It’s that time of year when Joe Namath and Jimmy Walker are constantly on TV. Officially, this is called the Medicare Open Enrollment Period and it runs October 15 through December 7. This is what you need to know about how paying for prescriptions in 2025 is going to change.

What is M3P?

A mobile music device stored in a kitchen drawer.

The removal of the infamous “donut hole.”

The Medicare Prescription Payment Program.

While the donut hole does disappear in 2025, if you chose C, you are correct. M3P and the $2000 Rx Max Out of Pocket (MOOP) are the latest change to Part D Prescription Drug Plans mandated by the Inflation and Reduction Act (IRA).

There are two ways M3P could be calculated: with or without “smoothing.” Smoothing is an option to choose in 2025 that would spread Rx costs out through the entire year. If elected, the Plan would bill the Member for the monthly smoothing amount instead of the Member paying for their Rx at the pharmacy.

Smoothing will affect those individuals who have Rx costs over $167/month. For people taking generics or insulin, M3P will likely not affect your experience at the pharmacy, as you will still have zero or low dollar copays and insulin will continue to be $35 for a 30-day supply.

Let’s consider a scenario where an individual has $500/month in Rx expense, and their Plan has a $0 deductible.

Without smoothing, the member will pay $500 / month at the pharmacy from January to April and then incur no further expense when getting refills. ($500 x 4 months = $2,000 Maximum Out of Pocket).

With smoothing, the member will pay no more than $167 ($2000 / 12) in January. While this charge is not constant over the year (Medicare math is never simple) the overall cost to the member will also be $2000. If a member enrolls in smoothing, they will be billed from the Plan and NOT be paying at the pharmacy.

Take aways:

First, the infamous donut hole will be eliminated. Second, $2000 is the maximum cost a Medicare beneficiary will be charged for Rx expenses. Third, enrolling in the “smoothing” option will help spread the Rx expense out through the year and the Plan will be billing the member instead of the cost being paid at the pharmacy. Finally, the licensed insurance agents at On Point insurance Agency are here to help review options and make 2025 Part D prescription drug plan choices.