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If you have Medicare Part D and face high prescription drug costs, the Medicare Prescription Payment Plan (M3P) may help you spread those costs over monthly payments instead of paying them all at once.
While the $2,100 out-of-pocket cap for Medicare Part D prescriptions can help keep costs down, coming up with a large amount of money all at once can still be a challenge. The Medicare Prescription Payment Plan can help by spreading those costs out into more manageable monthly payments.
M3P At a Glance
| Question | Answer |
|---|---|
| What is M3P? | A way to spread your Medicare Part D prescription drug costs into monthly payments. |
| Who can use it? | People enrolled in a Medicare Part D plan, including Part D coverage through Medicare Advantage. |
| Does it lower my drug costs? | No. It spreads your out-of-pocket costs over the year; it does not reduce what you owe. |
| Do I pay at the pharmacy? | No. Instead, your Medicare health or drug plan bills you for your monthly payment. |
| Is enrollment automatic? | No. You must opt in through your Medicare health or drug plan. |
| Is the payment plan bill my Medicare premium? | No. The payment plan bill is separate from your Medicare premium. |
Read on to learn how the Medicare Prescription Payment Plan works and how monthly payments are calculated.
What is the Medicare Prescription Payment Plan (M3P)?
People with Medicare can now use a monthly payment plan to pay out-of-pocket costs for expensive prescription drugs instead of having to pay the full cost upfront at a pharmacy.1
Who is eligible for the Medicare Prescription Payment Plan?
Older adults enrolled in Medicare are eligible for the payment plan if they have a Medicare Part D prescription plan. This can either be a standalone Medicare Part D coverage or Part D coverage that is part of a Medicare Advantage plan.1
People with Medicare who qualify for Medicare’s Low Income Subsidy program, also known as Extra Help, are also eligible for the payment plan. Because Extra Help offers a discount on prescription drugs, Medicare enrollees who qualify may benefit more from Extra Help than the Medicare Prescription Payment Plan.1
How do I enroll in the Medicare Prescription Payment Plan?
You can contact your Medicare health care plan or drug plan about enrolling. The earlier you enroll, the more you will be able to spread out the cost of more expensive drugs over time.2 You should receive a letter to confirm your enrollment and Medicare will notify your pharmacy that you’re participating in the payment plan.2
How does the Medicare Prescription Payment Plan work?
When you go to your pharmacy to pay for a prescription, they will say you owe $0 at the checkout register. What will follow is a bill from your Medicare health or prescription plan.2
If you start your payment plan in January, here are steps to find out how much your first bill will be:2
Step 1: Find out your maximum possible payment for the first month
Divide your $2,100 out-of-pocket spending maximum (in 2026) for prescription drugs by the number of months left in the year.
In this case, that means dividing $2,100 by 12 months which equals $166.67.
Step 2: Compare your monthly drug cost to your maximum possible payment
For example: If your drugs will cost $400 a month, you must compare that to $175.
Step 3: Pay the lowest of the two costs
This means you will pay $175 in January.
Step 4: Subtract the lowest amount from your monthly drug cost for your balance
For example: $400 - $175 = $225.
For future monthly payments, continue to add your monthly drug cost to your balance and divide it by the remaining months in the year.
For example: $400 + $225 = $625.
So:
$625 ➗ 11 months = $56.81 monthly payment
After your monthly drug cost reaches your $2,100 out-of-pocket maximum, you no longer have to add it to your balance. For each month on, you’ll continue to divide your balance by the months left in the year to get your monthly payment.
Is my Medicare Prescription Payment Plan bill the same as my Medicare premium?
No. Your bill for the Medicare Prescription Payment Plan is a separate bill from any premium you pay for your Medicare health care or prescription drug benefit. If you fail to pay your bill, you risk being disenrolled from the payment plan.2
If you have questions about affording your prescriptions, talk with your plan provider or with your State Health Insurance Assistance Program (SHIP) about your options. You can find contact information for your SHIP online or call 1-877-839-2675. A trained Medicare counselor can help you figure out whether the payment plan is right for you. They can also tell you if other resources like Medicare’s Extra Help program or one of the Medicare Savings Programs better suits your financial needs.
Sources
1. Centers for Medicare & Medicaid Services. Fact Sheet: Medicare Prescription Payment Plan Final Part One Guidance. Found on the Internet at https://www.cms.gov/files/document/fact-sheet-medicare-prescription-payment-plan-final-part-one-guidance.pdf
2. Medicare.gov. What’s the Medicare Prescription Payment Plan? Found on the Internet at https://www.medicare.gov/publications/12211-whats-the-medicare-prescription-payment-plan.pdf
Eligible for $5,900 a Year in Prescription Assistance?
Not having drug coverage, even for a short time, can create a serious financial burden for people who can barely afford basic living expenses. If you have limited income and resources, you may be able to get help paying for your medications through Medicare Part D's Low-Income Subsidy (LIS), also called "Extra Help."
