time, you will receive a bill in the mail explaining what you will be.

Another question you might have is will this help me? The short answer is it depends on your situation. This program is great for people who have high cost drugs that are going to meet the out-of-pocket max early on in the year. You can join the payment program at any time, but it is more beneficial to join it early on in the year. This program will not be beneficial to people who have low monthly drug cost, consistent monthly drug cost, those looking to sign up late in the year (September – December),  those of you who like paying for your drugs at the pharmacy and don’t want monthly bills, etc.

If you have questions about if this program can be beneficial to you or if you just want more information, make sure you contact us at Streamline Insurance Consultants or an experienced local agent/broker for this journey. If you are new to Streamline Insurance Consultants, please visit our Contact Us page and fill out the form so we can get in touch with you and help you through these confusing changes!