Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor
Robert Bloink and William H. Byrnes

Life Health > Health Insurance > Medicare Planning

New Program Makes Installment Payments an Option for Medicare Part D Enrollees

By Robert Bloink By William H. Byrnes

X
Your article was successfully shared with the contacts you provided.

What You Need to Know

  • Effective in 2025, Medicare Part D enrollees will have a $2,000 limit on out-of-pocket expenses for prescription drugs.
  • The Medicare Payment Prescription Plan helps enrollees in Part D coverage pay for the expenses for which they remain responsible.
  • Medicare will be sending information to enrollees to help them determine whether the program is right for them.

The Inflation Reduction Act of 2022 made a number of changes that are only now starting to become effective, and many affect the rights of Medicare beneficiaries going forward.

One of the more significant changes that becomes effective in 2025 places a $2,000 limit on out-of-pocket expenses that Medicare Part D enrollees will have to pay for prescription drugs. In connection with the $2,000 cap, Medicare has created the Medicare Payment Prescription Plan, a program to help enrollees in Part D coverage pay for the expenses for which they remain responsible. 

It is much more complex than many enrollees realize, and advisors may wish to start learning about the program now so that they can help clients maximize its value. The plan is not designed to save enrollees additional money; the point is to spread the costs of prescription drugs over a number of months to reduce the financial burden. 

Medicare will be sending information to enrollees to help them determine whether the program is right for them, so clients should be advised to pay close attention to any Medicare materials that they receive.

Inflation Reduction Act Changes

With the Inflation Reduction Act, individuals receiving catastrophic coverage are no longer required to cover otherwise applicable cost-sharing requirements for prescription drugs. In addition, insulin costs are capped at $35 per month, and the law eliminates cost sharing for recommended vaccines for individuals with Part D coverage.

Beginning in 2025, those with Medicare Part D coverage will have their prescription drug costs capped at $2,000. While the $2,000 cap will reduce an individual’s costs over the year, many enrollees are likely to have high prescription drug costs early in the year. For this reason, the Medicare Payment Prescription Plan was created.

Medicare Payment Prescription Plan: The Basics

The Medicare Payment Prescription Plan gives Medicare Part D enrollees the option of paying for prescription drug costs in monthly installments, rather than paying in full each time they refill prescriptions. Medicare Part D will instead pay the pharmacy, and then send a bill to the individual enrollee on a monthly basis.

Any individual with Part D coverage can enroll in the program, whether the coverage is standalone Part D coverage or part of a Medicare Advantage plan.

Pharmacies are required to notify Part D enrollees about the Medicare Payment Prescription Plan each time they have a single prescription that requires at least $600 in out-of-pocket payments. The pharmacy, however, won’t have information about the program aside from a basic notification that the individual is “likely to benefit” from it. The enrollee receives that information from the Part D plan.

The plan itself may also send an election form when an individual is eligible to participate in the Medicare Payment Prescription Plan and likely to benefit, whether with the individual’s 2025 plan card or separately. It’s the individual’s responsibility to participate in the program; there will be no automatic enrollment once the individual is eligible.

The Medicare Payment Prescription Plan is available only with respect to Medicare Part D-covered prescription drugs. Prescriptions provided by a doctor in connection with Part B coverage are not covered, nor is durable medical equipment.

Enrollees can opt in before the plan year or at any time during the plan year. Part D sponsors will be required to process requests to participate in the Medicare Payment Prescription Plan within 24 hours of the election if the request is made during the plan year. If the request is made before the plan year, they have 10 days to process the request.

The amount of the individual’s bill will be calculated by the Part D plan and can vary from month to month if the individual adds a new prescription. If the individual misses a payment, the Part D plan will issue notifications about the missed payment and must offer a grace period to pay. However, the enrollee’s participation can be terminated, and  full payment required, if the enrollee still does not pay the amount due.

Enrollees also have the right to opt out of the program once they have elected to participate. For example, if keeping track of another monthly bill becomes more of a hassle than a benefit, the individual can always decide to opt out and pay the remaining balance.

Robert Bloink

William H. Byrnes

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.