Key Takeaways
- Medicare prescription payment plans (M3Ps), established by the 2023 Prescription Drug Law, allow Medicare Part D and Medicare Advantage plan members to spread their out-of-pocket medication costs throughout the year.
- While the plans do not reduce overall medication expenses, they can make budgeting easier by providing predictable monthly bills.
- Enrolling earlier in the year maximizes the benefit of spreading payments. Those with high drug costs early in the year may find these plans the most helpful. In 2025, you will pay no more than $2,000 out-of-pocket for prescribed drugs during the calendar year.
As part of Medicare’s drug law changes, if you have a Medicare Part D prescription drug plan or a Medicare Advantage (Part C) plan with drug coverage, you can join a prescription payment plan.
When you opt for this payment method, you’ll keep paying your monthly plan premium (if you have one), and your health or drug plan will send you a bill for your prescription medications instead of you paying directly at the pharmacy.
With Medicare M3Ps, when you get a prescription for a covered drug, the pharmacy won’t charge you your out-of-pocket costs when you collect your medication.
Instead, you’ll get a monthly bill for all your filled prescriptions directly from your insurer. This bill is based on your balance from the previous month and the number of months remaining in the calendar year.
Your monthly payments can change if you fill a new prescription or refill an existing one. This is because there are fewer months left to distribute the remaining payments.
It’s important to understand that joining an M3P does not reduce your medication costs. That said, it does spread your payments out over time, which can result in lower monthly payments that are easier to manage.
For example, you may benefit if you have high drug costs earlier in the year. While you can join the plan at any time, the earlier you enroll, the more time you have to distribute the payments, thus reducing the monthly amount.
On the other hand, if you have lower drug costs earlier in the year or if your expenses are more stable throughout the year, you may not see as much benefit.
The tables below provide example scenarios for a Medicare prescription payment plan, including a breakdown of monthly costs with the program and costs without program support.
In the first example below, you have consistent prescription drug costs of $80 per month for 12 months.
| Month | Cost without an M3P | Cost each month with an M3P |
|---|---|---|
| January | $80 | You will pay the first month in full: $80 |
| February | $80 | Even though your continued costs are $80 per month, your pharmacy will bill your insurer, and you will pay the following amounts with monthly incremental increases: $7.27 |
| March | $80 | $15.27 |
| April | $80 | $24.16 |
| May | $80 | $34.16 |
| June | $80 | $45.59 |
| July | $80 | $58.93 |
| August | $80 | $74.92 |
| September | $80 | $94.93 |
| October | $80 | $121.59 |
| November | $80 | $161.59 |
| December | $80 | $241.59 |
| Total | $960 | $960 |
In the second example below, you would start the program with higher drug costs.
| Month | Cost without an M3P | Cost each month with an M3P |
|---|---|---|
| January | $500 | $166.67 |
| February | $500 | $75.76 |
| March | $500 | $125.76 |
| April | $500 | $181.31 |
| May | $0 | $181.31 |
| June | $0 | $181.31 |
| July | $0 | $181.31 |
| August | $0 | $181.31 |
| September | $0 | $181.31 |
| October | $0 | $181.31 |
| November | $0 | $181.31 |
| December | $0 | $181.31 |
| Total | $2,000 | $2,000 |
NOTE: When you first join the plan, your initial month’s bill is determined by the “maximum possible payment” formula. For the remaining months of the year, a different calculation is used.
Various resources are available if you find it challenging to afford out-of-pocket prescription drug costs. If you’re enrolled in Medicare, consider the following options:
- Extra Help
- Medicare savings programs
- state pharmaceutical assistance programs
- manufacturer coupons (although you won’t always be able to use them with insurance)
If you can get cost assistance, consider whether joining a Medicare prescription payment plan is beneficial for you, as your overall costs will already be lower.
Every Part D or Part C plan will have its own deductible.
Payments for a Medicare Prescription Drug Plan will cover your out-of-pocket costs, including your deductible.
You’ll also still be required to pay your monthly premium, if your plan has one.
You can enroll anytime by visiting your insurer’s website or calling them. However, the later in the year you set up a plan, the fewer months you will have left to spread the costs.
Once you have an M3P in place, you can cancel it at any time by repaying any remaining balance monthly or in full.
Any pharmacy costs you incur after your cancellation must be paid directly to the pharmacy when collecting your prescription.
If you miss a monthly payment for your M3P, you’ll receive a reminder.
You won’t have to pay interest or extra fees if you pay your bill, but late payments may lead Medicare to remove you from the plan.
You won’t lose drug coverage, but you’ll have to pay the pharmacy directly.
The 2023 Prescription Drug Law introduced a new way to handle prescription drug payments: A Medicare prescription payment plan (M3P).
Rather than paying for medications upfront at the pharmacy, you can now receive a convenient monthly bill from your Medicare Part D or Medicare Advantage plan with drug coverage. This can help you manage higher out-of-pocket drug costs by spreading your payments out over time.
Note that if you want to know your drug costs at the time of filling your prescription, you can still request a cost estimate from your pharmacist.