Medicare Prescription Payment Plan

Plan Overview

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). Starting in 2025, anyone with a Medicare health plan with drug coverage (like Blue Advantage) can use this payment option.
All plans offer this payment option and participation is voluntary.

If you select this payment option, each month you’ll continue to pay your plan premium (if you have one), and you’ll get a bill from your health or drug plan to pay for your prescription drugs (instead of paying the pharmacy). There’s no cost to participate in the Medicare Prescription Payment Plan.

Fact Sheet: What is the Medicare Prescription Payment Plan?

Coverage Details

How does it work?

The new prescription drug law caps your out-of-pocket costs at $2,000 in 2025 and eliminates the coverage gap (known as the “donut hole”). This means you’ll never pay more than $2,000 in out-of-pocket drug costs in 2025. This is true for everyone with Medicare drug coverage, even if you don’t join the Medicare Prescription Payment Plan.

If you do participate in the Medicare Prescription Payment Plan, we’ll let your pharmacy (including mail-order and specialty pharmacies) know that you’re using this payment option. When you fill a prescription for a drug covered by Part D, you won’t pay your pharmacy for the prescription. Each month your health or drug plan will send you a bill with the amount you owe, when it’s due, and information on how to make a payment. You’ll get a separate bill for your monthly plan premium (if you have one). This payment option might help you manage your monthly expenses, but it does not save you money or lower your drug costs.

Note: Your payments might change every month, so you might not know what your exact bill will be ahead of time. Future payments might increase when you fill a new prescription or refill an existing prescription because as new out-of-pocket drug costs are added into your monthly payment, there are fewer months left in the year to spread out your payments.

How is my monthly bill calculated?

The formula for calculating the minimum monthly payment (referred to as the “maximum monthly cap”) differs for the first month of participation versus the remaining months of the year. The maximum monthly cap calculations include specifics of a participant’s Part D drug costs (previously incurred costs and new out-of- pocket costs), as well as the number of months remaining in the plan year and the amount outstanding. Future payments might increase when you fill a new prescription or refill an existing prescription because as new out-of-pocket costs are added into your monthly payment, there are fewer months left in the year to spread out your payments. As such, the amount can vary from person to person and month to month, with the expectation that the total balance will be completely paid off by January 31st of the next calendar year.

You’ll never pay any interest or fees on the amount you owe, even if your payment is late. Remember, in a single calendar year (January – December), you’ll never pay more than:

• The total amount you would have paid out-of-pocket to the pharmacy.
• The Medicare drug coverage annual out-of-pocket maximum (which is $2,000 in 2025).

Examples of how a monthly bill is calculated:

View detailed examples of how Medicare Prescription Payment Plan monthly bills are calculated in the Medicare Prescription Payment Plan Fact Sheet.