Medicare covers prescription drugs, but not all of them, and your costs depend on which Medicare plan you have

Medicare has a drug benefit called Part D, which covers most prescription medications at pharmacies and through mail order. However, Part D is optional — you choose and pay for it separately — and it comes with gaps in coverage. Some drugs are not covered at all. Others are covered only if your doctor gets prior approval. The amount you pay depends on which Part D plan you pick, which pharmacy you use, and how much of the drug's cost you have already paid that year.

If you have a Medicare Advantage plan (Part C), drug coverage is built in, but the drugs covered and your costs may differ from standalone Part D. If you have only Original Medicare (Part A and Part B) with no drug plan, you pay the full price of prescriptions out of pocket.

Key Takeaways

  • Part D covers most common prescription drugs, but each plan has a list of covered drugs called a formulary, and your drug may not be on it.
  • You pay a monthly premium for Part D, a yearly deductible, copays or coinsurance at the pharmacy, and potentially more once you hit the coverage gap called the "donut hole."
  • Your doctor can request an exception if your drug is not covered, but this takes time and is not always approved.
  • Costs vary significantly between Part D plans and between pharmacies, so comparing plans and using a preferred pharmacy can lower what you pay.
  • If you do not enroll in Part D when you first become may be able to access, you may pay a permanent penalty if you join later.

How Part D Coverage Works

When you enroll in a Part D plan, you choose from dozens of private insurance companies offering different plans in your area. Each plan has its own list of covered drugs, called a formulary. The formulary is organized into tiers — typically four or five levels — and your copay or coinsurance depends on which tier your drug is on. A generic drug on Tier 1 might cost $5, while a brand-name drug on Tier 3 might cost $50 or more.

Not every drug is on every formulary. If your doctor prescribes a drug that is not on your plan's formulary, you have three options: pay the full price yourself, ask your doctor to prescribe a different drug that is covered, or request that your plan make an exception. Exceptions take one to three weeks and are not always granted.

Part D plans also use prior authorization for some drugs, meaning your doctor must contact the insurance company and get approval before the pharmacy will fill the prescription. This is common for expensive medications or drugs used to treat certain conditions. Your doctor's office usually handles this, but it can delay your prescription by several days.

The Costs You Pay Throughout the Year

Part D has four cost stages. First, you pay a monthly premium — the amount varies by plan and region, typically between $7 and $100 per month. Second, you pay an annual deductible before the plan starts paying anything. Most plans have a deductible between $0 and $505, though this amount changes each year.

Once you meet your deductible, you enter the initial coverage phase. Here, you pay a copay or coinsurance for each prescription, and the plan pays the rest. You stay in this phase until your total drug costs (what you paid plus what the plan paid) reach a certain amount — $5,850 in 2024, though this changes yearly.

When your total costs hit that threshold, you enter the coverage gap, often called the "donut hole." In the gap, you pay a larger share of the drug cost — typically 25 percent of the price — until your out-of-pocket spending reaches another limit (around $8,000 in 2024). After that, you enter catastrophic coverage, where you pay only a small copay or coinsurance and the plan covers the rest for the rest of the year.

This structure means your costs can spike dramatically in the coverage gap. A drug that cost you $10 in copays during initial coverage might cost you $50 or more per month once you enter the gap. Knowing when you will hit each stage helps you plan your budget and decide whether to use a less expensive alternative drug temporarily.

Drugs That Part D Does Not Cover

Part D has legal restrictions on what it can cover. It does not cover drugs used to treat erectile dysfunction, weight loss, or hair loss. It does not cover over-the-counter medications, even if a doctor recommends them. It does not cover most vitamins or supplements, though a few prescription-strength versions may be covered.

Part D also does not cover drugs that are not FDA-approved, drugs prescribed for off-label uses (uses not listed on the drug's label), or certain medications like benzodiazepines in high doses or for long-term use. Some biologics and specialty drugs are covered but may require prior authorization or step therapy, meaning you must try a cheaper drug first and fail before the plan will cover the expensive one.

If a drug you need is not covered, your doctor can request a formulary exception. The plan will review the request and decide within 72 hours (or longer if your doctor says it is urgent). Exceptions are sometimes granted, especially if you have tried other drugs on the formulary and they did not work, or if the uncovered drug is medically necessary.

Medicare Advantage Drug Coverage

If you have a Medicare Advantage plan instead of Original Medicare with Part D, your drug coverage is included in the plan. You do not pay a separate Part D premium. However, Medicare Advantage plans vary widely in which drugs they cover and what you pay. Some plans have lower copays than Part D plans; others have higher ones. Some plans limit you to certain pharmacies or require mail order for maintenance drugs.

Medicare Advantage plans must cover at least as many drugs as Part D does, but they can be more restrictive about prior authorization and step therapy. If you switch from Original Medicare to Medicare Advantage, or vice versa, your drug coverage changes, and you may need to talk to your doctor about whether your current medications will still be covered at the same cost.

How to learn about Your Drug is Covered

Before you enroll in a Part D plan, or if you are already enrolled and your doctor prescribes a new drug, check the plan's formulary. You can search the formulary on the insurance company's website or call their customer service number. You will need the drug's name, strength, and quantity to search.

You can also use the Medicare Plan Finder tool on Medicare.gov. Enter your drugs, and the tool will show you which plans in your area cover them and what your costs would be at different pharmacies. This comparison can save you hundreds of dollars per year, because the same drug at the same pharmacy can cost different amounts depending on which Part D plan you have.

If your drug is not covered, ask your doctor whether a covered alternative exists. If not, your doctor can submit a formulary exception request on your behalf. Bring the denial letter or the plan's formulary to your doctor's office so they know exactly what they are requesting an exception for.

What Happens if You Do Not Enroll in Part D

Part D is optional, but there is a cost to waiting. If you do not enroll when you first become may be able to access for Medicare — usually when you turn 65 — and you go without drug coverage for more than 63 days, you will owe a late enrollment penalty for as long as you have Part D. The penalty is roughly 1 percent of the national average Part D premium per month you were without coverage. If you waited two years, you would owe about 24 percent more per month than someone who enrolled on time.

The only exceptions are if you had other drug coverage that was at least as good as Part D (called creditable coverage) or if you may have access to for a Special Enrollment Period due to a life event like losing your job or moving to a new state. If you had creditable coverage, you can enroll in Part D later without penalty, but you must be able to prove it.

Frequently Asked Questions

Can I change my Part D plan if my drug is no longer covered?

Yes. You can switch Part D plans during the Annual Enrollment Period (October 15 to December 7 each year), and your new coverage starts January 1. If your drug was suddenly removed from your plan's formulary mid-year, you may also may have access to for a Special Enrollment Period, which lets you switch plans outside the normal window. Contact your current plan to ask whether you may have access to.

What if my copay is too high?

Ask your doctor whether a generic or lower-tier drug can treat your condition instead. If not, request a formulary exception. You can also look into patient information programs run by drug manufacturers — many offer free or reduced-cost drugs to people who cannot afford them. Your doctor's office or pharmacist can help you find these programs.

Does Medicare cover insulin?

Yes, insulin is covered by Part D, and since 2023, your copay for insulin is capped at $35 per month. This applies to all insulin types and all Part D plans. If your plan charges more than $35, you pay only $35 and the plan covers the rest.

Are brand-name drugs covered if a generic exists?

Usually not at the same copay. If a generic version of your drug exists, Part D plans typically put the generic on a lower tier with a lower copay and the brand-name on a higher tier. Your doctor can request an exception if the brand-name drug is medically necessary, but you may have to try the generic first.

What if I use multiple pharmacies?

Your out-of-pocket costs accumulate across all pharmacies, so switching between them does not reset your deductible or coverage gap. However, prices for the same drug can differ between pharmacies, so it is worth comparing. Use your plan's pharmacy finder tool or GoodRx to check prices before you fill a prescription.