Part D costs vary by plan and income, but most people pay a monthly premium, an annual deductible, and copays at the pharmacy

Part D is prescription drug coverage under Medicare. The total cost you pay depends on three things: the monthly premium charged by your plan, the annual deductible (the amount you pay before the plan starts helping), and what you pay per prescription at the pharmacy. A plan might charge $15 a month but have a $500 deductible, while another charges $45 a month with no deductible. There is no single "Part D cost" — it changes based on which plan you pick and what drugs you take.

The federal government sets a baseline each year. For 2024, the average Part D premium across all plans is around $34 per month, but individual plans range from roughly $5 to $100 monthly. Deductibles range from $0 to $545 in 2024. After you meet your deductible, you typically pay a copay (a flat amount like $5 or $15) or coinsurance (a percentage of the drug cost). These amounts differ by plan and by drug tier — generic drugs cost less than brand-name drugs.

Key Takeaways

  • Part D premiums in 2024 average around $34 per month but range from $5 to $100 depending on the plan you choose.
  • You pay an annual deductible (up to $545 in 2024) before your plan covers any drugs, though some plans have no deductible.
  • After meeting your deductible, you pay a copay or coinsurance for each prescription, which varies by drug and plan.
  • If your income is below certain thresholds, you may pay reduced premiums and deductibles through the Low-Income Subsidy program.
  • Costs reset each January, so your out-of-pocket total from one year does not carry over to the next.

How premiums work and what they cover

Your Part D premium is what you pay every month to have the coverage. It does not mean the plan pays for your drugs yet — it just means you are enrolled. Premiums vary widely because different insurance companies offer different plans, and plans with lower premiums often have higher deductibles or higher copays. A plan charging $10 a month might require you to pay more when you fill a prescription, while a $60-a-month plan might have lower copays.

The premium you pay depends on which plan you choose. Medicare publishes a list of all available plans in your state each October, and you can compare premiums, deductibles, and copays on Medicare.gov or by calling 1-800-MEDICARE. If you do not pick a plan during the annual enrollment period (October 15 to December 7), you may pay a penalty on top of your premium for the rest of your time on Medicare.

Deductibles and what happens after you meet them

Most Part D plans have an annual deductible — an amount you must pay out of your own pocket before the plan starts to help. In 2024, deductibles can be as high as $545, though some plans have no deductible at all. Once you have paid your deductible, the plan begins to share the cost of your drugs with you.

After you meet the deductible, you enter what is called the "initial coverage stage." Here, you pay a copay or coinsurance for each prescription. The amount depends on the drug's tier. Tier 1 drugs (usually generics) might cost $5 to $10 per prescription. Tier 2 drugs (preferred brand-name) might cost $15 to $50. Tier 3 and 4 drugs (non-preferred or specialty drugs) can cost much more. Your plan's formulary — a list of covered drugs — tells you which tier each drug is on.

The coverage gap and catastrophic coverage

If you spend enough on drugs, you may enter the "coverage gap," sometimes called the "donut hole." This happens when your total out-of-pocket spending reaches a certain amount — $11,000 in 2024. In the gap, you pay a higher percentage of drug costs. However, the gap has shrunk over time: in 2024, you pay 25 percent of brand-name drug costs and 25 percent of generic drug costs in the gap, rather than the full price.

Once your out-of-pocket costs reach $11,000 in 2024, you move into catastrophic coverage. Here, the plan covers most of the cost, and you pay only a small copay (around $5 to $10 per prescription) or 5 percent coinsurance, whichever is higher. Catastrophic coverage continues through the end of the year. On January 1, your deductible resets and the cycle begins again.

Income-based help with Part D costs

If your income is low, you may pay much less for Part D through the Low-Income Subsidy (LIS) program, also called "Extra Help." This federal program reduces or eliminates your premium, deductible, and copays. To be may be able to access, your income must be below 150 percent of the federal poverty line (roughly $2,100 per month for an individual in 2024, though this varies by state and household size). Your assets also matter — you cannot have more than $15,000 in countable assets as an individual or $30,000 as a couple.

If you receive LIS, you might pay $0 to $5 per prescription instead of the full copay, and your deductible might be waived entirely. To explore, contact your state Medicaid office or call 1-800-MEDICARE. Many people who are may be able to access do not know about this program, so it is worth checking even if you think your income is too high.

How to compare plans and estimate your costs

The best way to know what you will pay is to use the Medicare Plan Finder tool on Medicare.gov. You enter your current medications, and the tool shows you which plans cover them and what your costs would be under each plan. This includes premiums, deductibles, and copays for your specific drugs. You can also call 1-800-MEDICARE and speak to a counselor who will walk you through the comparison.

When comparing, look at the total cost you would pay in a year, not just the premium. A plan with a $5 premium but a $500 deductible and high copays might cost you more overall than a plan with a $50 premium and low copays, depending on how many drugs you take. The Plan Finder calculates this for you based on your medications.

When costs change and what to do about it

Part D costs change every January. Premiums, deductibles, copays, and the coverage gap threshold all adjust annually. Insurance companies also change which drugs they cover and which tier each drug is on. If your current plan changes in a way that affects your costs, you have the right to switch plans during the annual enrollment period (October 15 to December 7).

If a drug you take is no longer covered or moves to a higher tier, contact your plan when ready. Many plans allow you to request an exception, which can move your drug to a lower tier or waive the deductible. Your doctor can help by submitting a letter explaining why you need that specific drug. You can also switch to a different plan at any time if your current plan no longer meets your needs.

Frequently Asked Questions

Do I have to pay Part D costs if I do not take any prescription drugs?

You do not have to enroll in Part D if you do not take prescriptions. However, if you go without coverage and later decide to join, you will pay a penalty for each month you were not enrolled. The penalty is about 1 percent of the national average Part D premium per month, added to your premium permanently.

What happens to my out-of-pocket costs if I switch plans mid-year?

You can only switch plans during the annual enrollment period (October 15 to December 7) or if you have a may have access to life event like moving or losing other coverage. If you switch, your deductible and out-of-pocket totals from your old plan do not transfer — you start fresh with your new plan's deductible.

Can my Part D costs go up if I take the same drugs every year?

Yes. Even if you take identical drugs, your costs can rise because insurance companies adjust premiums, deductibles, and copays each January. A drug might also move to a higher tier, or your plan might stop covering it altogether. This is why comparing plans each year during enrollment is important.

What if my doctor prescribes a drug that Part D does not cover?

You can ask your plan for a coverage exception, which your doctor must request in writing. If the exception is denied, you can file an appeal. You can also switch to a different Part D plan during the annual enrollment period that does cover the drug, though you will pay its copay under that plan.

Does Medicare cover the cost of Part D premiums?

No. You pay Part D premiums yourself, unless you receive the Low-Income Subsidy, which can reduce or eliminate them. If you receive Medicaid, your state may help pay your premium, but this varies by state.