The Medicare Prescription Payment Plan (M3P) offers a new and convenient way to manage your prescription drug costs.
With this option you can now make manageable monthly payments throughout the year. Below are a few examples of how to calculate a new payment.
First, you need to know the maximum out-of-pocket (MOOP) for the health plan you are enrolled in. The MOOP refers to the highest amount you will have to pay for covered prescription drugs in a given year.
Example 1: High Drug Costs at the Start of the Year
Scenario: You take several high-cost drugs that cost $500 each month, and you have a maximum out-of-pocket of $2,000 per year.
In this scenario, the maximum out-of-pocket $2,000 is converted into a monthly maximum out-of-pocket by dividing it into 12 (months of the year) for $166.67.
- January: Your first payment is based on the lower amount between your monthly maximum out-of-pocket cost, calculated above to be $166.67, and your prescription drug cost of $500. In this case it’s the $166.67. The remaining balance of $333.33 carries over to the next month.
- February: Your bill for the rest of the year is calculated by adding any remaining balance from previous months. In this scenario, for January, you had a $333.33 balance and will incur another $500 for your prescription drugs this month. So that is added together for $833.33 and then divided by 11 ( months left in the year), making your February Payment $75.76.
- March: After paying $75.76, you will have $757.57 to carry over. Plus, $500 new cost for $1,257.57, with ten months left in the year, will make your March payment of $125.76
- April: You will reach your MOO of $2,000 by April, so you have the same amount for the remaining months.
Calculating your balance: For March, your balance would be $1,131.81 divided by 9 (months of the year left). You will pay $181.31 for the remaining months.
Example 2: Low Drug Costs at the Start of the Year
Scenario: You take several drugs that cost $80 each month, and you have a maximum out-of-pocket of $2,000 per year.
- January: Your first payment is based on the lower amount between your monthly maximum out-of-pocket cost, calculated above $166.67, and your prescription drug cost of $80. if your drug cost is lower than the monthly maximum out-of-pocket, you’ll pay $0. So your remaining balance is $0.
- February: Your payment is again calculated by adding any remaining balance ($0 in this case) to your new monthly costs ($80). This total is then divided by 11 (the number of months), leading to a payment of $7.27.
- March and Onwards: Similar to February, your payments will vary depending on the balance and new costs. For March, your payment will be $15.27.
Key Points:
- Your monthly payment may change, but you will only pay your total annual out-of-pocket costs.
- This payment plan only covers your drug costs; you’ll still need to pay any health or drug plan premiums separately.
