What is the Medicare Prescription Payment Plan? (2025)

FAQs

What is the Medicare prescription drug payment plan? ›

The Medicare Prescription Payment Plan is a new payment option in the prescription drug law that works with your current drug coverage to help you manage your out- of-pocket Medicare Part D drug costs by spreading them across the calendar year (January-December).

Included in these reforms is the establishment of the Medicare Prescription Payment Plan (M3P), a monthly installment plan that allows enrollees to pay back prescription drug costs overtime instead of all at once at the pharmacy.

You're most likely to benefit from participating in the Medicare Prescription Payment Plan if you have high drug costs earlier in the calendar year.

While the lower tier drugs may be manageable to pay for without Part D coverage, the higher tiers may give you sticker shock. So, while you may have to pay a premium, deductible, copay or coinsurance, your overall Medicare Part D costs will likely be significantly less than if you don't have coverage.

In 2024, the catastrophic threshold will be set at $8,000. This amount includes what Part D enrollees spend out of pocket plus the value of the manufacturer price discount on brands in the coverage gap phase.

Out-of-pocket costs

Health or prescription drug costs that you must pay on your own because they aren't covered by Medicare or other insurance. will be capped at $2,000, starting in 2025.

Starting in 2025, the M3P program provides the option to individuals with Medicare prescription drug coverage to spread the costs of their prescription drugs over the calendar year, rather than paying upfront in full each time they fill a prescription.

health coverage

Medicare drug coverage (Part D) helps you pay for both brand-name and generic drugs. Medicare drug plans are offered by insurance companies and other private companies approved by Medicare.

The Medicare Premium Payment Program, or Medicare Buy-In, allows Medi-Cal to pay Medicare Part A and/or Part B premiums for Medi-Cal beneficiaries and others who qualify for Medi-Cal under special programs, allowing Medi-Cal to defer medical costs to Medicare where appropriate.

Who is the largest provider of Medicare Advantage plans? ›

UnitedHealthcare has had the largest share of Medicare Advantage enrollment and largest growth in enrollment since 2010, increasing from 20 percent of all Medicare Advantage enrollment in 2010 to 29 percent in 2024.

Medicare pays for benefits whether beneficiaries use traditional Medicare and enroll in stand-alone prescription drug plans (PDPs) or they enroll in Medicare Advantage prescription drug plans. Plan sponsors bear insurance risk for the benefit spending of their enrollees.

First, Wellcare's Value Script plan makes a splash as the lowest-cost Part D plan on the market while also offering good star ratings. Second, AARP plans from UnitedHealthcare have a solid track record for quality. "The best Part D plan for you is one that reliably covers your medications at a cost you can afford.

In some cases, you'll have a higher share of costs when you see an out-of-network doctor. In other cases, you're not covered at all if you go out of network. This is particularly important if you travel a lot because Medicare Advantage plans generally don't provide out-of-state coverage.

Beginning in CY 2025, more payments by third-party payers will accrue as if they were beneficiary out-of-pocket costs, reducing beneficiary spending, including supplemental Part D coverage and coverage by other health insurers.

Medicare drug coverage (Part D) helps you pay for both brand-name and generic drugs. Medicare drug plans are offered by insurance companies and other private companies approved by Medicare.

Medicare Part C (Medicare Advantage) combines hospital and medical coverage, while Medicare Part D is a separate plan just for prescription medication coverage. Part C and Part D policies are only provided by private insurers.

Depending on your drug plan, in the first phase you may pay a deductible and about 25% of drug costs. In the third phase, you pay about 5%. In between, there is a gap in coverage which is called the donut hole when the client must pay 100% of drug costs out of their own pocket.

Prescription drug insurance is available as a stand-alone plan. It works similarly to medical insurance: You pay an annual premium and then have a copay or coinsurance cost at the pharmacy. The most well-known type of stand-alone plan is Medicare Part D, though privately-run plans do exist.