In 2025, one of the changes to the Part D program is a $2,000 out-of-pocket maximum for MAPD/PDP beneficiaries. CMS will also put a prescription payment plan program in place. The program is referred to as “smoothing” and begins Jan 1, 2025. It is part of the Inflation Reduction Act of 2022. What is Medicare Smooothing; this program gives beneficiaries an opportunity to use a payment plan to spread out the cost of prescription medications over the year. CMS put this program together to help mitigate the cost of prescrption drugs.
Click here to learn more about the prescription payment program
What is Medicare Smoothing
Medicare Smoothing is a way to even out the out-of-pocket costs that Medicare beneficiaries may incur each year. Unlike other health insurance plan costs, such as premiums, coinsurance and co-pays that vary significantly each year, Medicare Smoothing provides a predictable expense for Medicare drug plan beneficiaries.
This approach spreads out medication costs over a period of time, rather than allowing them to spike in any given month. Beneficiaries who take advantage of this program can reduce the financial strain of sudden large medication expenses.
How Does Smoothing work
As of January 1, 2025, Medicare beneficiaries have the option of smoothing out-of-pocket costs for Part D coverage. Every Medicare Part D plan sponsor must provide plan enrollees the option to pay their cost-sharing in monthly payment amounts.
Beneficiaries can enroll in the smoothing program at the start of each plan year or any time during the plan year.
Once the beneficiary elects to use this option for payment of their covered medications, the carrier determines the first payment amount. This amount is based on a maximum monthly cap. The cap is determined by calculating the annual out-of-pocket maximum ($2000 in 2025), minus the out-of-pocket costs incurred to date, divided by the number of months left in the current year.
To determine payment amounts for subsequent months, the maximum monthly cap is calculated using the total remaining out-of-pocket costs from the previous month that the beneficiary has not been billed for and any additional out-of-pocket costs incurred divided by the number of months remaining in the plan year.
Benefits of Smoothing
Financial Predictability
By spreading out expenses, Medicare Smoothing provides beneficiaries with a clearer picture of their healthcare costs. This is one way to help them control the budget and also provides some peace of mind.
Reduced Financial Strain
Large, unexpected medical bills can be a burden for anyone on a fixed income. Medicare Smoothing helps mitigate some financial risks by providing a consistent cost structure.
Enhanced Access to Care
With more predictable costs, beneficiaries may be more likely to seek necessary medical care without fear of incurring overwhelming expenses.
Additionally
Medicare Smoothing is a great way to manage healthcare costs, especially for those on a fixed income. By spreading out expenses and using the advice of a licensed Medicare agent, beneficiaries can achieve greater financial stability. As with any financial strategy, a professional should consider individual needs to develop a plan tailored to each specific situation.
Medicare agents – watch a quick YouTube video on the Medicare commission 2025 final update
Please note: in 2026 price negotiations will start for expensive drugs that do not have a generic alternative.
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