Medicare Prescription Payment Plan Can Help You Manage Monthly Drug Costs Row of drug bottles and pill tablet box on the farmacy shelf. You might benefit from the Medicare Prescription Payment Plan if you have high drug costs.The program, sometimes referred to as “cost smoothing,” is a new payment option for Medicare beneficiaries. It helps people manage out-of-pocket drug costs by spreading them across the calendar year. Anyone with a Medicare drug plan or health plan with drug coverage (such as Medicare Advantage Plan with drug coverage) can participate. There is no cost to enroll and participants won’t pay any interest or fees on the amount they owe.

How it works

When participants fill Part D-covered prescriptions, they won’t pay their pharmacies (including mail-order and specialty pharmacies). Instead, they’ll get a bill each month from their health or drug plan. Generally, the bill is based on the cost of prescriptions that month, plus the previous month’s balance, divided by the number of months left in the year.No matter what, you won’t pay more than $2,000 a year for Part D-covered medications. The prescription drug law caps out-of-pocket costs at $2,000 this year for Part D-covered drugs. The cap applies to everyone with Medicare drug coverage, not just those participating in the Medicare Prescription Payment Plan.

Example

“Ruth” enrolls in the Medicare Prescription Payment Plan in January. She has no out-of-pocket costs that month and fills her first prescription in February. Her out-of-pocket responsibility for the February prescription is $1,030.37.To calculate Ruth’s monthly payments:
  1. Determine Ruth’s total annual out-of-pocket maximum, which is $2,000 in 2025.
  1. Subtract Ruth’s out-of-pocket costs before she enrolled in the prescription payment plan. Because she enrolled before she had any out-of-pocket costs in 2025, the total is $0.
  1. Divide her total costs across the remaining months in the plan year. Ruth filled her prescription in February, so she will divide her payments over 11 months. Her out-of-pocket cost is $1,030.37, divided by 11. Her monthly bill will be $93.67, as long as she doesn’t have more out-of-pocket prescription costs. If she fills more prescriptions throughout the year, her monthly bill will be recalculated.

Weighing your options

The Medicare Prescription Payment Plan isn’t for everyone. However, it could benefit you if you:
  • Have high out-of-pocket drug costs early in the calendar year.
  • Have difficulty paying for medications all at once.
  • Take multiple medications, particularly specialty medications.
The program may be less helpful if you:
  • Have low prescription costs.
  • Have affordable, consistent costs every month.
  • Receive Extra Help (also known as Low-Income Subsidy) or financial assistance from independent programs or foundations for Part D medications.
Although the program can help Medicare beneficiaries manage monthly expenses, it doesn’t save money or decrease drug costs.Consider these resources to help you decide whether to participate:
  • Visit your health plan’s website, or call to get more information.
  • Visit the Medicare site to learn more about this payment option and whether it might be a good fit.
  • Visit State Health Insurance Assistance Program for the phone number for your local SHIP to get free, personalized health insurance counseling.
You can enroll in the Medicare Prescription Payment Plan any time. Visit your health or drug plan’s website, or call, to learn how to enroll. For help contacting your plan, call 1-800-MEDICARE (800-633-4227). TTY users can call 877-486-2048.