Medicare Prescription Payment Plan (M3P)

Medicare Prescription Payment Plan (M3P) – New in 2025

Starting in 2025, you can enroll in the Medicare Prescription Payment Plan (M3P) through your drug plan. With M3P, you won’t pay at the pharmacy (including mail order or specialty pharmacies) when filling Part D-covered prescriptions. Instead, your plan will send you a monthly bill.

This bill is calculated based on your prescription costs, plus any outstanding balance, divided by the months remaining in the year. All plans use the same formula for these payments.

Key Changes in 2025

1. Maximum Part D Deductible
   The deductible will be capped at $590, meaning you’ll pay this amount out-of-pocket before your plan coverage begins. For high-cost drugs, this can result in significant expenses, especially in January.
2. Drug Tiers and Costs
   Medications are categorized into tiers within your plan’s formulary (a list of drugs your plan covers). Each tier impacts your costs:
   • Tier 1: Generic (Preferred)
   • Tier 2: Generic (Non-preferred)
   • Tier 3: Brand Name (Preferred)
   • Tier 4: Brand Name (Non-preferred)
   • Tier 5: Specialty Drugs

Formulary tiers and coverage can change yearly. For example, a drug classified as Tier 2 this year might be Tier 3 next year, increasing your cost.

1. Potentially High Drug Costs Coming in January
   If you have a high deductible and expensive medications (Tier 3, 4, or 5), your initial out-of-pocket costs could be substantial. For instance:
   • If your drug cost is: $1,000
   • And your deductible is: $590
   • And your coinsurance is 25%: $102.50 (25% of the remaining $410 after the deductible)
   • Total in January: $692.50

From February onward, you would only pay the coinsurance, which in this example is $250 per month or until you reach your annual True Out of Pocket cap- TrOOP.

1. $2,000 True Out of Pocket Cap
   Beginning in 2025, you’ll pay no more than $2,000 annually for covered drugs. However, this only applies to drugs included in your plan’s formulary. If a drug you take isn’t covered, you can request a formulary exception to see if they will make a consideration and add it.

Next Steps

To set up the Medicare Prescription Payment Plan (M3P) or request a formulary exception, contact us for assistance or reach out to your drug plan directly.

Download Medicare’s Fact Sheet Here