If you have Medicare Part D and take prescription medications, you may have heard about the Medicare Prescription Payment Plan.
The program can make prescription drug costs easier to manage by allowing you to spread your out-of-pocket costs for covered Part D medications throughout the calendar year instead of paying the full amount at the pharmacy when you pick up your prescriptions.
But there is an important distinction:
The Medicare Prescription Payment Plan does not reduce the amount you owe for your medications. It changes when you pay those costs.
Let’s take a closer look at how it works.
The Medicare Prescription Payment Plan, sometimes called M3P, is a payment option available through Medicare Part D plans.
If you participate, instead of paying your full Part D out-of-pocket cost at the pharmacy, you can spread those costs into monthly payments over the rest of the calendar year.
For example, imagine you pick up a prescription early in the year and your share of the cost is $600.
Instead of paying the entire $600 at the pharmacy, you could choose to participate in the Medicare Prescription Payment Plan and have that amount included in your monthly payment schedule.
The exact monthly amount depends on your prescription costs and when those costs occur during the year.
No.
This is one of the most important things to understand.
The Medicare Prescription Payment Plan does not lower your prescription drug costs, eliminate your deductible, or provide a discount on your medications.
Instead, it allows you to spread your out-of-pocket costs over monthly payments.
Think of it as a way to make your prescription expenses more predictable and manageable, rather than necessarily making them cheaper.
Suppose you have a $1,200 out-of-pocket prescription expense during the year.
Without the payment plan, you may have to pay a large portion of that expense when you pick up your prescription.
With the Medicare Prescription Payment Plan, your Part D plan can spread your costs into monthly payments for the remainder of the year.
You still owe the $1,200.
You’re simply paying it over time rather than all at once.
The payment plan may be particularly helpful for Medicare beneficiaries who have high prescription drug costs, especially if those costs occur unexpectedly.
For example, it may be worth considering if you:
However, it isn’t necessarily the best choice for everyone.
Someone who has relatively low prescription costs may not get much benefit from spreading those costs throughout the year.
The process generally works like this:
You can ask your Medicare Part D plan about participating in the Medicare Prescription Payment Plan.
Participation is voluntary.
You are not automatically enrolled simply because you have Medicare Part D.
You continue using your Part D plan and its participating pharmacies.
When you fill a covered prescription, your plan processes the medication normally.
Instead of paying your full out-of-pocket amount at the pharmacy, that amount is added to your payment-plan balance.
Your Part D plan sends you a monthly bill for your payment-plan amount.
Your monthly payment can change during the year because it depends on your prescription costs and when those costs occur.
You continue making monthly payments until you’ve paid the applicable amount you owe under the payment plan.
It’s important to remember that the payment plan doesn’t eliminate your financial responsibility for your medications.
You can request to participate in the Medicare Prescription Payment Plan during the year.
However, the earlier you join, the more months you generally have available to spread your costs.
This can be particularly important if you expect to have significant prescription expenses early in the year.
You can contact your Part D plan to request participation.
Yes.
You don’t necessarily have to wait until Medicare’s Annual Enrollment Period to request participation.
If your prescription costs increase during the year, you can contact your Part D plan and ask about joining the Medicare Prescription Payment Plan.
Your plan will explain how your payment schedule would work.
If you change your Medicare Part D plan or Medicare Advantage plan during the year, your payment-plan arrangements can be affected.
If you switch plans, your existing payment arrangement generally doesn’t simply transfer to the new plan.
Your new plan will provide information about participating in its Medicare Prescription Payment Plan.
If you have an outstanding balance, make sure you understand what you still owe and how it will be handled.
You can generally choose to stop participating in the payment plan.
However, stopping participation does not erase any balance you already owe.
You will still be responsible for paying your remaining balance to the plan.
Your future prescription costs will generally return to the normal Part D payment process.
The Medicare Prescription Payment Plan is not the same thing as prescription drug insurance itself.
If you don’t make your monthly payment, you still owe the balance.
Your Part D plan will provide information about payment requirements and what happens if payments are missed.
It’s important to stay current with your payment-plan bills.
No.
These are two different things.
Medicare Part D is your prescription drug insurance.
The Medicare Prescription Payment Plan is an optional way to pay your Part D out-of-pocket prescription costs over time.
Think of it this way:
Part D = Your prescription drug coverage
Prescription Payment Plan = A way to spread your out-of-pocket costs over the year
You can have Medicare Part D without participating in the payment plan.
No.
The Medicare Prescription Payment Plan applies to covered Part D prescription drug costs that you would otherwise pay out of pocket.
It does not mean that every medication or medical expense you have will be included.
For example, medications that aren’t covered by your Part D plan may not qualify.
Your plan can explain which costs are eligible.
Medicare Part D has an annual out-of-pocket limit for covered Part D medications.
The Medicare Prescription Payment Plan doesn’t increase or decrease that limit.
Instead, it changes how you pay eligible out-of-pocket costs during the year.
Once you reach Medicare’s applicable annual Part D out-of-pocket limit for covered drugs, you generally won’t have additional out-of-pocket costs for covered Part D drugs for the remainder of the calendar year.
The annual limit can change over time, so it’s important to review the current year’s Medicare rules.
The Medicare Prescription Payment Plan may offer several advantages:
Instead of facing a large prescription bill, you may be able to spread your costs across monthly payments.
If you take an expensive medication, spreading the cost may make it easier to manage your household budget.
People with expensive medications may find the payment option particularly useful.
The payment plan isn’t right for everyone.
You still pay the same eligible out-of-pocket amount.
Your payment isn’t necessarily the same every month.
If you stop participating, you still have to pay any remaining balance.
If you normally spend very little on prescriptions, spreading those costs may not provide much benefit.
That depends on your prescription medications and your expected out-of-pocket costs.
Before deciding, consider:
The payment plan is designed primarily to help with cash-flow management, not to reduce the overall cost of your medications.
The Medicare Prescription Payment Plan can be a useful option for Medicare beneficiaries who have significant prescription drug expenses.
It allows eligible Part D out-of-pocket costs to be spread over monthly payments instead of being paid all at once at the pharmacy.
Remember the three most important points:
1. Participation is voluntary.
2. It does not reduce the total amount you owe for your medications.
3. It changes when you pay your eligible out-of-pocket costs.
If you’re taking several prescriptions or have expensive medications, it’s worth asking your Medicare Part D plan whether the Medicare Prescription Payment Plan could make your prescription expenses easier to manage.
At Next Level Benefits, we help Medicare beneficiaries understand their coverage and the options available to them.
If you’re reviewing your Medicare prescription drug coverage, we can help you understand how your plan works and what questions to ask when evaluating your options.
Next Level Benefits
Phillip and Lisa Dimitrakis
Medicare • Medicare Advantage • Prescription Drug Plans • Medicare Supplements
This article is for educational purposes only and is not a complete description of Medicare benefits or plan-specific benefits. Medicare rules, costs, and benefits can change. Contact your Medicare plan or visit Medicare.gov for the most current information.
