Start with your current medications and their costs

Before you look at any plan, write down every medication you take — including the dose and how often. Then go to each plan's formulary (the list of drugs it covers) and check whether your medications are on it and at what tier. A tier is a cost level: Tier 1 is usually the cheapest, Tier 5 the most expensive. A medication on Tier 1 in one plan might be Tier 3 in another, which changes what you pay out of pocket.

You can search formularies on Medicare.gov without logging in. Type the plan name and your state, then search for each drug by name. Write down the tier and the copay or coinsurance amount — the actual dollar cost you will owe per prescription. If a medication is not on the formulary at all, the plan will not cover it, and you would have to pay the full price yourself or ask your doctor for an alternative.

Some plans require prior authorization, meaning your doctor has to get approval from the plan before you can fill the prescription. Others have quantity limits — they will only cover a certain number of pills per month. Check the formulary notes for these restrictions, because they affect whether the plan actually works for you in practice.

Key Takeaways

  • Check your medications against each plan's formulary before comparing prices, because a plan that does not cover your drugs is not an option no matter how cheap it is.
  • Your out-of-pocket costs depend on the tier your medications are on, not just the plan's monthly premium, so add up what you will actually pay per prescription.
  • Plans with lower premiums often have higher copays, and plans with higher premiums sometimes have lower copays — you have to do the math for your specific medications.
  • The coverage gap (donut hole) affects how much you pay once you hit a spending threshold, so ask whether your plan has gap coverage or if you will pay more in the gap.
  • Your plan options change every year, and so do formularies and costs, so you need to check again during open enrollment even if you were happy last year.

Calculate your total yearly cost, not just the premium

The monthly premium is only part of what you pay. You also pay copays or coinsurance every time you fill a prescription. To know the real cost, add up the premiums for the whole year, then add what you will pay for each medication based on the tier and how often you refill it.

For example: Plan A costs $35 a month ($420 a year) with a $5 copay for generic drugs. Plan B costs $15 a month ($180 a year) but charges $25 per generic prescription. If you fill 20 prescriptions a year, Plan A costs $520 total. Plan B costs $680 total. The cheaper premium does not mean the cheaper plan.

Medicare.gov has a tool called "Plan Finder" that does this math for you. Enter your medications, and it shows you the estimated yearly cost for each plan in your area. This is the fastest way to narrow down your choices, because it ranks plans by total cost rather than making you calculate by hand.

Understand the coverage gap and whether you need gap coverage

Once you and your plan have spent a combined $5,850 on covered drugs in a year (the exact amount changes yearly), you enter the coverage gap, also called the donut hole. In the gap, you pay a higher percentage of the drug cost yourself — usually 25 percent — until your out-of-pocket spending reaches $8,550 (this amount also changes yearly). After that, catastrophic coverage kicks in and you pay only a small copay.

If you take many medications or expensive ones, you might hit the gap. Some plans offer gap coverage that fills in part or all of the gap, so you do not pay the higher percentage. This coverage costs more in the premium, but if you know you will hit the gap, it can save you money overall. The Plan Finder tool shows you whether you will enter the gap and what each plan charges in the gap.

If you do not think you will spend $5,850 on drugs in a year, gap coverage is not worth paying extra for. But if you take insulin, biologics, or multiple chronic disease medications, you almost certainly will, and gap coverage becomes important.

Check whether your pharmacy is in the plan's network

Part D plans contract with specific pharmacies. If you use a mail-order pharmacy or a specialty pharmacy for expensive drugs, check that it is in the plan's network before you pick the plan. Some plans have a smaller network and lower premiums; others have a larger network and higher premiums.

If your pharmacy is not in the network, you can still fill prescriptions there, but you will pay a higher out-of-pocket cost — sometimes the full price. The Plan Finder tool lets you search by pharmacy name and shows you which plans include it. If your pharmacy is not listed, call the plan directly to ask whether it is contracted.

If you travel or move during the year, check whether the plan has pharmacies in the places you go. Some national chains like CVS and Walgreens are in most plans, but smaller local pharmacies might not be.

Compare plans during the annual open enrollment period

You can change Part D plans once a year during open enrollment, which runs from October 15 to December 7. Changes take effect January 1. If you do not change plans during this window, you stay in your current plan for another year.

Even if you were happy with your plan last year, check it again during open enrollment. Formularies change — your medications might move to a higher tier, or new generic versions might become available at a lower tier. Premiums and copays change. New plans might enter your market with better coverage for your specific drugs. Spending 30 minutes comparing plans can save you hundreds of dollars a year.

If you miss the open enrollment important date, you cannot change plans unless you have a may have access to life event, such as losing other coverage, moving to a new state, or becoming newly may be able to access for Medicare. If that happens, you have 63 days from the event to make a change.

Use Medicare.gov Plan Finder or call 1-800-MEDICARE for help

The Plan Finder tool on Medicare.gov is the fastest way to compare plans. You enter your medications, your pharmacy, and your state, and it shows you all available plans ranked by estimated yearly cost. You can filter by premium, by whether gap coverage is included, or by specific pharmacies. It is free and does not require you to log in.

If you do not have internet access or want to talk through your options with a person, call 1-800-MEDICARE (1-800-633-4227). Representatives can walk you through the Plan Finder tool over the phone or answer questions about specific plans. The call is free, and they do not work for any insurance company.

Some people also work with a licensed insurance agent who specializes in Medicare. Agents do not charge you a fee — they are paid by the insurance companies — but they can spend more time on your specific situation than a Medicare helpline representative can. You can find agents through Medicare.gov or by calling 1-800-MEDICARE.

Make your choice and confirm your enrollment

Once you have picked a plan, you can enroll through Medicare.gov, by phone at 1-800-MEDICARE, or directly through the insurance company's website. Enrollment is free. You will receive a confirmation letter in the mail with your plan details, your member ID, and your effective date (usually January 1 if you enroll during open enrollment).

Keep this letter. You will need your member ID to fill prescriptions starting on your effective date. Some pharmacies may not have your new plan information in their system right away, so having the letter or ID number with you prevents delays at the pharmacy counter.

If you enroll after December 7, your coverage will not start until the first of the following month. For example, if you enroll on December 15, your coverage starts January 1. If you enroll on January 10, your coverage starts February 1. Plan ahead so you do not run out of medications while waiting for your new coverage to begin.

Frequently Asked Questions

What if my doctor prescribes a medication that is not on my plan's formulary?

You have two options. First, ask your doctor whether a similar medication on the formulary would work for your condition — often there are multiple drugs that treat the same illness. Second, you can ask your doctor to request a formulary exception from the plan, asking it to cover the drug anyway. The plan reviews the request and usually decides within 72 hours. If the plan denies it, you can appeal or pay out of pocket.

Can I change plans more than once a year?

No, unless you have a may have access to life event. These include losing other drug coverage, moving to a new state, becoming newly may be able to access for Medicare, or having a change in your income that affects your costs. If you have a may have access to event, you have 63 days to change plans. Call 1-800-MEDICARE to report the event and make a change.

Do all Part D plans cover the same medications?

No. Each plan creates its own formulary, and the same drug can be on different tiers in different plans. Some plans may not cover a medication at all. This is why checking the formulary before you pick a plan is so important — two plans with the same premium can have very different costs for your specific medications.

What happens to my coverage if I move to a different state?

Your current plan may not be available in your new state. You have 63 days from the date you move to change to a plan available in your new state. Contact your new state's Medicare office or call 1-800-MEDICARE to find plans in your new location. Do not wait until open enrollment, or you may have a gap in coverage.

Is there a penalty if I do not pick a Part D plan when I first become may be able to access?

Yes. If you do not enroll in a Part D plan when you first become may be able to access and you do not have other creditable drug coverage, you pay a late enrollment penalty for as long as you have Medicare. The penalty is about 1 percent of the national average Part D premium per month you were without coverage. This penalty is added to your premium every month, so it is worth enrolling on time to avoid it.