Payment Examples & Calculator
Summary
The example below shows how your monthly Medicare Prescription Payment Plan bill is calculated. It uses the 2026 annual Part D out-of-pocket threshold of $2,100, which is set by Medicare and may change each year.
You can also use our online calculator to estimate your own monthly payments.
How Your Monthly Payment Is Calculated
Each month, your bill is based on three things:
- Any unpaid balance carried over from previous months, plus
- Your new out-of-pocket drug costs that month,
- Divided by the number of months remaining in the plan year.
In the first month, you have costs; your maximum monthly payment is your remaining annual out-of-pocket amount divided by the number of months left in the year. Because the calculation spreads your costs over the remaining months, your monthly payment can change as the year goes on.
Scenario: High Drug Costs Early in the Year
Suppose your out-of-pocket cost for covered Part D drugs is $500 per month, and the annual Part D out-of-pocket threshold is $2,100.
| Month | Your out-of-pocket cost this month | Your M3P payment | Balance |
|---|---|---|---|
| January | $500 | $175.50 | $325.00 |
| February | $500 | $75.00 | $750.00 |
| March | $500 | $125.00 | $1,125.00 |
| April | $500 | $180.56 | $1,444.44 |
| May | $100 | $193.06 | $1,351.39 |
| June–December | $0 | ~$193.06 each | $0 by December |
| * From June through December, the remaining balance of $1,351.39 is paid in seven equal installments of about $193.06. The final installment may differ by a few cents, so your balance ends at exactly $0. | |||
What this example shows:
- You reach the $2,100 annual out-of-pocket threshold in May. After that, you pay $0 at the pharmacy for covered Part D drugs for the rest of the year.
- In May, only $100 of out-of-pocket cost applies — that’s the amount needed to reach the $2,100 threshold.
- From June through December, you have no new out-of-pocket drug costs, so each payment simply pays down your remaining balance until it reaches $0 in December.
- Across the full year, the total you pay through the Medicare Prescription Payment Plan equals the $2,100 threshold — the same amount you would have paid without the program, just spread out.
Key Points to Remember
- Your total annual cost stays the same. The Medicare Prescription Payment Plan changes when you pay, not how much.
- Premiums are separate. Your health plan and drug plan premiums are not included in this program.
- The program renews automatically. If you stay in the same plan and don’t opt out, your participation continues into the next plan year.
- You can leave at any time. Any balance you’ve already incurred remains your responsibility.