Medicare Prescription Payment Plan FAQ’s
What is the Medicare Prescription Payment Plan?
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 drug plan or Medicare health plan with drug coverage (like a Medicare Advantage Plan with drug coverage) can use this payment option. Texas Independence Health Plan (TIHP) offers this payment option and participation is voluntary.
This payment option might help you manage your monthly expenses, but it doesn’t save you money or lower your drug costs. Learn about Extra Help and other programs that might save you money, if you qualify.
When you fill a prescription for a drug covered by Part D, you won’t pay your pharmacy (including mail order and specialty pharmacies). Instead, you’ll get a bill each month from your health or drug plan.
Even though you won’t pay for your drugs at the pharmacy, you’re still responsible for the costs. If you want to know what your drug will cost before you take it home, call your plan or ask the pharmacist.
Your monthly bill is based on what you would have paid for any prescriptions you get, plus your previous month’s balance, divided by the number of months left in the year.
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 costs get added to your monthly payment, there are fewer months left in the year to spread out your remaining payments.
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 if you weren’t participating in this payment option.
The prescription drug law caps your out-of-pocket drug costs at $2,000 in 2025. This is true for everyone with Medicare drug coverage, even if you don’t participate in the Medicare Prescription Payment Plan.
You won’t pay any interest or fees on the amount you owe, even if your payment is late.
You should always pay your plan premium bill first. Do not include payment for your Medicare plan premium with your Medicare Prescription Payment Plan payment. Payments should always be sent separately.
Example 1:
You take several high-cost drugs that have a total out-of-pocket cost of $500 each month. In January 2025, you join the Medicare Prescription Payment Plan through your Medicare drug plan or Medicare health plan with drug coverage.
We calculate your first month’s bill in the Medicare Prescription Payment Plan differently than your bill for the rest of the months in the year:
First, we figure out your “maximum possible payment” for the first month:
$2,000 [annual out-of-pocket maximum] – $0 [no out-of-pocket costs before using this payment option] = $2,000
12 [remaining months in the year]
Then, we figure out what you’ll pay for January:
– Compare your total out-of-pocket costs for January ($500) to the “maximum possible payment” we just calculated: $166.67.
– Your plan will bill you the lesser of the two amounts. So, you’ll pay $166.67 for the month of January.
– You have a remaining balance of $333.33 ($500-$166.67).
For February and the rest of the months left in the year, we calculate your payment differently:
$333.33 [remaining balance] + $500 [new costs] = $833.33
11 [remaining months in the year]
We’ll calculate your March payment like we did for February:
$757.57 [remaining balance] + $500 [new costs] = $1,257.57
10 [remaining months in the year]
In April, when you refill your prescriptions again, you’ll reach the annual out-of-pocket maximum for the year ($2,000 in 2025). You’ll continue to pay what you already owe and get your prescription(s), but after April you won’t add any new out-of-pocket costs for the rest of the year.
$1,131.81 [remaining balance] + $500 [new costs] = $1631.81
9 [remaining months in the year]
= $166.67 [your “maximum possible payment” for the first month]
= $75.76 [your payment for February]
= $125.76 [your payment for March]
= $181.31 [your payment for April and all remaining months in the year]
Even though your payment varies each month, by the end of the year, you’ll never pay more than:
- The total amount you would have paid out-of-pocket.
- The total annual out-of-pocket maximum ($2,000 in 2025).
Remember, this is just your monthly payment for your out-of-pocket drug costs. You still need to pay your health or drug plan’s premium (if you have one) each month.
Example 1: Start participating in January with high drug costs early in the year
| Month | Your drug costs (without this payment option) | Your monthly payment (with this payment option) | Notes |
|---|---|---|---|
| January | $500 | $166.67 | This is when you started participating in this payment option. Remember, your first month’s bill is based on the “maximum possible payment” calculation. We calculate your bill for the rest of the months in the year differently. |
| February | $500 | $75.76 | |
| March | $500 | $125.76 | |
| April | $500 | $181.31 | This month you reached the annual out-of-pocket maximum ($2,000 in 2025). You’ll have no new out-of-pocket drug costs for the rest of the year. |
| May | $0.00 | $181.31 * | *You’ll still get your $500 drugs each month, but because you’ve reached the annual out-of-pocket maximum, you won’t add any new out-of-pocket costs for the rest of the year. You’ll continue to pay what you already owe. |
| June | $0.00 | $181.31 * | |
| July | $0.00 | $181.31 * | |
| August | $0.00 | $181.31 * | |
| September | $0.00 | $181.31 * | |
| October | $0.00 | $181.31 * | |
| November | $0.00 | $181.31 * | |
| December | $0.00 | $181.31 * | |
| Total | $2,000.00 | $2,000.00 | You’ll pay the same total amount for the year, even if you don’t use this payment option. |
If you’re concerned about paying $500 each month from January to April, this payment option will help you manage your costs. If you prefer to pay $500 each month for 4 months and then pay $0 for the rest of the year, this payment option might not be right for you. Contact your health or drug plan for personalized help.
Example 2:
You take several drugs that have a total out-of-pocket cost of $80 each month. In January 2025, you join the Medicare Prescription Payment Plan through your Medicare drug plan or Medicare health plan with drug coverage.
We calculate your first month’s bill in the Medicare Prescription Payment Plan differently than your bill for the rest of the months in the year:
- First, we figure out your “maximum possible payment” for the first month:
$2,000 [annual out-of-pocket maximum] – $0 [no out-of-pocket costs before using this payment option] = $2,000
12 [remaining months in the year]
- Then, we figure out what you’ll pay for January:
– Compare your total out-of-pocket costs for January ($80) to the “maximum possible payment” we just calculated: $166.67.
– Your plan will bill you the lesser of the two amounts. So, you’ll pay $80 for the month of January.
– You have a remaining balance of $0.
For February and the rest of the months left in the year, we calculate your payment differently:
$0 [remaining balance] + $80 [new costs] = $80
11 [remaining months in the year]
We’ll calculate your March payment like we did for February:
$72.73 [remaining balance] + $80 [new costs] = $152.73
10 [remaining months in the year]
Even though your payment varies each month, by the end of the year, you’ll never pay more than:
- The total amount you would have paid out-of-pocket.
- The total annual out-of-pocket maximum ($2,000 in 2025).
Remember, this is just your monthly payment for your out-of-pocket drug costs. You still need to pay your health or drug plan’s premium (if you have one) each month.
= $166.67 [your “maximum possible payment” for the first month]
= $7.27 [your payment for February]
= $15.27 [your payment for March]9
Example 2: Start participating in January with consistent costs throughout the year
| Month | Your drug costs (without this payment option) | Your monthly payment (with this payment option) | Notes |
| January | $80.00 | $80.00 | This is when you started using this payment option. Remember, your first month’s bill is based on the “maximum possible payment” calculation. We calculate your bill for the rest of the months in the year differently. |
| February | $80.00 | $7.27 | |
| March | $80.00 | $15.27 | |
| April | $80.00 | $24.16 | |
| May | $80.00 | $34.16 | |
| June | $80.00 | $45.59 | |
| July | $80.00 | $58.93 | |
| August | $80.00 | $74.92 | |
| September | $80.00 | $94.93 | |
| October | $80.00 | $121.59 | |
| November | $80.00 | $161.59 | |
| December | $80.00 | $241.59 | |
| Total | $960.00 | $960.00 | You’ll pay the same total amount for the year, even if you don’t use this payment option. |
Depending on your specific circumstances, you might not benefit from using this payment option due to the higher payments that start in September. Contact your health or drug plan for personalized help.
Example 3:
You pay $4 every month in out-of-pocket costs for a prescription you use regularly. In April 2025, you need a new one-time prescription that costs $613, so your total out-of-pocket costs in April are $617. That same month, before you fill your prescriptions, you decide to participate in the Medicare Prescription Payment Plan through your Medicare drug plan or Medicare health plan with drug coverage.
We calculate your first month’s bill in the Medicare Prescription Payment Plan differently than your bill for the rest of the months in the year:
- First, we figure out your “maximum possible payment” for the first month:
$2,000 [annual out-of-pocket maximum] – $12 [your out-of-pocket costs before using this payment option] = $1,988
9 [remaining months in the year]
- Then, we figure out what you’ll pay for April:
– Compare your total out-of-pocket costs for April ($617) to the “maximum possible payment” we just calculated: $220.89.
– Your plan will bill you the lesser of the two amounts. So, you’ll pay $220.89 for the month of April.
– You have a remaining balance of $396.11 ($617 – $220.89).
For May and the rest of the months left in the year, we calculate your payment differently:
$396.11 [remaining balance] + $4 [new costs] = $400.11
8 [remaining months in the year]
Your payments will vary throughout the year. That’s because you’re adding drug costs during the year, but you have fewer months left in the year to spread your payments across.
By the end of the year, you’ll never pay more than:
- The total amount you would have paid out-of-pocket.
- The total annual out-of-pocket maximum ($2,000 in 2025).
Remember, this is just your monthly payment for your out-of-pocket drug costs. You still need to pay your health or drug plan’s premium (if you have one) each month.
= $220.89 [your “maximum possible payment” for the first month]
= $50.01 [your payment for May]11
Example 3: Start participating in April with varying costs throughout the year
| Month | Your drug costs (without this payment option) | Your monthly payment (with this payment option) | Notes |
| January | $4.00 | $4.00* | *You made these payments directly to the pharmacy before you started participating in the Medicare Prescription Payment Plan. |
| February | $4.00 | $4.00* | |
| March | $4.00 | $4.00* | |
| April | $617.00 | $220.89 | This is when you started using this payment option. Remember, your first month’s bill is based on the “maximum possible payment” calculation. We calculate your bill for the rest of the months in the year differently. |
| May | $4.00 | $50.01 | |
| June | $4.00 | $50.59 | |
| July | $124.00 | $71.25 | This month, you need a drug that’s $120, in addition to your $4 drug. Following the same formula we used in May, your payments increase because you’re adding drug costs during the year, but you have fewer months left in the year to spread your payments across. |
| August | $4.00 | $72.05 | |
| September | $4.00 | $73.05 | |
| October | $124.00 | $114.39 | This month, you need a drug that’s $120, in addition to your $4 drug. Following the same formula we used in May, your payments increase because you’re adding drug costs during the year, but you have fewer months left in the year to spread your payments across. |
| November | $4.00 | $116.39 | |
| December | $4.00 | $120.38 | |
| Total | $901.00 | $901.00 | You’ll pay the same total amount for the year, even if you don’t use this payment option. |
If you’re concerned about paying $617 in April, this payment option will help you spread your costs across monthly payments that vary throughout the year. If you’re concerned about higher payments later in the year, this payment option might not be right for you. Contact your health or drug plan for personalized help.
It depends on your situation. Remember, this payment option might help you manage your monthly expenses, but it doesn’t save you money or lower your drug costs. You’re most likely to benefit from participating in the Medicare Prescription Payment Plan if you have high drug costs earlier in the calendar year. Although you can start participating in this payment option at any time in the year, starting earlier in the year (like before September), gives you more months to spread out your drug costs.
This payment option may not be the best choice for you if:
- Your yearly drug costs are low.
- Your drug costs are the same each month.
- You’re considering signing up for the payment option late in the calendar year (after September).
- You don’t want to change how you pay for your drugs.
- You get or are eligible for Extra Help from Medicare.
- You get or are eligible for a Medicare Savings Program.
- You get help paying for your drugs from other organizations, like a State Pharmaceutical Assistance Program (SPAP), a coupon program, or other health coverage.
Your health or drug plan: call TIHP’s M3P department at 833.823.6777 or send an email to MedicarePrescriptionPaymentPlan@txihp.com to get more information. If you need to pick up a prescription urgently, call us to discuss your options.
Medicare: Visit Medicare.gov/prescription-payment-plan to learn more about this payment option and if it might be a good fit for you.
State Health Insurance Assistance Program (SHIP): Visit shiphelp.org to get the phone number for your local SHIP and get free, personalized health insurance counseling.
To opt-in to TIHP’s Medicare Prescription Payment Plan:
- By paper: You may download and print the TIHP Medicare Prescription Payment Plan election form to complete, sign, and mail to the address listed on the form.
- By telephone: Call TIHP’s Medicare Prescription Payment Plan department at 833.823.6777
- By website: Complete an online election form here.
After we approve your participation in the Medicare Prescription Payment Plan, you’ll get a letter from us with information about how to pay your bill.
You’ll get a reminder from us if you miss a payment. If you don’t pay your bill by the date listed in that reminder, you’ll be removed from the Medicare Prescription Payment Plan. You’re required to pay the amount you owe, but you won’t pay any interest or fees, even if your payment is late. You can choose to pay that amount all at once or be billed monthly. If you’re removed from the Medicare Prescription Payment Plan, you’ll still be enrolled in our Medicare health and drug plan.
Always pay your plan monthly premium first (if you have one), so you don’t lose your drug coverage.
Call us at 833.823.6777 if you think we made a mistake about your Medicare Prescription Payment Plan bill. If you think we made a mistake, you have the right to follow the grievance process found in your Evidence of Coverage.
You can leave the TIHP Medicare Prescription Payment Plan at any time by contacting us at 833.823.677. Leaving won’t affect your Medicare drug coverage and other Medicare benefits. Keep in mind:
- If you still owe a balance, you’re required to pay the amount you owe, even though you’re no longer participating in this payment option.
- You can choose to pay your balance all at once or be billed monthly.
- You’ll pay the pharmacy directly for new out-of-pocket drug costs after you leave the Medicare Prescription Payment Plan.
If you leave TIHP or change to a new Medicare drug plan or Medicare health plan with drug coverage (like a Medicare Advantage Plan with drug coverage), your participation in the Medicare Prescription Payment Plan will end.
Contact your new plan if you’d like to participate in the Medicare Prescription Payment Plan again.