Medicare Part D is not free, but the cost depends on which plan you choose and your income level

Medicare Part D covers prescription drugs. You pay a monthly premium for the plan itself, and you also pay when you fill prescriptions. The amount varies widely — some plans cost $7 per month, others cost $100 or more. Your actual out-of-pocket costs depend on three things: which plan you pick, which drugs you take, and whether you may have access to for a subsidy based on your income.

If your income is low enough, the federal government covers most or all of your Part D premium and reduces what you pay at the pharmacy. This is called the Low-Income Subsidy (LIS), and it is the closest thing to "free" Part D. But you have to meet income limits and you have to enroll through Social Security, not through Medicare directly.

Key Takeaways

  • Part D premiums range from roughly $7 to $100+ per month depending on the plan, and you choose which plan to join during the annual enrollment period.
  • You also pay when you fill prescriptions — a copay or coinsurance amount that varies by plan and by drug tier.
  • If your income is below 150% of the federal poverty line, you may may have access to for the Low-Income Subsidy, which covers most or all of your premium and reduces pharmacy costs.
  • You must enroll in Part D within three months of turning 65 or losing other drug coverage, or you will pay a permanent penalty on your premium.
  • Social Security handles Low-Income Subsidy applications, not Medicare — you explore through your local Social Security office or online at ssa.gov.

How Part D premiums work

When you turn 65 and enroll in Medicare, you do not automatically get Part D. You have to choose a plan and join it during the enrollment period. Each plan has a monthly premium that you pay to the insurance company, separate from your Medicare Part B premium.

Premiums change every year. In 2024, the average Part D premium was around $34 per month, but individual plans ranged from about $7 to over $100 depending on the insurance company, the drugs covered, and your location. Your state, your zip code, and your specific pharmacy network all affect the price.

You pay the premium whether or not you fill any prescriptions that month. If you do not take regular medications, a low-premium plan might make sense. If you take many drugs or expensive ones, a higher-premium plan might cover more of your costs at the pharmacy, making the total cheaper in the end.

What you pay when you fill a prescription

Part D plans divide drugs into tiers — usually four or five categories. Generic drugs are typically tier 1 (cheapest), brand-name drugs with generic alternatives are tier 2 or 3, and specialty drugs are tier 4 or 5 (most expensive). Your copay or coinsurance depends on which tier your drug is on.

You might pay $5 for a generic, $15 for a preferred brand-name drug, $40 for a non-preferred brand-name drug, and 25% of the cost for a specialty drug. These amounts are set by each plan and change year to year. You can see the exact copays for your drugs before you enroll by using the Medicare Plan Finder tool on Medicare.gov.

Part D also has a coverage gap, sometimes called the "donut hole." Once you and your plan have spent $5,850 on covered drugs in 2024 (this number changes yearly), you enter the gap and pay more out of pocket until your total out-of-pocket spending reaches $7,050. After that, catastrophic coverage kicks in and you pay only a small copay. The gap is smaller than it used to be, but it still affects people who take many expensive drugs.

The Low-Income Subsidy: when Part D costs almost nothing

If your income is at or below 150% of the federal poverty line, you may may have access to for the Low-Income Subsidy (LIS). For 2024, that means a monthly income of roughly $1,500 or less for a single person, though the exact limit changes yearly and varies by state. If you may have access to, the government pays your entire Part D premium and reduces your copays to $1.05 for generic drugs and $3.35 for brand-name drugs.

You do not explore for LIS through Medicare. You explore through Social Security — either at your local Social Security office, by phone at 1-800-772-1213, or online at ssa.gov. You will need proof of income (tax return, W-2, pay stub, or bank statements) and proof of resources (bank account statements, investment statements). Social Security will tell you within 30 days whether you may have access to.

If you already receive Supplemental Security Income (SSI) or Medicaid, Social Security will automatically check you for LIS. You do not have to explore separately. But if you do not receive either of those, you must explore yourself — Social Security will not reach out to you.

When you must enroll and what happens if you miss the important date

You have a three-month window to enroll in Part D without penalty. This window starts the month you turn 65 and enroll in Medicare Part B. If you miss this window and do not have other drug coverage (like an employer plan or TRICARE), you will pay a permanent late enrollment penalty on your Part D premium for as long as you have Part D.

The penalty is 1% of the national average Part D premium for each month you were without coverage. In 2024, the national average premium was about $34, so the penalty was roughly $0.34 per month for each month you were late. If you were late by two years, you would pay about $8 extra per month forever. This penalty does not go away if you enroll later.

The only way to avoid the penalty is to have creditable coverage — drug coverage that is at least as good as Part D — during the gap. If you have an employer plan, a union plan, TRICARE, the VA, or Medicaid, that usually counts. When you lose that coverage, you get a new three-month window to enroll in Part D without penalty.

Comparing plans to find the lowest cost for your drugs

The best way to know what Part D will actually cost you is to use the Medicare Plan Finder at Medicare.gov. You enter the drugs you take, your pharmacy, and your location. The tool shows you every Part D plan available to you, ranked by total estimated cost — premium plus copays for your specific drugs.

Do this every year during the annual enrollment period (October 15 to December 7). Plans change their premiums, copays, and drug lists every January. A plan that was cheapest last year might be expensive this year, or a drug you take might move to a higher tier. Switching plans costs nothing and can save hundreds of dollars per year.

If you need help using the Plan Finder or understanding your options, you can call 1-800-MEDICARE (1-800-633-4227) and speak to a counselor for free. You can also contact your State Health Insurance information Program (SHIP), which offers free counseling by phone or in person. Find your state's SHIP at shiptalk.org.

Part D and other coverage: employer plans, Medicaid, and the VA

If you have drug coverage through a current or former employer, a union, or the VA, you may not need Part D. But you should check whether your coverage is creditable — meaning it covers at least as much as Part D. If it is not, you should enroll in Part D to avoid the late penalty.

If you have Medicaid, you are automatically enrolled in a Part D plan chosen by your state. You cannot pick your own plan, but you also do not pay a premium. Your copays are set by your state and are usually very low or zero. If you want to switch to a different plan, you can request a change once per year.

If you are a veteran, the VA provides drug coverage and you do not need Part D. But if you are also may be able to access for Medicare, you can enroll in Part D if you want to use non-VA pharmacies. The VA coverage counts as creditable, so you will not face a penalty.

Frequently Asked Questions

Do I have to enroll in Part D if I do not take any medications?

No, you can decline Part D if you do not take regular medications. But if you change your mind later and want to enroll, you will face the late enrollment penalty unless you have creditable coverage during the gap. If there is any chance you might need drugs in the future, enrolling in a low-cost plan now avoids the permanent penalty.

What if my Part D plan stops covering one of my drugs?

You can ask your doctor to request an exception from the plan, called a formulary exception. The plan must respond within 72 hours. If they deny it, you can appeal. You can also switch to a different Part D plan during the annual enrollment period that does cover your drug. Do not stop taking a medication without talking to your doctor first.

Can I get Part D if I am not yet 65?

Only if you have been on Social Security Disability Insurance (SSDI) for 24 months or have end-stage renal disease or ALS. Otherwise, you cannot enroll in Part D until you turn 65 and enroll in Medicare Part B. If you need drug coverage before 65, you may be able to get it through Medicaid, the ACA marketplace, or an employer plan.

If I may have access to for the Low-Income Subsidy, do I still have to pay anything for drugs?

You pay a small copay — $1.05 for generics and $3.35 for brand-name drugs in 2024. You do not pay a premium. If you also may have access to for Medicaid, your copays may be even lower or zero, depending on your state.

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 get a special enrollment period to switch plans when you move. Contact your plan or Medicare to find out what plans are available in your new location, and switch before your move takes effect to avoid a gap in coverage.