Sample payment calculation

In this example, the member takes several high-cost drugs that have a total out-of-pocket cost of $500 each month. In January 2025, they join the Medicare Prescription Payment Plan.


For more examples, please see the Medicare Prescription Payment Plan fact sheet (PDF) | Medicare Prescription Payment Plan fact sheet (PDF en español).

1. Calculate the maximum possible payment for the first month.

This calculation determines the maximum possible amount you could be charged for your the first month in the program.

2. Determine the actual payment due for January 2025

In January 2025, this member had filled their usual prescriptions with a total out-of-pocket cost of $500. This will be compared to the “maximum possible payment” of $166.67, and they will be billed the lesser of those two amounts, so their balance due for the month is $166.67. The member will still have to pay the remaining balance of $333.33, but this balance will be incorporated into their monthly payments for the rest of the year.

Calculate the remaining balance:

For the rest of the year, your payments are calculated differently to include your previous remaining balance and any new prescription costs you may have each month.

3. Determine the payment due for February 2025

In April, the member refills their prescriptions again, and they reach the $2,000 out-of-pocket max for 2025. They will continue to pay what they owe, but their prescriptions will have no additional out-of-pocket costs for the rest of the year. See the monthly breakdown below for more details.

5. Determine monthly payments for the rest of the year

Monthly breakdown

If you’re concerned about making large payments early in the year, this payment option can help you manage your costs. If you prefer to pay early up front and less later in the year (once you’ve hit your out-of-pocket max), this payment option may not be right for you.