The Inflation Reduction Act
The Inflation Reduction Act (IRA) is a law that improves and expands benefits for Medicare members. The IRA lowers Part B and Part D drug costs, provides stable and predictable out-of-pocket costs for covered drugs, and more.
Providers: For provider information related to the Inflation Reduction Act, please visit the Provider News Center.
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Annual out-of-pocket (OOP) threshold
Medicare has set a maximum out-of-pocket cap on prescription drug costs. In 2025 that amount is $2,000. In 2026, that amount will be $2,100. That means if your drug costs reach this amount, you won’t pay anything for your prescription drugs for the rest of the calendar year. Your monthly plan premium does not count toward this amount. This cap is specifically for Part D drugs. It does not apply to drugs covered under Medicare Part B. Payments for Part B drugs count towards your plan’s maximum out-of-pocket amount instead.
The Medicare Prescription Payment Plan
What is the Medicare Prescription Payment Plan?
The Medicare Prescription Payment Plan is a payment option that works with your current Medicare Part D prescription drug coverage to help you manage your out-of-pocket Part D prescription drug costs by spreading them across the calendar year (January through December) instead of paying them in full at the pharmacy or through mail order each time you fill a prescription. It can help you manage your monthly expenses, but it doesn’t save you money or lower your prescription drug costs.
Anyone with Medicare Part D coverage can use this payment option to pay for covered Part D drugs. All Medicare plans with Part D and standalone prescription drug plans offer this payment option. Participation is voluntary, and there is no cost to participate.
How it works
You must opt in to the program. When you fill a prescription for a covered Part D drug, you won’t pay your pharmacy (including mail order and specialty pharmacies). Instead, you’ll get a bill each month from your health or drug plan.
Even though you won’t pay for your drugs at the pharmacy or through mail order, you’re still responsible for the costs. If you want to know what your drug will cost before you take it home, contact our Member Help Team or ask the pharmacist.
How your bill is calculated
Your monthly bill is calculated specific to your drug costs. Your first month’s bill is calculated a little differently from the rest of your monthly payments. It is based on what Medicare calls your “maximum possible payment.” The rest of your monthly bills are based on what you would have paid for your prescriptions at the pharmacy or through mail order, plus your previous month’s remaining balance, divided by the number of months left in the year. Your bill may vary from month to month as you fill more prescriptions and new out-of-pocket costs get added to your owed amount.
View information on the “maximum possible payment” and examples of bill calculations.
Who is likely to benefit
You’re most likely to benefit from participating in this payment option if you have high drug costs earlier in the year. “High drugs costs” can mean that you will spend more than $600 out of pocket on a single prescription at the pharmacy counter or through mail order, or you will reach the Medicare annual out-of-pocket threshold ($2,000 in 2025 and $2,100 in 2026). Although you can start participating in this payment option at any time, starting earlier in the year (January through September) gives you more months to spread out your payments. Go to Medicare.gov/prescription-payment-plan/will-this-help-me to answer a few questions and find out if you’re likely to benefit from this payment option. We may send you a letter letting you know that you’re likely to benefit.
This payment option may not be the best choice for you if:
- Your yearly drug costs are low.
- You are considering opting in later in the year (after September).
- You don’t want to change how you pay for your drugs.
- You get or are eligible for Medicare’s Low-Income Subsidy (“Extra Help”) or a Medicare Savings Program.
- You get or are eligible for a Medicare Savings Program.
- You get help paying for your drugs from other organizations, like a State Pharmaceutical Assistance Program (SPAP), a coupon program, or other creditable prescription drug coverage.
How to opt in to the program
If you are not currently participating, you must opt in to take advantage of the program. You can opt in by phone, online, or by mail.
Phone
You can call our Member Help Team.
Individual members
- Keystone 65 HMO/HMO-POS: 1-800-645-3965 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
- Personal Choice 65SM PPO: 1-888-718-3333 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
Group members
- Keystone 65 HMO/HMO-POS: 1-844-352-1699 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
- Personal Choice 65SM PPO: 1-888-879-4293 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
- Select Option® PDP: 1-888-678-7009 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
Online
By mail
Individual members
For Keystone 65 HMO/HMO-POS, download our paper form and mail it to:
Keystone 65 Rx
PO Box 7799
Philadelphia, PA 19101-7799
For Personal Choice 65 PPO, download our paper form and mail it to:
Personal Choice 65 Rx
PO Box 7799
Philadelphia, PA 19101-7799
Group members
For Keystone 65 HMO/HMO-POS, download our paper form and mail it to:
Keystone 65 Rx
PO Box 7799
Philadelphia, PA 19101-7799
For Personal Choice 65 PPO, download our paper form and mail it to:
Personal Choice 65 Rx
PO Box 7799
Philadelphia, PA 19101-7799
Select Option® PDP, download our paper form and mail it to:
Select Option
PO Box 41535
Philadelphia, PA 19101-1535
Renewing your participation in the program
If you are currently participating and want to remain opted in for the following plan year, your participation will automatically renew on January 1. You will receive a Notice of Participation Renewal from us in advance of the new plan year confirming that your participation will be renewed. No action is needed. You only need to inform us if you want to opt out so we can remove you from participating.
How to opt out of the program
You can opt out of the Medicare Prescription Payment Plan at any time by contacting our Member Help Team. Opting out won’t affect your health or drug coverage and other Medicare benefits. Keep in mind:
- If you still owe a balance, you’re required to pay the amount you owe, even though you’re no longer participating in this payment option.
- You’ll start paying the pharmacy directly for new out-of-pocket drug costs after you opt out of the Medicare Prescription Payment Plan.
Making payments
How to pay your bill
After we approve your participation in the Medicare Prescription Payment Plan, you’ll get a letter with more information about how to pay your bill. You can pay online or by mail.
- Online: Pay your bill online.
- By mail: Send your payment to
Optum Rx MPPP
PO Box 67
Minneapolis, MN 55480-0067
Please note: Only send checks for payment and the remittance coupon to this address. Do not send any correspondence.
What happens if you don't pay your bill?
You will get a reminder by mail if you miss a payment. If you don’t pay your bill by the date listed in that reminder, you’ll be removed from the Medicare Prescription Payment Plan, and you’ll start paying for your drugs when you get them at the pharmacy or through mail order. You’re required to pay only the amount you owe You won’t pay any interest or fees, even if your payment is late.
You can choose to pay that amount all at once or be billed monthly. If you are removed from the Medicare Prescription Payment Plan, you’ll still be enrolled in your Medicare health or drug plan.
How to file a grievance
You can contact our Member Help team if you think we made a mistake about your Medicare Prescription Payment Plan bill. You also have the right to follow our grievance process.
Individual members
- Keystone 65 HMO/HMO-POS: 1-800-645-3965 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
- Personal Choice 65SM PPO: 1-888-718-3333 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
Group members
- Keystone 65 HMO/HMO-POS: 1-844-352-1699 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
- Personal Choice 65SM PPO: 1-888-879-4293 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
- Select Option® PDP: 1-888-678-7009 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
Medicare Prescription Payment Plan election
Members are able to ask for retroactive election into in the Medicare Prescription Payment Plan if you have urgent prescription fills for which you have already paid and before your program election was received and processed.
Under this policy, a retroactive election must be processed if all the following conditions are met:
- You reasonably believe that any delay in filling the prescription(s) due to the 24-hour timeframe required to process your opt in request may seriously jeopardize your life, health, or ability to regain maximum function; and
- You request a retroactive election within 72 hours of the date and time your urgent claim(s) were determined.
Once your Medicare Prescription Payment Plan election has been effectuated, we must process the reimbursement for all cost sharing paid by you for the urgent prescription and any covered Part D prescription drugs filled between the date of that fill and the date that your election is effectuated within 45 days of the election date.
If we determine that you failed to request retroactive election within the required timeframe or that a request for retroactive inclusion of an urgent prescription is unreasonable, we will promptly notify you of our determination and provide instructions on how to file a grievance.
For additional information visit Medicare.gov/prescription-payment-plan, or call 1-800-MEDICARE (1-800-633-4227), 24 hours a day, 7 days a week. TTY users can call 1-877-486-2048.
Additional money-saving programs
The Low-Income Subsidy (LIS) Program
Eligible Medicare beneficiaries can get the Low-Income Subsidy, or "Extra Help" if they meet certain geographic, income, and resource requirements. Those that live in one of the 50 states or the District of Columbia meet the geographic requirements. The IRA expanded the income and resource requirements, allowing more people to qualify. Individuals who earn up to $23,475 per year and couples who earn up to $31,725 per year meet the income requirements. For those living in Alaska or Hawaii, the income requirements are different. Resource requirements are the same as listed below.
- Alaska income requirements: $29,325 for individuals and $39,645 for couples.
- Hawaii income requirements: $26,985 for individuals and $36,480 for couples.
Individuals with resources of up to $17,600 and couples with resources of up to $35,130 meet the resource requirements.
Resources include money in a checking, savings, or retirement account, stocks, and bonds. They don’t include your home, one car, burial plots, up to $1,500 for burial expenses if you’ve put that money aside, furniture, and other household and personal items.
The IRA also ensures that "Extra Help" recipients have a reduced plan premium and deductible, and that they don’t need to pay a Part D late enrollment penalty if they receive one. Additionally, it caps the costs for a single prescription at up to $5.10 for generic drugs and $12.65 for brand-name drugs.
Visit our money saving programs page to learn more about reduced premiums under “Extra Help.”
To see if you may qualify for “Extra Help,” use our Tax Credit and Subsidy Calculator. To apply, visit ssa.gov/medicare/part-d-extra-help. You may also be eligible for one of these programs.
Other programs
- Medicare Savings Programs: State-run programs that might help pay some or all of your Medicare premiums, deductibles, copayments, and coinsurance. Visit Medicare.gov/medicare-savings-programs to learn more.
- State Pharmaceutical Assistance Programs (SPAPs): Programs that might include coverage for your Medicare drug plan premiums and/or cost sharing. SPAP contributions may count toward your Medicare drug coverage out-of-pocket limit. Visit go.medicare.gov/spap to learn more.
- Manufacturer Pharmaceutical Assistance Programs (sometimes called Patient Assistance Programs (PAPs)): Programs from drug manufacturers to help lower drugs costs for people with Medicare. Visit go.medicare.gov/pap to learn more.
Additional benefits under the IRA
Insulin cost-sharing capped at $35 a month
The IRA limits the cost of all Part B and Part D covered insulins to $35 or less per one-month supply, regardless of what drug tier the insulin is on or what Part D coverage phase a member is in. For Part B insulins that are administered through durable medical equipment like pumps, the $35 monthly limit applies only to the insulin, not the cost of the equipment.
$0 cost-sharing for recommended Part D vaccines
All Medicare plans with prescription drug coverage now cover the full cost of many Part D vaccines, including shingles, hepatitis A, and respiratory syncytial virus (RSV). That means people with Part D plans will not have to pay a deductible, coinsurance, or any other cost-sharing for vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), whether they are received in or out of network.
- If you receive a Part D ACIP-recommended adult vaccine at a pharmacy, no payment will be required.
- If you receive a Part D ACIP-recommended adult vaccine at a doctor's office, you may be asked to pay the cost for both the vaccine and administration up front. Reimbursement requests can be made by following the instructions outlined in your Evidence of Coverage (EOC). You will be reimbursed for the full amount.
$0 cost-sharing for Part D medications during the Catastrophic Coverage stage
The IRA limits the amount of money Part D plan members may spend out of pocket on their prescriptions per year. Once you reach the Medicare annual out-of-pocket threshold, you enter the Catastrophic Coverage stage. During this stage, you pay nothing for your covered Part D medications until the beginning of the next calendar year.
- Prior to the IRA, people with Part D plans who reached the Catastrophic Coverage stage would continue to pay five percent of their drug costs for the rest of the year.
- Now, they will pay nothing after they reach this stage until the next year begins.
- Many people don't reach the Catastrophic Coverage stage.
Resources
For more resources and information on the IRA:
- Learn more about the Low-Income Subsidy
- Learn more about the Medicare Prescription Payment Plan
- Read the Medicare Prescription Payment Plan terms and conditions
How can we help?
Call our Member Help Team
Individual members
- Keystone 65 HMO/HMO-POS: 1-800-645-3965 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
- Personal Choice 65SM PPO: 1-888-718-3333 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
Group members
- Keystone 65 HMO/HMO-POS: 1-844-352-1699 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
- Personal Choice 65SM PPO: 1-888-879-4293 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
- Select Option® PDP: 1-888-678-7009 (TTY/TDD: 711), seven days a week from 8 a.m. to 8 p.m.
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Website last updated: 8/15/2025