Medicare covers prescriptions through Part D, a separate plan you choose and pay for each year

Medicare itself — Parts A and B — does not cover prescription drugs. To get prescription coverage, you must join a Part D plan, which is run by private insurance companies approved by Medicare. Part D covers most common medications, but not all, and you pay a monthly premium plus costs at the pharmacy. The coverage and cost depend entirely on which plan you pick, so two people on Medicare can pay very different amounts for the same drug.

If you already have prescription coverage through a current employer or union, or through a program like Veterans Affairs or TRICARE, you may not need Part D. But if you do not have coverage and you miss the important date to join when you first become may be able to access, you will pay a penalty for as long as you have Medicare.

Key Takeaways

  • Part D is optional but joining late carries a permanent penalty added to your monthly premium.
  • Each Part D plan has a different list of covered drugs, so the same prescription may be covered under one plan and not another.
  • You pay a monthly premium, a yearly deductible (if your plan has one), and then a percentage or fixed amount per prescription depending on the drug tier.
  • Plans change every year, so a drug that was covered last year may move to a higher cost tier or be dropped entirely.
  • You can switch Part D plans once per year during the annual enrollment period, usually October 15 to December 7.

How Part D coverage works and what you pay

When you join a Part D plan, you choose from dozens of options in your area, each with its own list of covered drugs, called a formulary. The formulary divides drugs into tiers — usually four or five levels. Tier 1 drugs (generics) cost the least; Tier 5 drugs (newest or brand-name medications) cost the most. Your plan tells you upfront what you will pay for each tier.

You also pay a monthly premium, which varies by plan and can range from roughly $7 to $100 or more per month. Most plans have a yearly deductible — the amount you pay out of pocket before the plan starts to help — though some plans have no deductible. Once you meet your deductible, you pay a copay (a fixed dollar amount) or coinsurance (a percentage of the drug cost) for each prescription, depending on the tier.

There is a coverage gap, sometimes called the "donut hole," that kicks in after you and your plan together have spent a certain amount on drugs in a year. In the gap, you pay a higher percentage of the drug cost. Once your out-of-pocket spending reaches a yearly limit (which changes each year), catastrophic coverage begins and the plan covers most of the cost.

Which drugs are covered and how to check before you buy

Part D plans do not have to cover every drug. Each plan's formulary lists the drugs it covers and at what tier. A drug your doctor prescribes may not be on your plan's formulary, or it may be on a higher tier than you expected, making it much more expensive.

Before you fill a prescription, use the Medicare Plan Finder tool on Medicare.gov to search for your specific drugs and see which plans cover them and at what cost. You can also call the plan directly or ask your pharmacist to check. If a drug is not covered, you have options: pay out of pocket, ask your doctor for a different drug that is covered, or request an exception from the plan (though this is not always granted).

Plans update their formularies every year, so a drug that was covered last year may move to a higher tier or be removed. When you get your plan's notice of changes in the fall, check whether your current drugs are still covered at the same cost.

When you become may be able to access and the important date to join

You become may be able to access for Part D when you turn 65 and enroll in Medicare Part A or Part B. You also become may be able to access if you are under 65 and on Medicare due to disability or end-stage renal disease. Your initial enrollment period is seven months long — it starts three months before the month you turn 65 and ends three months after.

If you do not join a Part D plan during your initial enrollment period and you do not have other creditable coverage (coverage as good as Part D), you will pay a late enrollment penalty for as long as you have Medicare. The penalty is roughly 1 percent of the national average Part D premium for each month you were without coverage. If the average premium is $35 and you waited two years to join, your penalty would be about $8.40 per month, added to your premium forever.

You can join or switch plans once per year during the annual enrollment period, which runs from October 15 to December 7. Changes take effect January 1.

Part D plans available to you and how to compare them

Medicare approves dozens of Part D plans in most areas. Plans fall into two main types: Prescription Drug Plans (PDPs), which work with Original Medicare (Parts A and B), and Medicare Advantage plans with drug coverage built in, which replace Original Medicare entirely. If you have Original Medicare, you choose a PDP. If you have Medicare Advantage, drug coverage is included in that plan.

To compare plans, go to Medicare.gov and use the Plan Finder. Enter your zip code, the drugs you take, and your preferred pharmacy. The tool shows you the monthly premium, deductible, copays, and total estimated yearly cost for each plan. You can sort by cost, coverage, or pharmacy network. Many people find that the cheapest plan is not the best plan if it does not cover their drugs or uses a pharmacy far from home.

You can also call 1-800-MEDICARE to speak with someone who can walk you through the options, or contact a local counselor through your State Health Insurance information Program (SHIP), which offers free help.

What happens if your drug is not covered or costs too much

If your plan does not cover a drug your doctor prescribed, or if the copay is too high, you have several paths. First, ask your doctor whether a different drug on your plan's formulary would work for your condition. Many conditions have multiple treatment options, and switching to a covered drug may be medically reasonable.

Second, you can request a formulary exception from your plan. You or your doctor submit a form explaining why you need that specific drug. The plan reviews the request and may approve it, moving the drug to a lower tier or covering it entirely. This process usually takes a few days to a week, though urgent requests can be faster. There is no may provide the plan will approve, but it costs nothing to ask.

Third, if you believe the plan's decision is wrong, you can file an appeal. Fourth, you can switch to a different Part D plan during the annual enrollment period if another plan covers your drug at a lower cost. If you need a drug urgently and your plan denies coverage, you can pay out of pocket and then appeal for reimbursement.

How Part D interacts with other coverage

If you have prescription coverage through a current job or a union, you may not need Part D right away. But once that coverage ends, you have a two-month window to join Part D without penalty. If you miss that window, the late enrollment penalty applies.

If you are a veteran, you may get prescriptions through the VA at little or no cost. VA coverage counts as creditable coverage, so you do not need Part D. Similarly, if you have TRICARE (military retiree coverage) or coverage through a state Medicaid program, those may count as creditable. Check with your current plan to confirm it is creditable before you skip Part D, because if it is not, you will owe the penalty.

If you are on both Medicare and Medicaid (called "dual may be able to access"), Medicaid usually covers prescriptions, and you may not need Part D. But rules vary by state, so contact your state Medicaid office to confirm.

Frequently Asked Questions

Can I change my Part D plan if my drug costs too much?

Yes, but only during the annual enrollment period from October 15 to December 7, or if you have a may have access to life event like moving to a new state or losing other coverage. Outside those windows, you are locked into your current plan for the year. If you need a drug urgently and your plan will not cover it, you can pay out of pocket now and switch plans in October.

What if I cannot afford my copays?

Medicare has a Low-Income Subsidy program that reduces or eliminates copays, deductibles, and premiums for people with limited income and resources. You can check whether you may have access to on Medicare.gov or by calling 1-800-MEDICARE. Some drug manufacturers also offer patient information programs that provide free or low-cost drugs to people who meet income limits.

Do I need Part D if I take very few prescriptions?

If you take no prescriptions now but might in the future, joining Part D during your initial enrollment period is usually wise. The late enrollment penalty applies even if you never fill a prescription, so waiting until you need a drug can be expensive. If you are certain you will never take prescriptions, you can skip Part D, but confirm this with your doctor first.

What if my doctor prescribes a brand-name drug but the plan only covers the generic?

Ask your doctor whether the generic version would work for you. If the brand-name drug is medically necessary, request a formulary exception from your plan. Your doctor may need to submit a letter explaining why the generic is not suitable. The plan has five business days to respond to a standard request or 24 hours for an urgent one.

Can I use any pharmacy with Part D?

Most Part D plans have a network of pharmacies where your copay applies. Using an out-of-network pharmacy usually costs more. Check your plan's pharmacy list before you join, especially if you have a preferred pharmacy or use mail order. Some plans cover mail-order prescriptions at a lower cost than retail pharmacies.