The Medicare Prescription Payment Plan, and what its first year of data shows

In the first year of the Medicare Prescription Payment Plan, Part D plans flagged at least 3.7 million people as likely to benefit from it. At least 119,000 of those people asked to join. Those figures come from GxRadar's tally of the 2025 contract-level data CMS released on Sept. 30, 2026⁶, covering the program's first year.

According to the same public use file⁷, plans collected about $276 million through the program's monthly bills in 2025 and reported about $58 million as uncollected. Plans also reported at least 97,000 people precluded from opting in for 2026, which under federal rules follows unpaid bills.

Created by the Inflation Reduction Act and running since Jan. 1, 2025, the program lets anyone with Medicare drug coverage pay their share of prescription costs in monthly installments instead of at the pharmacy counter. It does not lower what anyone owes. "This payment option might help you manage your monthly expenses, but it doesn't save you money or lower your drug costs," Medicare.gov says¹. For people whose prescriptions are all generics, it rarely comes into play.

How the monthly bill is calculated

Every plan uses the same formula, set out in federal regulation at 42 CFR 423.137³. In the first month, the cap on the bill is the year's out-of-pocket threshold minus what the person has already paid toward it, divided by the months left in the year. In each later month, the plan adds any unbilled balance to new costs and divides by the months remaining. The pharmacy charges the participant $0 and the plan pays the pharmacy.

For 2026 the threshold is $2,100, according to Medicare.gov², and once a person's covered costs reach it they owe nothing more for covered drugs that year, in the program or not. The examples below are GxRadar's arithmetic using the regulation's formula and the 2026 threshold.

Costs that arrive steadily behave differently. Take someone who joins in January and owes $300 a month at the pharmacy until the $2,100 threshold is reached in July. Under the formula, the bills run $175 in January, $38.64 in February, then climb each month to $232.33 from July through December. That pattern is why Medicare.gov warns² that "your payments might change every month," and lists steady monthly costs and low yearly costs among situations where the option may not be the best choice. It also flags joining after September, when few months are left to spread a bill across.

Joining, leaving and missed payments

All Part D plans, stand-alone and Medicare Advantage, must offer the option, and there is no charge to use it, Medicare.gov says¹. People sign up through their plan, by phone, website or paper form under CMS's program rules⁴, before the year starts or in any month during it. Under the regulation³, a plan must process a complete request made during the year within 24 hours, so a prescription waiting at the pharmacy is not held up.

Participants can leave at any time. A plan may not demand a lump-sum payment on the way out and must keep billing monthly, though the person may choose to pay off the balance at once, CMS said in its program fact sheet⁴. Notices sent to people who leave must say they will not pay interest or fees on the amount owed, under the same rule³.

Participation now carries over from year to year. Plans must re-enroll participants for the next year and send a notice saying so, with a reminder that they can opt out, according to the regulation's automatic-renewal provision³.

Missed bills have consequences, but limited ones. After a missed payment a plan must allow a grace period of at least two months; if the balance is still unpaid, the plan can end the person's participation in the payment program, CMS's final part one guidance⁵ explains. "Importantly, the Part D plan sponsor is not permitted to terminate the individual's enrollment in the Part D plan due to failure to pay," the fact sheet says. A person removed for nonpayment can be barred from opting in the following year, and plans must reinstate someone who shows good cause and pays the overdue amount, the regulation says.

What the first year of data shows

CMS posted the 2025 file with its plan payment data⁶. It reports each Part D contract's counts of people identified as likely to benefit, election requests, collections and unpaid balances. CMS's accompanying documentation in the download⁷ warns that the data "has not undergone independent data validation," suppresses any cell covering 10 or fewer people, and leaves out contracts with only one plan. Because suppressed cells drop out of the totals, GxRadar's sums below are floors.

Two cautions apply. The "likely to benefit" count mixes people flagged before the year began with people flagged at the pharmacy, and the request count is in requests, not unique people. On the figures as reported, roughly 3 percent of those flagged as likely to benefit asked to join. The accepted-request column is suppressed for more than half of contracts, so GxRadar did not total it.

Why generics rarely trigger it

Cost is what triggers the pharmacy notice that tells someone about the option. From 2026, a plan must flag an enrollee who incurs $600 or more in out-of-pocket costs for a single covered drug, or who ran up $2,000 in out-of-pocket costs for covered drugs in the first nine months of the prior year, under the targeted outreach rules³. CMS chose the $600 single-prescription threshold to catch people "with a very high likelihood of benefiting," its fact sheet⁵ says.

Few generic prescriptions come anywhere near that. In 2022, 70.5 percent of generic 30-day-equivalent fills in Part D cost enrollees $2 or less, HHS's planning office found⁹. Pharmacy acquisition costs for common generics, tracked on our NADAC price pages, are often a few cents a pill. For people whose costs come mainly from generics, the more relevant programs are usually the ones that lower the bill. Medicare.gov and CMS both point people who qualify toward Extra Help, which CMS calls "more advantageous"⁴ than the payment plan for those eligible. GxRadar covers it in our comparison of patient assistance programs, Extra Help and 340B.

Whether the option suits a particular set of prescriptions is a question for the plan or a pharmacist, and the questions GxRadar suggests for the pharmacy counter can start that conversation. Background on the rest of the benefit is in our pieces on Part D changes in 2025, 2026 and 2027, how Part D pays for generics and the Inflation Reduction Act and generics, and on our pharmacy counter desk.

For 2027, the out-of-pocket threshold rises to $2,400 under CMS's April 2026 rate announcement⁸. Someone who joins before January and fills one large prescription in January would see 12 bills of $200.