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. 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.

The amount Medicare pays varies. Some drugs cost you nothing after you meet your deductible. Others require you to pay a percentage of the cost, or a fixed amount called a copay. A few drugs may not be covered at all, though your plan must cover at least two drugs in most categories.

What you pay also depends on which stage of the year you are in. Medicare divides the prescription year into phases, and your costs change as you move through them.

Key Takeaways

  • Part D covers most common prescription drugs through private insurance plans you choose yourself, while Medicare Advantage plans usually include drug coverage as part of the plan.
  • Your costs depend on the drug, your plan, and what time of year you fill the prescription — costs are lower early in the year and higher once you reach the coverage gap.
  • You can see which drugs your plan covers by searching your plan's formulary, a list that shows your copay or coinsurance for each medication.
  • If your plan does not cover a drug your doctor prescribed, you can ask your doctor to request an exception, or you can switch to a different plan during the annual enrollment period.
  • Plans change every year, so the drug coverage you had in January may be different in January of the next year.

How Part D coverage works through the year

When you fill a prescription under Part D, you move through four phases. In the first phase, called the deductible phase, you pay the full cost of your drugs until you reach your plan's deductible — usually between $0 and $550, depending on the plan. Once you hit that amount, you move into the initial coverage phase.

In the initial coverage phase, Medicare and your plan share the cost. You might pay 25 percent of the drug cost, or a flat copay like $5 or $10, depending on the drug and your plan. This phase lasts until your total drug costs (what you paid plus what the plan paid) reach about $5,850.

Once you cross that threshold, you enter the coverage gap, sometimes called the "donut hole." In this phase, you pay a larger share of the cost — currently 25 percent of the price for brand-name drugs and 25 percent for generic drugs. This phase continues until your out-of-pocket costs reach about $8,550.

After you spend that amount out of pocket, you enter catastrophic coverage. Medicare pays most of the cost from that point forward, and you pay only a small copay or coinsurance for the rest of the year.

How Medicare Advantage drug coverage differs

If you have a Medicare Advantage plan, prescription drugs are usually included in the plan itself rather than added separately. You do not choose a Part D plan on top of your Advantage plan — the drug coverage is already there.

Your costs work differently. Instead of moving through deductible, initial coverage, and coverage gap phases, most Advantage plans use a simpler structure: you pay a copay for each drug, and those copays may vary by drug tier. A tier is a grouping based on cost and how common the drug is. Tier 1 drugs (usually generics) cost less; Tier 4 or 5 drugs (usually newer or brand-name) cost more.

Some Advantage plans do have a deductible you must meet before coverage starts, but many do not. Check your plan documents to see whether your plan has a deductible and what your copays are for each tier.

Finding out what your plan covers

Every Part D plan and Medicare Advantage plan publishes a formulary — a list of covered drugs and what you pay for each one. You can find your plan's formulary on the plan's website or by calling the plan's customer service number, which is on your insurance card.

Search the formulary for your specific drug. The formulary will show you the tier (if you have an Advantage plan) or whether you are in the deductible phase, initial coverage, or coverage gap (if you have Part D). It will also tell you whether the drug requires prior authorization — meaning your doctor must get approval from the plan before the pharmacy can fill it.

If your drug is not on the formulary, or if the copay is higher than you expected, you have options. You can ask your doctor whether a different drug on the formulary would work for you. You can also ask your doctor to request a formulary exception, which asks the plan to cover a drug that is not normally covered or to lower your copay.

What happens if your drug is not covered

If your plan does not cover the drug your doctor prescribed, your doctor can submit a request for an exception. The plan must respond within 72 hours (or one business day in urgent cases). If the plan approves the exception, it will cover the drug. If it denies the exception, your doctor can appeal the decision.

While the exception is being decided, you can ask the pharmacy to fill the prescription at your own cost. Keep your receipt — if the exception is approved, you may be able to get reimbursed for what you paid out of pocket.

If the exception is denied and you disagree, you can file a formal appeal or switch to a different plan. You can change Part D plans or Medicare Advantage plans during the annual enrollment period, which runs from October 15 to December 7 each year. If you have a life-changing event — such as moving, losing other insurance, or a significant change in your health — you may be able to switch outside the enrollment period.

Costs for drugs without Medicare coverage

Some drugs are not covered by any Medicare plan. These include drugs used only for cosmetic purposes, most over-the-counter medications, and some newer or experimental drugs. If you need a drug that Medicare does not cover, you pay the full cost yourself.

However, you can sometimes lower the cost. Pharmaceutical companies offer patient information programs that provide free or reduced-cost drugs to people who meet income requirements. GoodRx, SingleCare, and similar discount programs let you compare prices at different pharmacies and use coupons to lower the cost. Your doctor or pharmacist can help you find these programs.

When your plan changes or your drug is removed

Medicare Part D and Advantage plans change every year. A drug your plan covered in January may no longer be covered in January of the next year, or your copay may increase. Insurance companies must notify you of changes by October 1 each year.

If your plan removes a drug you take, or if your copay becomes unaffordable, you can switch plans during the annual enrollment period. You can also ask your doctor to request an exception for the current year while you decide whether to switch.

If you are already in the coverage gap and your plan removes a drug, contact your plan when ready. Some plans will cover the drug through the end of the year even if it is no longer on the formulary, depending on the reason it was removed.

Frequently Asked Questions

Does Medicare cover insulin?

Yes. Part D and Medicare Advantage plans must cover insulin. Starting in 2024, if you are on Medicare, your copay for insulin is capped at $35 per month, no matter which insulin you use or what stage of the year you are in. This cap applies even if you are in the coverage gap.

What if I cannot afford my copays?

If your income is low, you may be may be able to access for the Low-Income Subsidy (LIS) program, which helps pay your Part D premiums, deductibles, and copays. You can learn more by calling 1-800-MEDICARE or visiting Medicare.gov. Some pharmaceutical companies and nonprofits also offer copay information cards that reduce your out-of-pocket cost at the pharmacy.

Can I use a GoodRx coupon instead of my insurance?

Yes, you can choose to use a discount coupon instead of your insurance for a single prescription. Compare the price with your insurance copay first — sometimes the coupon is cheaper, sometimes your insurance is. You cannot use both for the same prescription, so pick whichever costs less.

What if my doctor prescribes a brand-name drug when a generic is available?

Your plan may require you to try the generic first, or it may charge a higher copay for the brand-name version. Ask your doctor whether the generic works the same way for your condition. If you need the brand-name drug for a medical reason, your doctor can request an exception.

Do I have to use a specific pharmacy?

Most Part D and Advantage plans have a network of preferred pharmacies where your copay is lowest. You can use an out-of-network pharmacy, but you will pay more. Check your plan documents or call your plan to find pharmacies in your network.