New Medicare Prescription Payment Plan

Medicare Part D introduces a $2,000 yearly cap on out-of-pocket drug costs in 2025. Learn how payment plans and extra assistance could make your medications more affordable and predictable.

Key takeaways

• Save more with a $2,000 annual out-of-pocket cap for prescription drugs, says Tricia Sandiego.
• Simplify budgeting by spreading medication costs into predictable monthly payments, with no extra fees.
• Access extra support through programs like Extra Help and Medicare Savings Programs if you need it.

Summary

Medicare Part D prescription drug coverage is undergoing important changes in 2025 that could save millions of Americans money on their medications. Medicare expert Tricia Sandiego shares that one of the biggest updates is the introduction of a $2,000 annual out-of-pocket cap, ensuring you’ll never pay more than that for covered prescription drugs in a year. Even better, the new Medicare prescription payment plan lets you spread your prescription costs throughout the year — so if you hit that cap early, you can break it up into manageable monthly payments.

This change is designed to make it easier for people on Medicare to manage their cash flow, avoid large one-time bills and keep medications within reach. You’ll need to enroll in the payment plan, but there’s no extra fee, and you’ll receive a single monthly bill for prescriptions — making budgeting and planning much simpler. If you need further financial help, there are also programs like Extra Help and Medicare Savings Programs available. For more on eligibility and the details of these changes, visit aarp.org/medicare.

The key takeaways and summary were created with the assistance of generative AI. An AARP editor reviewed and refined the content for accuracy and clarity.

Full Transcript:

[00:00:00] There have been some big, and I have to say, fantastic changes to Medicare’s prescription drug coverage,

[00:00:06] that could mean savings for millions of people. Hey, and maybe you too. I’m Tricia Sandiego, and in my job with AARP, I live and breathe Medicare. 

[00:00:16] Let’s take a look at what’s new with the Medicare Part D prescription payment plan. So starting in 2025,  people enrolled in Medicare Part D will see some

[00:00:28] significant changes to how they can pay for prescription medications. Probably the most exciting thing about this, your total out-of-pocket

[00:00:36] costs cannot exceed $2,000, thanks to the new out-of-pocket spending cap.

[00:00:42] So cool. Everyone on Medicare will benefit from this, but there’s one more feature now available:

[00:00:48] the Medicare prescription payment plan. In a nutshell, this is a program that allows you to spread prescription

[00:00:55] drug costs over the calendar year. It’s important to note that this payment option does not lower your

[00:01:01] actual drug costs, but it does give you an extra tool to help control your expenses from month to month.

[00:01:09] To take advantage of this option, you do have to enroll. Let’s look at an example. Say you have a $2,000  bill in January and hit the new out-of-pocket cap.

[00:01:20] Rather than pay that all at once, that could become a $167 monthly

[00:01:25] payment over the rest of the year. This can really help with managing your cash flow. Another perk of the payment program, you’ll get a bill each month directly

[00:01:35] from your drug plan, instead of paying every time you pick up your prescriptions or order them online.

[00:01:41] How handy is that? There might be some confusion around this at first, so remember that your premium

[00:01:48] will still be billed separately on top of the prescription payment plan bill. If you decide it is the right option for your situation, you can enroll

[00:01:58] in the Medicare prescription payment plan any time throughout the year, and it won’t cost you an additional cent.

[00:02:05] Remember, this new plan won’t lower the total amount that you’ll have to pay. If you are in need of help with that,

[00:02:12] there are other programs available like Medicare’s Extra Help Program  and the Medicare Savings Programs.

[00:02:19] You should ask a counselor from your state health insurance assistance program or check out medicare.gov to see which options might be a fit for you.

[00:02:28] Get the help where you can. For more detailed information about eligibility and  coverage, visit AARP

[00:02:35] dot org slash medicare and subscribe to our YouTube channel to stay informed on the latest health care updates from AARP.