What Medicare Part D covers and why the choice matters
Medicare Part D is prescription drug coverage run by private insurance companies under contract with Medicare. You do not have to take it — it is optional — but if you do not sign up when you first become may be able to access, you will pay a penalty for every month you go without it, even if you do not take many medications.
The plans differ in what drugs they cover, how much you pay at the pharmacy, and which pharmacies you can use. Picking the wrong plan can cost you hundreds of dollars a year. The right plan depends on which medications you actually take, not on which plan sounds cheapest.
You can change plans once a year during the annual enrollment period, which runs from October 15 to December 7. If you miss that window, you are locked in until the next year unless you have a may have access to life event like losing other coverage or moving to a new state.
Key Takeaways
- The plan that costs least in premiums is often not the plan that costs least overall, because the drugs you take matter more than the monthly fee.
- Every Part D plan has a formulary — a list of covered drugs — and you need to check whether your current medications are on it before you enroll.
- Medicare's Plan Finder tool lets you enter your medications and see the total out-of-pocket cost for each plan in your area, which is the only reliable way to compare.
- You can switch plans once a year during open enrollment, so if your medications change or a plan raises prices, you can move to a different one.
- Some plans charge more upfront but less at the pharmacy; others charge less upfront but more when you fill a prescription — the math depends on your specific drugs.
How to use Medicare's Plan Finder to compare actual costs
The Medicare Plan Finder is at Medicare.gov. You will need your Medicare number, which is on your Medicare card. You will also need a list of every prescription medication you take, including the dose and how often you take it.
Enter your medications into the tool. It will show you every Part D plan available in your ZIP code, ranked by total estimated cost for the year. This number includes the monthly premium, copays at the pharmacy, and any costs you pay during the coverage gap (the "donut hole"). This total cost is what matters — not the premium alone.
The tool also shows you which pharmacies each plan uses. If you have a pharmacy you prefer, check whether it is in the plan's network. Some plans use CVS, others use Walgreens, others use independent pharmacies. Using an out-of-network pharmacy costs more or may not be covered at all.
Run the comparison at least twice: once with your current medications, and once with any medications your doctor has mentioned you might need. If the plan you pick does not cover a drug you start taking later, you can switch plans at that point without waiting for open enrollment.
Understanding formularies and coverage tiers
A formulary is the list of drugs a plan covers. Every Part D plan has one, and they vary widely. Just because a drug exists does not mean your plan covers it.
Drugs on a formulary are sorted into tiers. Tier 1 drugs (usually generics) cost the least. Tier 2 drugs (brand-name or newer generics) cost more. Tier 3, 4, and 5 drugs cost progressively more. Some plans have six or seven tiers. A drug on Tier 1 in one plan might be on Tier 3 in another, which changes what you pay.
Before you enroll, check the formulary for every medication you take. Search by drug name on the plan's website. If a drug is not listed, call the plan and ask whether it is covered. If it is not, ask whether the plan covers a similar drug — your doctor may be able to switch you to one that is covered.
Some plans require prior authorization before they will cover certain drugs, meaning your doctor has to call the plan and get approval first. Others require you to try a cheaper drug first before they will cover an expensive one — this is called a step therapy. These requirements can delay your prescription, so ask about them when you compare plans.
The coverage gap and how it affects your costs
Medicare Part D has a coverage gap, often called the "donut hole." Once you and your plan have spent $5,850 together on covered drugs in a year, you enter the gap. In the gap, you pay a larger share of the cost until your out-of-pocket spending reaches $7,050. After that, catastrophic coverage kicks in and you pay very little.
These dollar amounts change every year. The gap is narrower than it used to be — you now pay about 25 percent of the cost in the gap instead of the full price — but it still adds up if you take expensive medications.
Some plans charge lower premiums but have a wider gap. Others charge higher premiums but cover more drugs in the gap. The Plan Finder shows you the total cost including the gap, so you do not have to do the math yourself. That total is what you should use to decide.
If you take very expensive medications and hit the gap every year, a plan with a higher premium but better gap coverage may cost less overall. If you take cheap generics, you may never hit the gap, so the premium matters more.
Comparing plans side by side: premium, copay, and pharmacy network
Once the Plan Finder narrows your options to the three or four cheapest plans, look at each one in detail. Create a straightforward table with the plan name, monthly premium, copay for each of your medications, and whether your pharmacy is in the network.
| Plan Name | Monthly Premium | Copay for Drug A | Copay for Drug B | Your Pharmacy In Network? | Estimated Annual Cost |
|---|---|---|---|---|---|
| Plan X | $35 | $10 | $45 | Yes | $1,240 |
| Plan Y | $28 | $15 | $60 | Yes | $1,356 |
The annual cost in the rightmost column is what the Plan Finder calculated. That number is your best guide. Do not pick a plan because the premium is lowest — pick it because the total cost is lowest.
If two plans have nearly the same total cost, look at the pharmacy network. If one uses a pharmacy you already go to, that plan is easier to use. If one plan has a lower copay for a drug you take every day, that matters more than a lower copay for a drug you take once a month.
When to switch plans and how to do it
You can change Part D plans once a year during open enrollment, October 15 to December 7. You can also switch if you have a may have access to event: you move to a new state, lose other drug coverage, become may be able to access for Extra Help (a program that pays Part D costs for people with low income), or your plan leaves the market.
To switch, go back to the Plan Finder during open enrollment and pick a new plan. You do not have to call anyone or fill out a form — Medicare handles the switch automatically. Your new coverage starts January 1.
If your medications change during the year — your doctor prescribes something new, or you stop taking something — you do not have to wait for open enrollment. You can switch plans when ready if the new drug is not covered by your current plan. This is called a may have access to life event. Call Medicare at 1-800-MEDICARE to report the change and switch.
Mark your calendar for October 15 each year. Even if you are happy with your plan, run the Plan Finder again. Drug prices and plan formularies change every year. A plan that was cheapest last year might be expensive this year. Spending 20 minutes comparing once a year can save you hundreds of dollars.
Special situations: Extra Help, employer coverage, and Part D penalties
If your income is low, you may be may be able to access for Extra Help, a program that pays most or all of your Part D costs. You do not have to be on Medicaid. Contact your local Social Security office or call 1-800-MEDICARE to find out whether you may have access to. If you do, Extra Help picks up the premium and most copays, so the plan you choose matters less.
If you have drug coverage through a current or former employer, you may not need Part D. But check the coverage carefully — employer plans sometimes cover fewer drugs or charge higher copays than Part D. If your employer coverage ends, you have 63 days to sign up for Part D without a penalty.
If you do not sign up for Part D when you first become may be able to access, and you do not have other drug coverage, Medicare charges you a penalty. The penalty is 1 percent of the national average Part D premium for every month you go without coverage. If you go without coverage for three years, the penalty is 3 percent. The penalty stays with you for life, even if you sign up later. The only way to avoid it is to sign up during your initial enrollment period or within 63 days of losing other coverage.
Frequently Asked Questions
Can I change my Part D plan if I do not like it after I enroll?
Yes, but only during open enrollment in October and November, or if you have a may have access to life event like a change in your medications or a move. If you enroll in January and realize in March that the plan does not cover a drug you need, you can switch when ready. Otherwise, you are locked in until the next open enrollment.
What if my medication is not on the formulary?
Call the plan and ask whether they cover a similar drug. If not, ask about the appeals process — you can request that the plan cover the drug anyway if your doctor says it is medically necessary. This takes time, so do it before you enroll if possible. You can also switch to a different plan that does cover it.
Do I have to use the pharmacy listed in the plan?
Yes, to get the copay price shown in the plan. If you use an out-of-network pharmacy, you pay more or the drug may not be covered at all. Some plans have mail-order options or partner pharmacies in other states, so ask before you enroll if you travel or live part of the year elsewhere.
What happens to my Part D coverage if I move to a different state?
Your current plan may not be available in your new state. You have 60 days after you move to pick a new plan without waiting for open enrollment. Contact Medicare or use the Plan Finder with your new ZIP code to see what is available.
Is there a way to lower my Part D costs if I cannot afford the copays?
Check whether you may have access to for Extra Help, which covers most or all copays if your income is low. Some drug manufacturers also offer copay information programs for their medications. Ask your doctor or pharmacist whether your drugs have information programs available.