Every Medicare Part D plan in the country, every stand-alone prescription drug plan and every Medicare Advantage plan that covers prescriptions, has had to offer monthly billing for out-of-pocket drug costs since the option launched on January 1, 2025. What changed for 2026 is what happens to a member who joined and then does nothing: the Centers for Medicare and Medicaid Services finalized a rule in April 2025 that carries a member’s enrollment in the Medicare Prescription Payment Plan forward automatically, year after year, unless the member contacts the plan first to opt out. The default now runs in favor of continued billing, not a fresh decision each January.
A Rule CMS Finalized in April 2025
The Medicare Prescription Payment Plan was created under the Inflation Reduction Act of 2022 and began operating for the 2025 plan year. It lets a Part D enrollee ask their plan sponsor to bill covered drug costs in monthly installments rather than collecting the full cost-sharing amount at the pharmacy counter the moment a prescription is filled. A person can request to join before a plan year starts or during any month once the year is underway, and every plan sponsor is required to accept the request, regardless of whether the enrollee has a documented history of high drug costs.
CMS addressed what happens the following year in the Contract Year 2026 Medicare Advantage and Part D final rule, published April 4, 2025. The rule finalized a new automatic election renewal process that extends a member’s participation in the payment plan into the next calendar year unless the member opts out, adopting the change largely as proposed with only a modest adjustment to the timing of the renewal notice plan sponsors must send.
That renewal duty is now codified at 42 CFR 423.137(d)(10)(iv), and it has already run once in practice. Under CMS’s September 2025 guidance to plan sponsors, the Notice of Participation Renewal for people enrolled during 2025 had to go out after the 2026 annual coordinated election period closed on December 7 but before the 2025 plan year ended on December 31, carrying anyone who did not respond into 2026 participation by default.
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One Nationwide Duty, One $600 Trigger
The obligation is uniform. CMS’s Medicare Prescription Payment Plan program page confirms that both standalone Part D prescription drug plans and Medicare Advantage plans with drug coverage must offer the payment option to any enrollee who asks, with no exception for smaller plan sponsors or regional carriers. The renewal rule applies with the same uniformity, since a plan cannot decline to auto-renew a participant simply because it would rather process a fresh election every year.
A specific dollar figure triggers the process for people who have not yet joined. Under the program’s operating rules, a pharmacy must be notified whenever a Part D enrollee’s cost-sharing for a single covered drug reaches $600 or more and the person has not already opted in, so the pharmacy can hand over a standardized notice describing the option. That threshold, not income or age, is what flags most first-time participants.
CMS said it finalized the 2026 renewal requirements largely as proposed, with the stated goal of letting plan sponsors and participants gain more experience with the program while minimizing both administrative burden on plan sponsors and disruption for people already relying on monthly billing. Requiring an active, annual re-election for every participant, the agency reasoned, would create exactly the kind of disruption automatic renewal is designed to avoid.
Opting out remains a member-initiated step. A participant can leave at any point during the plan year by contacting the plan sponsor directly, and sponsors must process an opt-out request the same way they process a new election, within 24 hours if the request arrives during the plan year, or within 10 calendar days if it arrives before the year begins. Nothing about the process requires paperwork beyond that single contact, but nothing happens automatically in the other direction either.
A Renewal That Spreads Costs, Never Cuts Them
CMS has been explicit that the payment plan, renewed automatically or not, does not lower what a person ultimately owes. The agency’s own guidance states plainly that the program does not reduce the amount of money an individual pays in out-of-pocket costs; it only spreads an existing cost-sharing obligation across monthly bills instead of a single charge at the pharmacy. Renewal extends a billing arrangement, not a discount.
People already receiving the Part D Low-Income Subsidy, commonly called Extra Help, are not exempt from the renewal rule even though CMS has said Extra Help is generally the better deal for anyone who qualifies for it. A Part D sponsor must still offer, and automatically renew, payment-plan participation for an Extra Help recipient who opted in and never opted out, regardless of whether that person would save more by relying on Extra Help’s separate cost protections instead.
The practical effect is that a decision made once, often during a single expensive month in 2025, keeps applying every year afterward until someone actively reverses it. The window for doing that runs each fall, in the weeks between the close of the annual coordinated election period on December 7 and the end of the calendar year on December 31, when the next Notice of Participation Renewal is due in participants’ mailboxes.
This article was produced with AI assistance and reviewed by The Money Overview editorial team.
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