Medicare covers prescription drugs, but the coverage depends on which part of Medicare you have and which drug you need

Medicare Part D is the prescription drug coverage piece of Medicare. If you have Original Medicare (Part A and Part B), you can add Part D through a private insurance company. If you have a Medicare Advantage plan (Part C), prescription drug coverage is usually built in, though you pay differently than you would under Part D.

Not every drug is covered the same way. Each Part D plan and Medicare Advantage plan publishes a list called a formulary that shows which drugs they cover, how much you pay, and whether your doctor needs to get approval first. The formulary changes every year, so a drug covered this year might move to a different cost tier next year, or stop being covered altogether.

Your out-of-pocket costs for drugs move through stages during the year. You pay a monthly premium, then a deductible (if your plan has one), then a copay or coinsurance for each prescription. Once you and your plan spend a certain amount together, you enter the "donut hole" — a coverage gap where you pay more. After you spend enough out of pocket, catastrophic coverage kicks in and your costs drop again.

Key Takeaways

  • Part D covers most common prescription drugs through private plans you choose yourself, while Medicare Advantage plans usually include drug coverage as part of the plan.
  • Each plan's formulary lists which drugs are covered and at what cost, and formularies change every year on January 1st.
  • You move through cost stages during the year: premium, deductible, copay or coinsurance, donut hole, and catastrophic coverage.
  • Brand-name drugs often cost more than generic versions, and your plan may require prior authorization or step therapy before covering certain medications.
  • You can change your drug plan once a year during the Annual Enrollment Period (October 15 to December 7) if your current coverage no longer fits your needs.

How Part D coverage works during the year

When you sign up for Part D, you choose a plan and pay a monthly premium. That premium varies by plan and by region. Some plans have no deductible; others ask you to pay between $0 and several hundred dollars out of pocket before coverage begins.

After you meet your deductible (if you have one), you enter the initial coverage stage. Here you pay a copay or coinsurance — a fixed dollar amount or a percentage of the drug's cost — for each prescription. For generic drugs, this might be $5 to $10. For brand-name drugs, it can be $30, $50, or more per prescription.

Once you and your plan together have spent a certain amount on covered drugs (the threshold varies by year), you enter the coverage gap, often called the "donut hole." In this stage, you pay a larger share of the drug cost yourself. However, manufacturers' discounts and your plan's negotiated prices count toward getting you out of the donut hole faster than they used to.

After your out-of-pocket spending reaches a yearly limit (which also varies), catastrophic coverage begins. At this point, you pay only a small copay or coinsurance, and your plan covers the rest.

Differences between Part D and Medicare Advantage drug coverage

If you have Original Medicare and add Part D through a standalone plan, you choose your drug plan separately from your medical coverage. You can change your Part D plan every year during the Annual Enrollment Period without changing your doctor or hospital coverage.

If you have a Medicare Advantage plan, drug coverage is usually included. You do not choose a separate drug plan — the coverage comes with the plan you pick. However, Medicare Advantage plans often have smaller networks of pharmacies and may require you to use mail order for some long-term medications. The cost structure for drugs in Medicare Advantage is the same (premium, deductible, copay, donut hole, catastrophic), but the amounts may differ from Part D plans.

Some people with Original Medicare and Part D also add a Medigap policy to cover some of the costs that Medicare does not. Medigap does not cover prescription drugs, so you still need Part D or a Medicare Advantage plan for that protection.

Brand-name drugs, generics, and prior authorization

Your plan's formulary usually lists generic drugs at a lower cost tier than brand-name versions of the same medication. If your doctor prescribes a brand-name drug and a generic is available, you can ask your pharmacist to fill the generic instead — you will pay less.

Some plans require prior authorization before they will cover certain drugs, especially newer or more expensive ones. This means your doctor has to contact the plan and explain why you need that specific medication. The process usually takes a few days, but it can delay your prescription if your doctor does not submit the request right away.

Plans may also use step therapy, which means you have to try a cheaper drug first. If that does not work for you, your doctor can request approval for the more expensive option. Again, this takes time, so talk to your doctor before you fill a new prescription if you think it might need approval.

What drugs Medicare Part D does not cover

Part D does not cover drugs used only in a hospital or doctor's office — those are covered under Part B. It also does not cover most over-the-counter medications, though some plans cover a small amount of OTC drugs through a special benefit.

Certain categories of drugs are excluded by law: drugs used to treat erectile dysfunction, weight loss drugs, cosmetic drugs, and most drugs used to treat infertility. Some plans may not cover all drugs in a category — for example, not all diabetes medications or all blood pressure medications — so check your formulary.

If your plan does not cover a drug your doctor prescribed, you have options. You can ask your doctor to prescribe a different drug that is on your formulary. You can request an exception from your plan, which your doctor can support in writing. Or you can switch to a different Part D plan during the Annual Enrollment Period that does cover the drug you need.

Finding and comparing drug plans

Medicare publishes a tool called Medicare Plan Finder on Medicare.gov where you can enter the drugs you take and see which plans cover them and at what cost. You can filter by pharmacy, by plan type, and by price. This tool updates every year before the Annual Enrollment Period.

You can also call 1-800-MEDICARE to speak with someone who can walk you through your options. Many Area Agencies on Aging and senior centers offer free help comparing plans in person.

When you compare plans, look at the total cost, not just the premium. A plan with a low premium might have high copays, or it might not cover one of your drugs. The plan with the lowest premium is not always the cheapest plan for you.

Changing your drug plan

You can change your Part D plan once a year during the Annual Enrollment Period, which runs from October 15 to December 7. Changes take effect on January 1st of the following year. If you have a Medicare Advantage plan and want to switch to a different plan or to Original Medicare with Part D, you can also make that change during this period.

If you have a major life change — you move to a different state, lose your current coverage, or become newly may be able to access for Medicaid — you may be able to change your plan outside the enrollment period. Contact your current plan or call 1-800-MEDICARE to ask about a special enrollment period.

If your plan stops covering a drug you need, or if your costs become unaffordable, do not wait until next October. Talk to your doctor about alternatives, ask your plan about exceptions, or call 1-800-MEDICARE to understand your options right away.

Frequently Asked Questions

What if my drug is not on my plan's formulary?

You can ask your plan for a coverage exception, which your doctor can request in writing. Plans must respond within 72 hours for urgent requests. If the exception is denied, you can appeal or switch to a different plan during the Annual Enrollment Period.

Do I have to use a specific pharmacy?

Most Part D plans have a network of preferred pharmacies where you pay less. You can use an out-of-network pharmacy, but you will pay more. Mail-order pharmacies are often cheaper for long-term medications. Check your plan's pharmacy list before you fill a prescription.

Why did my drug cost more this year?

Drug prices change, formularies change, and your plan's cost tiers change every January 1st. A drug you paid $10 for last year might move to a higher tier this year. Review your plan during the Annual Enrollment Period to see if a different plan would cost less for your current medications.

Can I get help paying for my drugs if I cannot afford them?

If your income is low, you may may have access to for Extra Help, a federal program that pays some or all of your Part D costs. You can also ask your drug manufacturer about patient information programs, which sometimes provide free or low-cost medications. Contact 1-800-MEDICARE or your local Area Agency on Aging for more information.

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

Medicare Advantage plans include drug coverage, but the formulary and costs are different from Part D. When you switch, review the new plan's drug list to make sure your medications are covered at a cost you can afford. You can switch back to Part D during the next Annual Enrollment Period if the coverage does not work for you.