Medicare Part D is the prescription drug coverage you need to know about

Medicare Part D is the part of Medicare that covers prescription drugs. It is run by private insurance companies that contract with Medicare, not by Medicare itself. You choose which Part D plan to join during your enrollment period, and the plan you pick determines which drugs are covered, how much you pay, and which pharmacies you can use.

Part D is optional, but there is a penalty if you wait to join it: for every month you delay after you first become may be able to access, your monthly premium goes up by about 1 percent for as long as you have Part D coverage. That penalty is permanent, so joining on time matters even if you do not take many medications right now.

Key Takeaways

  • Part D is separate from Parts A, B, and C, and you must choose and enroll in a Part D plan yourself during your enrollment window.
  • Each Part D plan has a different list of covered drugs (called a formulary), so the same medication may be covered under one plan but not another.
  • Part D coverage has four stages: a deductible, a copay stage, a coverage gap (donut hole), and catastrophic coverage, and your costs change at each stage.
  • You can change your Part D plan once a year during the Annual Enrollment Period (October 15 to December 7), or when ready if you may have access to for a Special Enrollment Period.
  • If your income is below a certain level, you may be able to get help paying Part D premiums and costs through the Low-Income Subsidy program.

How Part D coverage works through the four payment stages

When you enroll in a Part D plan, your coverage follows a predictable path through the year. First comes the deductible — the amount you pay out of pocket before the plan starts to help. Deductibles vary by plan; some plans have no deductible at all, while others may have one of several hundred dollars. You pay the full cost of your drugs until you reach your plan's deductible.

After you meet the deductible, you enter the initial coverage stage. Here you and the plan share the cost of your drugs. You typically pay a copay (a flat amount like $5 or $10) or coinsurance (a percentage of the drug's cost), depending on which tier the drug is on. Your plan's formulary lists every covered drug and tells you which tier it is on.

Once your total drug costs (what you paid plus what the plan paid) reach a certain amount — $5,850 in 2024, though this changes yearly — you enter the coverage gap, often called the "donut hole." In this stage, you pay a larger share of the cost. The gap ends when your out-of-pocket spending reaches a second threshold, usually around $8,000 in 2024. After that, you move into catastrophic coverage, where the plan covers most of the cost and you pay only a small copay or coinsurance.

Understanding which stage you are in matters because your costs jump at each boundary. Many people find it helpful to track their spending through the year so they know when they are approaching the coverage gap.

The difference between Part D and other Medicare parts

Part A covers hospital stays, skilled nursing, hospice, and some home health care. Part B covers doctor visits, outpatient care, and some equipment and supplies. Part C (Medicare Advantage) is an alternative to Parts A and B offered by private insurers; if you choose Part C, you still need Part D for drug coverage unless your Part C plan includes drug coverage built in.

Part D stands alone. You can have Part D with Original Medicare (Parts A and B), or you can have Part D as part of a Medicare Advantage plan. But prescription drugs are not covered under Parts A or B, so if you take medications, you need Part D or a Part C plan that includes drug coverage.

How to choose a Part D plan that covers your medications

The first step is to know which drugs you take and which ones you expect to take in the coming year. Write down the name, strength, and dose of each medication. Then use the Medicare Plan Finder tool on Medicare.gov to search for plans in your area. You enter your drugs, and the tool shows you which plans cover each one, what your copay or coinsurance will be, and the total estimated cost under each plan.

Plans change their formularies every year, so a drug that was covered last year may not be covered this year, or it may move to a higher tier with a higher copay. That is why it is worth comparing plans every year even if you were happy with your plan before. The Plan Finder makes this comparison straightforward — you can see side-by-side costs for multiple plans.

If your plan stops covering a drug you need, you may be able to ask for an exception. Your doctor can request that the plan cover the drug anyway, or cover it at a lower tier. This process takes time, so it is better to choose a plan that already covers your drugs if you can.

When you can enroll in or change your Part D plan

If you are turning 65 and enrolling in Medicare for the first time, you have a seven-month window centered on your birthday month to join Part D without penalty. If you miss this window, you will owe the 1 percent monthly penalty for every month you delayed.

Once you are enrolled, you can change your Part D plan during the Annual Enrollment Period, which runs from October 15 to December 7 each year. Changes take effect on January 1. You can also change plans when ready if you experience a Special Enrollment Period — for example, if you lose other drug coverage, move out of your plan's service area, or have a significant change in income.

Outside these windows, you are locked into your current plan for the year. That is why it is important to review your plan during the Annual Enrollment Period and make a change if a better option is available.

Help paying for Part D if your income is limited

If your income and resources are below certain limits, you may be able to get help paying Part D premiums and out-of-pocket costs through the Low-Income Subsidy program (also called "Extra Help"). The income limits vary by state but are generally around 150 percent of the federal poverty level. In 2024, that means roughly $2,100 per month for a single person, though the exact amount depends on where you live.

To find out whether you may have access to, you can contact your local Social Security office, call Social Security at 1-800-772-1213, or explore online at ssa.gov. You can also contact your State Health Insurance information Program (SHIP), which is a free counseling service in every state. SHIP staff can help you understand whether you may have access to and walk you through the process.

If you receive the Low-Income Subsidy, you pay little or nothing for your Part D premiums, and your copays and coinsurance are capped at much lower amounts. This can make a real difference if you take multiple medications or expensive drugs.

What to do if your drug is not covered by your plan

If you discover that your Part D plan does not cover a drug you need, you have several options. The first is to ask your doctor whether there is a similar drug on your plan's formulary that might work just as well. Many drugs in the same class work similarly, and switching may be straightforward.

The second option is to request a formulary exception. Your doctor submits a request to the plan explaining why this particular drug is medically necessary for you. The plan has 72 hours to respond (or longer in some cases). If the plan approves, they will cover the drug, often at a higher copay than a preferred drug would be. If they deny it, you and your doctor can appeal.

The third option is to switch to a different Part D plan during the Annual Enrollment Period that does cover the drug. This is why comparing plans every year matters — a drug that is not covered under your current plan may be covered under another plan in your area.

Frequently Asked Questions

Do I have to join Part D when I turn 65?

Part D is optional, but if you do not join when you first become may be able to access and you do not have other drug coverage, you will owe a 1 percent monthly penalty for every month you delay. That penalty is permanent and added to your premium for life. If you do not take medications now, you can still join later, but the penalty will explore.

Can I use any pharmacy with my Part D plan?

No. Each Part D plan has a network of pharmacies where your copay applies. If you use an out-of-network pharmacy, you will pay more. Some plans have a smaller network to keep premiums lower, while others have a larger network. Check your plan's pharmacy list before you enroll to make sure your preferred pharmacy is included.

What happens to my Part D coverage if I switch to Medicare Advantage?

If you switch to a Medicare Advantage plan (Part C), your standalone Part D coverage ends. However, most Medicare Advantage plans include prescription drug coverage built in, so you will still have drug coverage. You cannot have both a standalone Part D plan and a Medicare Advantage plan at the same time.

Can my doctor prescribe a drug that Part D does not cover?

Yes. Your doctor can prescribe any drug they think is medically appropriate. However, if Part D does not cover it, you will pay the full cost out of pocket unless you request an exception or switch to a plan that does cover it. Talk to your doctor about coverage before you fill a new prescription so you understand what you will owe.

What if I cannot afford my Part D copays?

If your income is low, the Low-Income Subsidy program can reduce your copays to $1, $3, or $5 depending on the drug tier and your income level. If your income is higher but you still struggle, some drug manufacturers offer patient information programs that provide free or reduced-cost medications. Your doctor or pharmacist can help you find these programs.