The Medicare Prescription Payment Plan is a new, optional and free program that allows Medicare beneficiaries with outpatient pharmacy coverage to spread out their prescription drug costs over the remainder of the plan year.
Below are tips on how to make the program work for you and your personal finances.
Tip #1: Protect your savings.
Your out-of-pocket costs for covered Part D prescription drugs are capped at $2,000 in 2025, but you could still end up with a high cost drug that’s hard to pay down all at once. Rather than pull money out of your savings, HSA, or investment accounts – or not getting the drug at all – paying over time could help you smooth out the cost into smaller payments that are easier to fit into your regular monthly budget. That means your savings can grow, and you won’t have to pay additional taxes for pulling money out earlier than you planned. In other words, opting into the program can be a personal finance strategy that gives you more cash to save – or spend – later.
Tip #2: Opt in early to avoid delays.
Anyone with a Medicare drug plan or Medicare health plan with drug coverage, such as a Medicare Advantage plan with drug coverage, can enroll for the program during the Annual Enrollment period, beginning October 15, 2024. By opting in early for the program, and before it goes into effect January 1, 2025, you can avoid delays at the pharmacy. Plus, the program rules state that your first payment in the month you opt in is subject to a monthly out of pocket cap, which could be higher than the rest of your payments. If you opt in during a month when you don’t have any high-cost medications, you could skip that monthly cap and smooth the cost of future drugs evenly over the remaining months in the calendar year.
Tip #3: Pay MORE than the minimum each month. If possible, pay in FULL each month.
When the program smooths the cost of your regular monthly medication over the course of the year, costs can pile up in November and December. To avoid having prescription costs pile up at the end of the year, pay at least the minimum payment each month, and if possible, pay your balance in full every month. This way you can pay your regular prescription costs in monthly installments, on your own time, and smooth out any new high-cost medications that you may need during the year.
Tip #4: Make sure your caregivers know about the program.
If someone else picks up your prescription at the pharmacy, and is unaware of the program, they may be confused and think they need to pay in person. Make sure you communicate about the program and how it works with anyone you might need to pick up a prescription on your behalf.
Tip #5: Sign up for auto-pay to avoid missing payments.
Signing up for auto-pay is a great way to avoid missing a monthly payment in the program! If you do miss a payment, you are at risk of being terminated from the program, and this might impact your ability to pick up a prescription.
