Medicare Part D costs vary by plan and by year, but you will pay a monthly premium, an annual deductible, and copayments or coinsurance when you fill prescriptions

There is no single Part D cost. Each insurance company sets its own premium, deductible, and copay structure within federal limits. A plan that costs $15 a month in one state may cost $35 in another. The same plan may change its price every January. What matters is understanding the four separate charges you will face, and knowing that you can switch plans once a year during the open enrollment period.

Part D is optional — you do not have to take it — but if you go without coverage when you first become may be able to access for Medicare, you will pay a permanent penalty on your premium if you join later. The penalty is roughly 1 percent of the national average Part D premium for each month you were not covered.

Key Takeaways

  • Part D premiums range widely by plan and location; the national average is around $30 to $40 per month, but your actual cost depends on which plan you choose and where you live.
  • You pay a deductible before coverage begins, which varies by plan and can be as low as zero or as high as $545 in 2024, though this amount changes yearly.
  • After you meet your deductible, you pay a share of the cost at the pharmacy — either a fixed copay per prescription or a percentage of the drug's price, depending on the plan and the drug tier.
  • If your yearly drug costs reach a certain threshold, you enter the coverage gap (donut hole) where you pay more out of pocket until costs reach the catastrophic level, at which point your coinsurance drops significantly.
  • You can change Part D plans once per year during the annual enrollment period, which runs from October 15 to December 7, so you can switch to a cheaper plan if your current one's price rises.

The four costs you will pay: premiums, deductibles, copays, and coinsurance

Monthly premium is what you pay to the insurance company to keep the plan active. This is the most visible cost. Premiums in 2024 range from roughly $7 to $100 per month depending on the plan and your location, with most plans falling between $25 and $50. Some plans have zero premium if you have low income and meet other conditions through the Low-Income Subsidy program.

Annual deductible is the amount you must pay out of pocket before the plan starts to help. Not all plans have a deductible — some start covering drugs when ready — but those that do can have deductibles up to $545 in 2024. Once you reach the deductible, the plan begins to share costs with you.

Copayments and coinsurance are your share of the drug cost after the deductible. A copay is a fixed dollar amount per prescription — for example, $5 for a generic drug, $15 for a preferred brand-name drug, or $50 for a non-preferred drug. Coinsurance is a percentage of the drug's price — for example, 25 percent. Which one you pay depends on the plan and the drug's tier (how the plan categorizes it).

Catastrophic coverage kicks in after your total out-of-pocket spending reaches a limit set by Medicare. In 2024, that limit is $7,050. Once you cross it, you pay only a small coinsurance (roughly 5 percent) on most drugs for the rest of the year.

How the coverage gap (donut hole) affects what you pay

The coverage gap is a range of drug costs where you pay more than you would in the initial coverage phase. It begins after you and your plan together have spent a certain amount on covered drugs — $5,850 in 2024 — and ends when your out-of-pocket costs reach $7,050. While you are in the gap, you pay a larger share of the drug cost, though the exact amount depends on the drug and the plan.

Not all plans have a coverage gap that affects you the same way. Some plans offer gap coverage that reduces what you pay during this phase. Others have copays that stay the same throughout the year. The plan's summary document will tell you what happens to your costs if you enter the gap.

The coverage gap is one reason to review your plan each year. If you take expensive drugs and expect to enter the gap, a plan with better gap coverage may cost less overall even if its premium is higher.

Income-based help: the Low-Income Subsidy program

If your income is below 150 percent of the federal poverty line, you may be able to get help paying Part D premiums and out-of-pocket costs through the Low-Income Subsidy (also called Extra Help). This program can reduce your premium to zero, lower your deductible, and cap your copays at $3.90 for generic drugs and $9.65 for brand-name drugs in 2024.

You do not have to be on Medicaid to may have access to. Social Security will tell you if you are may be able to access when you turn 65, but you can also contact your state Medicaid office or call 1-800-MEDICARE to ask. The income limits and copay amounts change each year.

How to compare Part D costs before you choose a plan

Medicare provides a plan comparison tool on Medicare.gov where you can enter the drugs you take and see the estimated yearly cost for each plan in your area. This is the most accurate way to compare, because the cost depends on your specific medications, not on a general estimate.

To use the tool, you will need a list of your current drugs, including the dose and how often you take them. You can get this from your doctor, pharmacy, or your current insurance card. Enter this information into the Medicare plan finder, and it will show you the premium, deductible, and estimated out-of-pocket costs for each plan.

Compare the total yearly cost, not just the premium. A plan with a higher premium but better coverage for your drugs may cost less overall than a cheaper plan with higher copays.

When costs change and how to respond

Part D costs change every January. Your plan's premium may go up, its deductible may change, and the drugs it covers may shift. Medicare sends you a notice in the fall showing your plan's new costs for the coming year. Read this notice carefully — it is your signal to decide whether to stay or switch.

You can change plans during the annual enrollment period from October 15 to December 7 each year. If you miss this window, you are locked into your plan until the next October, unless you have a may have access to life event such as moving to a new state or losing other coverage.

If your plan's costs rise sharply or your medications change, switching may save you hundreds of dollars per year. Use the Medicare plan finder again during open enrollment to see what other plans cost for your current drugs.

What happens if you do not take Part D when you first become may be able to access

Part D is optional, but there is a financial consequence to waiting. If you do not join a Part D plan when you first become may be able to access — usually when you turn 65 — and you do not have other creditable prescription drug coverage, you will pay a late enrollment penalty when you finally join.

The penalty is roughly 1 percent of the national average Part D premium for each month you were not covered. If the national average is $35 and you waited two years (24 months), your penalty would be about $8.40 per month for life. This penalty is added to your premium and does not go away.

The exception is if you have other coverage that is as good as Part D — such as coverage through a current employer or a union — or if you may have access to for Medicaid. If you have creditable coverage, you can delay Part D without penalty.

Frequently Asked Questions

Can I change my Part D plan if my costs go up in January?

Yes. You can switch to a different plan during the annual enrollment period from October 15 to December 7. If you miss this window, you are locked in until next October unless you have a may have access to event such as moving or losing other coverage.

What is the difference between a copay and coinsurance?

A copay is a fixed dollar amount you pay per prescription — for example, $10. Coinsurance is a percentage of the drug's price — for example, 25 percent. Some plans use copays, some use coinsurance, and some use both depending on the drug tier.

Do I have to pay the late enrollment penalty forever?

Yes. The penalty is added to your Part D premium and stays with you for as long as you have Part D coverage. It does not expire or decrease over time.

What if I cannot afford my Part D copays?

If your income is low, the Low-Income Subsidy program can reduce your copays to $3.90 for generics and $9.65 for brand-name drugs. Contact your state Medicaid office or call 1-800-MEDICARE to learn if you may have access to. Some drug manufacturers also offer copay information programs.

Does Part D cover all prescription drugs?

No. Each plan has a formulary — a list of covered drugs — and some drugs may not be on it. Your doctor can request an exception if a non-covered drug is medically necessary, but this takes time. Check the plan's formulary before you join to make sure your drugs are covered.