Medicare Part D costs vary by plan and pharmacy, but most people pay a monthly premium, an annual deductible, and a percentage of drug costs

Medicare Part D is prescription drug coverage you add to Original Medicare (Parts A and B). The total cost you pay has four parts: a monthly premium, an annual deductible, your share of drug costs at the pharmacy, and potentially a coverage gap penalty. None of these amounts are fixed across all plans — they depend on which plan you choose and which pharmacy you use. The same drug at the same pharmacy can cost different amounts depending on your plan's negotiated price.

Part D is optional, but if you go without it when you first become may be able to access for Medicare, you will pay a permanent penalty on your premium for as long as you have Part D coverage. That penalty is roughly 1 percent of the national average Part D premium for each month you were may be able to access but not enrolled.

Key Takeaways

  • Part D monthly premiums in 2024 range from roughly $7 to $100 per month depending on the plan, and the amount changes each year.
  • Most plans have an annual deductible (the amount you pay out of pocket before the plan starts paying), which varies by plan but averages around $35 to $110.
  • After you meet your deductible, you typically pay 25 percent of drug costs until you reach the coverage gap, where your costs jump significantly.
  • Once your total out-of-pocket spending hits a certain threshold (around $7,050 in 2024), catastrophic coverage kicks in and you pay only a small copay for the rest of the year.
  • Switching plans during the annual enrollment period (October 15 to December 7) is free and can save you hundreds of dollars per year.

Monthly Premiums and How They Change

Your Part D premium is what you pay each month to keep the plan active. In 2024, premiums range from about $7 to $100 per month, but this varies widely by plan and by region. Some plans cost more because they cover more drugs or have lower copays; others cost less because they cover fewer drugs or have higher out-of-pocket costs. The plan with the lowest premium in your area may not be the cheapest plan overall when you factor in deductibles and copays.

Premiums increase every year. The increase is not the same for all plans — some plans raise their premiums by 5 percent, others by 15 percent or more. If you stay in the same plan, your premium will likely go up each January. If you switch to a different plan during the annual enrollment period, you can often find a plan with a lower premium, though you may trade that for higher copays on your specific drugs.

If you have limited income, you may be able to get help paying your Part D premium through the Low-Income Subsidy program (also called Extra Help). This program is run by Social Security, and you can contact them to learn whether you may have access to.

Deductibles: What You Pay Before Coverage Starts

Most Part D plans have an annual deductible — the amount you must pay out of pocket for drugs before the plan starts to help pay. In 2024, deductibles range from $0 to $545, though most plans fall between $35 and $110. Some plans have no deductible at all, which means the plan starts paying when ready, though usually with higher copays.

Once you meet your deductible, you move into the next cost stage, where the plan begins to share the cost of your drugs with you. The deductible resets every January 1, so if you reach it in November, you will start over in January. Plans with lower premiums often have higher deductibles, and plans with higher premiums often have lower deductibles or no deductible.

Copays and Coinsurance After Your Deductible

After you meet your deductible, you pay a share of each drug's cost. This share is either a fixed copay (for example, $5 for a generic drug) or coinsurance (a percentage of the drug's cost, usually 25 percent). The copay or coinsurance amount depends on which "tier" the drug is on. Tier 1 drugs (usually generics) have the lowest copays; Tier 2 drugs (preferred brand-name drugs) cost more; Tier 3 and Tier 4 drugs (specialty and non-preferred drugs) cost the most.

The same drug can be on different tiers in different plans, which is why comparing plans matters. A drug you take regularly might cost $10 per month in one plan and $50 per month in another plan, even though both are Part D plans in your area. When you are comparing plans, check the copay for each drug you take, not just the premium.

The Coverage Gap and What Happens There

Once your total drug costs (what you and the plan have paid combined) reach a certain amount — $5,030 in 2024 — you enter the coverage gap, sometimes called the "donut hole." In the coverage gap, you pay a larger share of your drug costs. For brand-name drugs, you pay 25 percent of the cost. For generic drugs, you pay about 40 percent of the cost. This continues until your out-of-pocket spending (what you personally have paid) reaches a second threshold — around $7,050 in 2024.

The coverage gap is where many people's costs spike unexpectedly. If you take expensive drugs, you may hit the gap by mid-year and face much higher copays for the rest of the year. Some plans offer coverage gap information, which means they help pay part of your costs in the gap, but not all plans do. When comparing plans, check whether they offer gap coverage for your specific drugs.

Catastrophic Coverage: The Final Stage

Once your out-of-pocket spending reaches the catastrophic threshold (about $7,050 in 2024), catastrophic coverage begins. From that point until December 31, you pay only a small copay for each drug — usually around $3.75 for generic drugs and $9.45 for brand-name drugs, though these amounts change yearly. The plan pays the rest. This stage protects you from unlimited costs if you have a serious illness or take many expensive drugs.

The catastrophic threshold is based on what you personally have paid, not what the plan has paid. Copays and coinsurance count toward this threshold, but your monthly premium does not. If you have very high drug costs, you may reach catastrophic coverage by late fall or early winter.

How to Find the Lowest Cost Plan for Your Drugs

The Medicare Plan Finder tool on Medicare.gov lets you enter your specific drugs and see the total cost (premium plus copays) for each plan in your area. This is the most accurate way to compare plans, because it shows you the real cost for your situation, not just the premium. You can access it at Medicare.gov/plan-compare or by calling 1-800-MEDICARE.

When you use the Plan Finder, enter every drug you take, including over-the-counter drugs you pay for yourself. The tool will show you the annual cost for each plan, including the premium, deductible, and copays. The cheapest plan on paper (lowest premium) is often not the cheapest plan for you. A plan with a $15 monthly premium might cost you $2,000 per year total if your drugs are on high tiers; a plan with a $40 monthly premium might cost you $1,200 per year total if your drugs are on lower tiers.

When and How to Switch Plans

You can switch Part D plans once per year during the annual enrollment period, which runs from October 15 to December 7. Your new plan coverage begins January 1. Switching is free — you do not pay any penalty or fee to change plans. If you miss the annual enrollment period, you can only switch if you have a may have access to life event, such as moving to a new state, losing other drug coverage, or becoming newly may be able to access for Medicare.

To switch plans, you can use the Medicare Plan Finder, call 1-800-MEDICARE, or contact the plans directly. You do not need to contact your current plan to leave — you straightforward enroll in the new plan, and your old plan coverage ends automatically on December 31. If you switch plans, make sure your pharmacy is in the new plan's network and that your drugs are covered before January 1.

Frequently Asked Questions

What happens if I do not enroll in Part D when I first become may be able to access?

You will pay a permanent penalty on your Part D premium for as long as you have Part D coverage. The penalty is roughly 1 percent of the national average Part D premium for each month you were may be able to access but not enrolled. If you go without Part D for two years, your penalty is roughly twice as high. The penalty never goes away, even if you switch plans later.

Can I change my Part D plan if my drug costs go up during the year?

No, you cannot switch plans outside the annual enrollment period unless you have a may have access to life event. If your costs spike because you hit the coverage gap, you are stuck with that plan until the next enrollment period. This is why comparing plans carefully before January 1 matters — you need to anticipate your costs for the full year.

Do I have to use a specific pharmacy with Part D?

Most Part D plans have a network of pharmacies where your copays explore. If you use an out-of-network pharmacy, you will pay more or the plan may not cover the drug at all. When comparing plans, check whether your preferred pharmacy is in the network. Some plans have mail-order options that may cost less for drugs you take regularly.

What if my drug is not covered by my Part D plan?

You can ask the plan for an exception, which means asking them to cover a drug that is not on their formulary (list of covered drugs). This usually requires your doctor to write a letter explaining why that specific drug is medically necessary. The plan has 72 hours to respond. If they deny the exception, you can appeal. You can also switch to a different plan during the next enrollment period that does cover the drug.

Does Part D cover over-the-counter drugs?

Standard Part D plans do not cover over-the-counter drugs. However, some plans offer supplemental benefits that may include a small allowance for over-the-counter items. Check your plan's details to see whether it offers this benefit. Prescription drugs are covered; over-the-counter items are not unless your plan specifically includes them.