As you may have heard, Medicare Part D has some big changes for 2025! We outlined all the reforms in our previous blog, Major 2025 Part D Reforms. One reform that we want to give more information on is the Medicare Prescription Payment Plan (M3P). The new payment plan will help manage with high drug costs by spreading it out over the year. Find out how the new plan works and who should enroll below.
What is the Medicare Prescription Payment Plan (M3P)?
Starting 2025, the Inflation Reduction Act implemented several Medicare prescription reforms. A $2,000 max out of pocket cap on prescription drugs and the Medicare Prescription Payment Plan (M3P). M3P is a payment option for your Part D coverage to help you “smooth out” your out-of-pocket costs drug costs. Starting January 1, 2025, all Part D plans must offer beneficiaries the option to enroll in the M3P program. This includes both stand alone Part D prescription plans, as well as Medicare Advantage plans that include Part D coverage.
Who will benefit from the M3P program?
While the $2,000 cap will help keep yearly costs down, some beneficiaries with high-cost drugs may be faced with paying this $2,000 early in the year. This can happen if you have a high deductible and higher-tiered, expensive drugs with higher copays or coinsurance. This means your monthly costs at the pharmacy will be high early in the year, but low the remainder of the year. In this scenario, you would benefit from the M3P program. It would divided your total drug costs out over the year to make more manageable monthly payments.
How do I sign up for M3P and how does it work once enrolled?
Signing up for M3P
As mentioned, every plan must offer the option to enroll in the Medicare Prescription Payment Plan. You can participate in the payment plan by calling your plan to sign up. You can do this anytime during the year. However, signing up late in the year may not benefit you. This is because there are fewer months to spread out the costs. If you know you prescription costs are high, you can sign up with your current carrier during the annual enrollment period (AEP). Your payment plan would start in January. If you change plans during AEP, you will need to call the new carrier to sign up starting January.
Paying for prescriptions once enrolled in M3P
Once you are enrolled in M3P, you will not pay your copays at the pharmacy for any drugs covered by the plan. Your plan will notify the pharmacy that you are on the payment plan so they do not charge you. You will then bill you each month for your prescription payment amount. Your payment amount will be based on a calculation of how much you would pay for any prescriptions, plus your previous month’s balance, then divided by the number of months left in the year. You can see an example of the payment calculation breakdown on Medicare’s Fact Sheet here. This payment calculation takes into account changing prescriptions throughout the year. Your payments may change each month as it adjusts to your prescriptions. This means you may not always know ahead of time how much your next payment will be.
The payment plan does not affect your drug costs overall and is not a savings program or discount program. It simply spreads the costs out over time. You will not pay any more or any less for the year than if you do not do the payment plan. If you do need help paying for prescriptions, you can learn more and see if you qualify for Extra Help in our previous blog or call our licensed agents for assistance.
Important note: If you have prescriptions that are not covered on the plan formulary, then you will still be responsible for paying these costs at the pharmacy on your own.
When the pharmacist gives you a Likely to Benefit Notice
If you are not signed up for the Medicare Prescription Payment Plan and you are prescribed a prescription that will cost you $600 or more at the pharmacy, the pharmacist is required to notify you that you are likely to benefit from the plan. If this happens, you have the option to call your plan and sign up before you fill your prescription.
Paying for your monthly M3P bill
Your Part D plan or Medicare Advantage Prescription Drug plan will bill you monthly for your Medicare Prescription Payment plan. This amount is separate then your Part D premium. You will get a letter from plan letting you know how to make a payment and the date it needs to be paid. You can set up automatic payments to avoid missing a payment.
If you stop paying your M3P payments or leave the plan
If you miss a payment, your plan will send a payment reminder. It is important for you to make your monthly payments by the due date, or you will be removed from M3P. You can also voluntarily request to leave the prescription payment plan by contacting your Part D plan. Whether you are removed for non-payment or voluntarily leave the payment plan, you will still be responsible for paying any balance you still owe the plan. You can choose to pay your remaining balance all at once or be billed monthly. You will resume paying any filled prescriptions on your own at the pharmacy.
If you change to a new Part D plan and any point, you will be removed from the Medicare Prescription Payment Plan. You will need to contact your new plan to sign up with them.
Who will not benefit from the Medicare Prescription Payment Plan?
As mentioned, the payment plan is most beneficial if you have high-cost prescriptions. If your yearly prescription costs are low, then the plan will not make sense. Many low-tier generic prescriptions do not require you to meet a deductible and the copays are generally lower. In this situation, you will not have higher costs at the beginning of the year and your copays would already be consistent each month.
If you receive Extra Help and receive assistance paying for your prescriptions, then you would not benefit from M3P because your prescriptions are already low, and you won’t have a deductible.
