What matters most when choosing a drug plan

The right Medicare drug plan depends on which medications you take, which pharmacies you use, and how much you can spend out of pocket. There is no single best plan for everyone. A plan that costs less for one person's medications might cost more for another's, even if both people are in the same town.

Start by listing the medications you take right now — the exact names and doses. Then use the Medicare Plan Finder tool on Medicare.gov to see what each plan in your area would charge for that specific list. This takes 15 to 20 minutes and shows you real costs, not estimates. Many people find their costs drop by hundreds of dollars a year by switching plans, but only if they compare based on their own medications.

You can change plans once a year during Open Enrollment, which runs from October 15 to December 7. If you are newly may be able to access for Medicare or had a major life change, you may be able to switch outside this window. The plan you pick takes effect January 1 of the following year.

Key Takeaways

  • Use the Medicare Plan Finder tool with your actual medication list to compare costs for plans in your area, because costs vary widely between plans and between people.
  • Check whether your current pharmacy is in the plan's network and whether your doctors accept the plan's insurance, because out-of-network costs are much higher.
  • Look at the plan's formulary — the list of covered drugs — to confirm your medications are covered and at what tier (cost level), because some drugs require prior approval from the plan before you fill them.
  • Open Enrollment runs October 15 to December 7 each year, and any plan you choose starts January 1, so enroll by December 7 to avoid a coverage gap.
  • If you miss Open Enrollment and do not may have access to for a Special Enrollment Period, you cannot change plans until the following October, so mark the dates on your calendar.

How the five standard plan types differ

Medicare offers two main kinds of drug plans: Part D plans (prescription drug coverage you add to Original Medicare) and Medicare Advantage plans with drug coverage (all-in-one plans that replace Original Medicare). Within Part D, there are five standard plan designs, though insurers can adjust the exact costs.

All five Part D plans have the same structure: you pay a monthly premium, then a copay or coinsurance when you fill a prescription. Once you spend a certain amount out of pocket, you enter the "donut hole" — a gap where you pay more. Once you spend enough to reach catastrophic coverage, the plan pays most costs for the rest of the year. The five plans differ in how high the copays are and where the donut hole starts and ends.

Preferred Provider Plans (PPOs) let you use any pharmacy but charge higher copays at non-preferred pharmacies. Health Maintenance Organizations (HMOs) require you to use in-network pharmacies and are usually cheaper if you stick to the network. Medicare Advantage plans bundle drug coverage with medical coverage, so you have one deductible and one out-of-pocket maximum for everything. They often have $0 premiums but may have higher copays or require prior approval for drugs.

Using the Medicare Plan Finder to compare costs

Go to Medicare.gov and select "Find Care Providers and Plans" or search for "Medicare Plan Finder." You will need your Medicare number, which is on your Medicare card. Enter your zip code, then click "Prescription Drug Plans" or "Medicare Advantage Plans" depending on which type you want to compare.

Type in each medication you take — the brand name or generic name, the dose, and how often you take it. The tool will show you every plan available in your area, ranked by estimated yearly cost for your medications. The cost includes your premiums, copays, and coinsurance. Some plans will be hundreds of dollars cheaper than others for the exact same medications.

Click on each plan to see the full details: the monthly premium, the copay for each drug, whether the drug is on the formulary (covered list), and whether it requires prior approval. If a drug is not on the formulary, that plan will not cover it, and you will pay the full price out of pocket. If a drug requires prior approval, your doctor has to request it from the plan before you can fill the prescription, which can take a few days.

Checking your pharmacy and doctor are in the plan's network

Before you enroll, confirm that the pharmacy where you currently fill prescriptions is in the plan's network. Some plans have thousands of pharmacies; others have far fewer. If your pharmacy is not in the network, you will pay much more or have to switch pharmacies.

Search the plan's pharmacy directory on its website or call the plan's customer service number. Give them your pharmacy's name and address. Ask whether it is a preferred pharmacy (lower copay) or a standard pharmacy (higher copay). Also ask whether mail-order pharmacies are covered, in case you want to use them later.

If you use multiple pharmacies — one for regular medications and one for specialty drugs, for example — check that both are in the network. If your current pharmacy is not in any plan you like, you have two choices: switch to a pharmacy that is in the network, or pick a different plan.

Understanding formularies and prior approval requirements

A formulary is the plan's official list of covered medications. Every plan has one, and they differ. A drug you take might be on one plan's formulary but not another's, or it might be on both but at different cost tiers.

Drugs are organized into tiers, usually numbered 1 through 5. Tier 1 drugs (generic) have the lowest copay. Tier 2 drugs (preferred brand-name) cost more. Tier 3 and above cost even more. If your medication is on Tier 4 or 5, your copay will be high — sometimes $100 or more per month. If it is not on the formulary at all, the plan will not cover it.

Some plans require prior approval before you can fill certain medications. This means your doctor has to contact the plan and explain why you need the drug. The plan then decides whether to cover it. This can delay your prescription by a few days. If a drug you take requires prior approval, ask your doctor whether they have done this before with that plan, because some doctors' offices handle it routinely and others find it burdensome.

Accounting for the coverage gap and catastrophic coverage

After you and your plan spend a combined $600 on covered drugs in 2024 (this amount changes each year), you enter the coverage gap, often called the "donut hole." In the gap, you pay a higher percentage of the cost — usually 25 percent — until your out-of-pocket spending reaches $7,050 (also changes yearly). Then catastrophic coverage kicks in, and the plan pays most costs for the rest of the year.

Some plans offer gap coverage that reduces what you pay in the donut hole. Others do not. If you take expensive medications, the gap can cost you hundreds of dollars. When comparing plans, look at the total yearly cost including the gap, not just the copays before the gap starts.

You can see where the gap starts for each plan in the Plan Finder tool. If you are concerned about the gap, ask the plan whether it offers any gap coverage or whether you can get a discount on brand-name drugs during the gap. Some manufacturers also offer patient information programs that help cover costs in the gap.

Timing your enrollment and avoiding coverage gaps

Open Enrollment for Medicare drug plans runs from October 15 to December 7 each year. If you enroll during this window, your new plan starts on January 1. If you miss the important date and do not may have access to for a Special Enrollment Period, you cannot change plans until the following October, and you will have no drug coverage for the months in between.

Special Enrollment Periods let you change plans outside the normal window if you have a may have access to event: you move to a new state, your plan leaves the market, you lose other health coverage, or you become newly may be able to access for Medicare. You have 63 days from the event to enroll. If you think you may have access to, call Medicare at 1-800-MEDICARE to confirm.

Mark October 15 and December 7 on your calendar each year. If you are turning 65 or becoming may be able to access for Medicare for another reason, you have a seven-month Initial Enrollment Period to pick a plan. If you miss it, you may have to wait until the next Open Enrollment, and you could face a penalty on your premiums.

Frequently Asked Questions

Can I change plans if I do not like the one I picked?

Yes, but only during Open Enrollment (October 15 to December 7) or if you have a may have access to life event. If you miss both windows, you are locked into your plan for the rest of the year. If your plan leaves the market or stops covering a medication you need, that counts as a may have access to event, so call Medicare to confirm.

What happens if my medication is not on the plan's formulary?

The plan will not cover it, and you will pay the full price out of pocket. You can ask your doctor to request a formulary exception — the plan may cover it anyway if your doctor explains why you need that specific drug. This takes time, so do it before January 1 if possible.

Do I have to use a mail-order pharmacy?

No, but many plans offer lower copays for mail-order prescriptions, especially for medications you take long-term. You can use a local pharmacy for some drugs and mail-order for others. Check the plan's rules before you enroll.

What if I cannot afford the copays even with a plan?

You may be may be able to access for the Extra Help program, which pays some or all of your drug plan costs if your income is below a certain level. Call 1-800-MEDICARE or visit Medicare.gov to learn whether you may have access to. You can also ask your plan about patient information programs from drug manufacturers.

Does my plan cover drugs from other countries?

No. Medicare drug plans only cover prescriptions filled at U.S. pharmacies. If you travel or buy medications abroad, you will pay out of pocket. Some plans offer travel coverage that reimburses you for emergency medications filled outside the U.S., so ask before you enroll.