Medicare covers some prescription drugs, but not all of them, and the coverage depends on which Medicare plan you have

Medicare Part D is the prescription drug coverage piece of Medicare. It covers thousands of medications, but there are gaps: some drugs are not covered at all, some require you to try a cheaper drug first, and some cost more depending on which pharmacy you use. Original Medicare (Part A and Part B) does not cover outpatient prescription drugs at all — you need Part D or a Medicare Advantage plan that includes drug coverage to get any help with medication costs.

The drugs Medicare Part D covers are listed in a document called a formulary, which each insurance company publishes and updates every year. Your specific out-of-pocket cost depends on three things: which plan you chose, which drug you need, and which pharmacy you fill it at. A drug that costs $15 at one pharmacy might cost $40 at another, and a drug covered under one plan's formulary might not be covered under another's.

Key Takeaways

  • Original Medicare does not cover prescription drugs; you must have Part D or a Medicare Advantage plan with drug coverage to get any medication help.
  • Each Part D plan has its own formulary — a list of covered drugs — and you can switch plans every year during open enrollment if your medication is not on it.
  • You pay different amounts depending on the plan tier the drug is on: generic drugs cost less, brand-name drugs cost more, and some drugs require prior approval from the insurance company.
  • Prices vary by pharmacy, so checking costs at different locations before you fill a prescription can save you hundreds of dollars per year.
  • If a drug you need is not covered, you can ask your doctor to request an exception, which the insurance company may grant if the cheaper alternative does not work for you.

How Part D coverage is organized into tiers and cost-sharing stages

Part D plans organize drugs into tiers, usually four or five levels. Tier 1 is generics (cheapest), Tier 2 is preferred brand-name drugs, Tier 3 is non-preferred brand-name drugs, and Tier 4 or 5 are specialty drugs (most expensive). Your copay or coinsurance amount depends on which tier the drug is on. A generic might cost $5, a preferred brand $35, and a non-preferred brand $75 — all for the same medication in different forms.

You also move through cost-sharing stages as you spend money on drugs during the year. In the deductible stage, you pay the full cost of drugs until you hit your plan's deductible (usually $505 to $550 in 2024, though this changes yearly). In the initial coverage stage, you pay your copay or coinsurance and the plan pays its share. Once you and the plan together have spent a certain amount (the "initial coverage limit"), you enter the coverage gap — sometimes called the "donut hole" — where you pay a higher percentage of the cost. Once your out-of-pocket spending hits the catastrophic threshold, the plan covers most of the cost for the rest of the year.

The exact dollar amounts and percentages change every year, so you need to check your plan's details each year during open enrollment, even if you kept the same plan the year before.

What happens if your medication is not on your plan's formulary

If your doctor prescribes a drug that is not on your Part D plan's formulary, you have three options: pay the full cost out of pocket, switch to a different Part D plan during open enrollment that does cover it, or ask your doctor to request a formulary exception.

A formulary exception is a formal request to the insurance company asking them to cover a drug that is not on their list. Your doctor submits the request, usually because the cheaper alternative on the formulary did not work for you or caused side effects. The insurance company has 72 hours to respond (or 24 hours if it is urgent). They often approve exceptions if your doctor documents that you have already tried the preferred drug and it failed. This is not may provide — the company can deny the request — but it is worth asking if the drug you need is not covered.

If the exception is denied, you can appeal the decision. Your doctor can also ask the insurance company to cover the drug under a different code or request a different exception route. The process takes time, so start it as soon as you know the drug is not covered.

Prior authorization and step therapy requirements

Even if a drug is on your formulary, the insurance company may require prior authorization before the pharmacy will fill it. This means your doctor has to contact the insurance company and get approval before you can pick up the medication. The approval usually comes through within 24 hours, but it can delay your prescription by a day or two.

Step therapy is a requirement to try a cheaper drug first before the insurance company will cover the one your doctor prescribed. For example, if your doctor prescribes a brand-name blood pressure medication, the plan might require you to try a generic version first. If the generic does not work or causes problems, your doctor can then request the brand-name drug and the plan will usually cover it. Step therapy is common for drugs that have generic or lower-cost alternatives available.

Your pharmacy will tell you if prior authorization or step therapy is needed when you try to fill the prescription. Ask your doctor's office to handle the request — they do this regularly and know how to present the case to the insurance company.

How to find out what your specific medications will cost

The best way to know your actual cost is to use the Medicare Plan Finder tool on Medicare.gov. You enter the medications you take, and it shows you the cost under each available Part D plan in your area. You can also call the plans directly and ask, or ask your pharmacist to look up the cost in their system.

Prices vary significantly by pharmacy. A drug might cost $20 at one pharmacy and $60 at another, even within the same insurance plan. Before you fill a prescription, call at least two or three pharmacies in your area and ask the price. Many people save $200 to $500 per year just by switching pharmacies or using mail-order options. Some chains like Costco, Walmart, and GoodRx also offer low-cost generic programs that may be cheaper than your Part D copay.

If you are taking multiple medications, ask your pharmacist about combining them into a 90-day supply instead of 30-day refills — many plans charge the same copay for 90 days as for 30 days, cutting your costs by two-thirds. This option is not available for all drugs, but it is worth asking.

What to do if you cannot afford your medications

If your out-of-pocket costs are very high, you may be able to get help. Medicare has a Low-Income Subsidy (LIS) program that pays part or all of your Part D costs if your income and resources are below certain limits. The income limit varies by state but is roughly $1,500 per month for an individual. You can explore through your local Social Security office or online at SSA.gov.

Pharmaceutical companies also offer patient information programs that provide free or reduced-cost medications to people who cannot afford them. Your doctor or pharmacist can help you find these programs — they are not advertised widely, but they exist for most major medications. Some nonprofits like NeedyMeds and Partnership for Prescription information maintain searchable databases of these programs.

If you are in the coverage gap (donut hole), manufacturers' coupons and discount programs can help. Some coupons count toward your out-of-pocket spending and help you get out of the gap faster. Ask your pharmacist whether a coupon is available for your medication.

How to switch Part D plans if your medication is not covered

You can change Part D plans once per year during the Annual Enrollment Period, which runs from October 15 to December 7. If you are newly may be able to access for Medicare or if a major life event happens (like losing other coverage), you may be able to change plans outside this window.

Before you switch, use Medicare Plan Finder to compare the cost of your medications under different plans in your area. Look not just at the monthly premium, but at the total out-of-pocket cost for all your drugs combined — a cheaper premium might mean higher copays. Also check whether your pharmacy is in the plan's network; some plans have limited pharmacy networks that do not include your preferred location.

Once you choose a new plan, you can enroll online at Medicare.gov, by phone at 1-800-MEDICARE, or through a local Senior Center or Area Agency on Aging. Your new coverage starts January 1 if you enroll by December 7.

Frequently Asked Questions

Does Original Medicare cover any prescription drugs?

No. Original Medicare (Part A and Part B) does not cover outpatient prescription medications. You must have Part D or a Medicare Advantage plan with drug coverage to get any help with medication costs.

What is the difference between a generic drug and a brand-name drug on my formulary?

Generic drugs are chemically identical to brand-name drugs but cost less because the manufacturer did not develop them. Most Part D plans put generics on Tier 1 (lowest copay) and brand-name drugs on higher tiers. Your doctor can prescribe a generic, or you can ask the pharmacist to substitute a generic version of a brand-name drug.

Can I use a GoodRx coupon instead of my Part D plan?

Sometimes. If the GoodRx price is lower than your Part D copay, you can use the coupon and pay out of pocket. However, the cost does not count toward your Part D deductible or out-of-pocket maximum, so you may end up paying more overall if you use coupons for all your drugs. Compare the total cost before deciding.

What happens if I cannot afford my medication during the coverage gap?

Manufacturer coupons, patient information programs, and discount cards can help. Your pharmacist can tell you which options are available for your specific drug. If your income is low, the Low-Income Subsidy program may cover most or all of your costs during the gap.

Can my doctor override my insurance company's decision not to cover a drug?

Your doctor can request a formulary exception or appeal a denial, but the insurance company makes the final decision. If the appeal is denied, you can pay out of pocket, switch plans, or try the alternative drug the plan recommends. Your doctor can also contact the insurance company's medical director if they believe the denial is medically inappropriate.