Part D is not free, but the cost depends on which plan you choose and what you earn

Part D is the prescription drug coverage that comes with Medicare. It is not included in Part A or Part B, and you pay a separate monthly premium for it — the amount varies by plan and by your income. Most people pay somewhere between $7 and $100 per month, though some pay more. If your income is below a certain level, you may pay little or nothing, and the government covers the rest through a program called Extra Help.

The cost you see on a plan's website is the base premium. On top of that, you also pay a share of your drug costs when you fill a prescription — this is called a copay or coinsurance. How much you pay for each drug depends on which tier it sits on (generic drugs cost less than brand-name ones) and how much of your deductible you have already met.

Key Takeaways

  • Part D premiums range from about $7 to $100 per month depending on the plan, and you choose which plan to join during the annual enrollment period.
  • You also pay out-of-pocket when you fill prescriptions, with amounts that depend on whether the drug is generic or brand-name and how much you have already spent that year.
  • If your income is below 150% of the federal poverty line, you may pay $0 or $1 per prescription through the Extra Help program.
  • Missing the enrollment important date can mean paying a penalty on top of your premium for as long as you have Medicare.
  • Your actual cost changes each year because plans change their premiums, drug lists, and which pharmacies they work with.

How Part D premiums work and what they cover

When you join a Part D plan, you pay a monthly premium to the insurance company that runs it. This premium is the price of the plan itself — it does not include the drugs you buy. Each insurance company sets its own premium, and plans with the same company can have different premiums depending on what drugs they cover and which pharmacies they use.

The premium you pay is based on the plan's costs, not on your age or health. However, if you have higher income (above $97,000 for a single person in 2024, though this changes yearly), Medicare adds an extra charge called an Income-Related Monthly Adjustment Amount, or IRMAA. This means higher earners pay more for Part D than lower earners on the same plan.

The premium covers the plan's administration and the negotiated prices it has with pharmacies and drug makers. It does not mean your drugs are free. You still pay when you pick up a prescription.

What you pay when you fill a prescription

Part D plans organize drugs into groups called tiers. Tier 1 is usually generic drugs and costs the least. Tier 2 is preferred brand-name drugs. Tier 3 and higher are non-preferred brands and specialty drugs, which cost more. Some plans also have a deductible — usually $100 to $500 per year — that you must pay out of pocket before the plan starts to help.

Once you meet your deductible, you pay a copay (a flat dollar amount like $5 or $15) or coinsurance (a percentage of the drug's cost, like 20%). The amount depends on the tier. A generic drug might cost you $5, while a brand-name drug on a higher tier might cost you $50 or more per prescription.

There is also a coverage gap, sometimes called the "donut hole," where you pay more of the cost yourself. Once you and your plan have spent $5,850 together in 2024 (this number changes yearly), you enter the gap. In the gap, you pay 25% of the cost of brand-name drugs and 25% of the cost of generics until your total out-of-pocket spending reaches $8,550. After that, catastrophic coverage kicks in and you pay only a small copay.

Extra Help if your income is low

If your income is at or below 150% of the federal poverty line (about $1,968 per month for a single person in 2024), you may be able to get Extra Help, a federal program that pays most or all of your Part D costs. With Extra Help, you typically pay $0 to $5 per prescription instead of the full copay, and the program covers your deductible and the coverage gap.

You do not have to be on Medicaid to get Extra Help — it is a separate program run by Social Security. To learn about you may have access to, you can call Social Security at 1-800-772-1213 or visit ssa.gov/benefits/retirement/extra-help.html. You can also ask your local Area Agency on Aging or call 211 for a referral to someone who can help you explore.

If you are already getting Extra Help and your income changes, tell Social Security right away. Your benefits may go up or down, and reporting changes quickly means you do not overpay or underpay.

How to compare Part D plans and their real costs

Medicare publishes a tool called the Plan Finder on Medicare.gov where you can enter your drugs and see which plans cover them and what you would pay. This is the most accurate way to compare costs because it shows you the actual copays for your specific medications, not just the premium.

When you use the Plan Finder, enter every drug you take, including over-the-counter ones if you use them regularly. The tool will show you the total estimated cost for each plan — premium plus what you would pay for prescriptions over the year. Some plans have low premiums but high copays, while others have higher premiums but lower copays. The plan that costs the least depends on which drugs you take.

You can change plans once a year during the Annual Enrollment Period, which runs from October 15 to December 7. If you miss this window, you cannot switch plans until the next year unless you have a may have access to life event like moving to a new state or losing other coverage.

Penalties for late enrollment or going without coverage

If you are may be able to access for Part D and do not join when you first become may be able to access, or if you go without creditable prescription drug coverage for more than 63 days in a row, Medicare charges you a late enrollment penalty. This penalty is added to your premium for as long as you have Medicare and does not go away.

The penalty is 1% of the national average Part D premium for each month you were without coverage. In 2024, the national average premium is about $34, so the penalty would be roughly $0.34 per month for each month you were late. If you waited two years to join, your penalty would be about $8 per month forever.

The only way to avoid the penalty is to have creditable coverage — prescription drug coverage that is at least as good as Part D — from another source like an employer plan, a union plan, or Veterans Affairs. If you have creditable coverage, you can delay joining Part D without penalty, but you need to keep proof that you had it.

How costs change from year to year

Part D plans change every year. A plan you liked in 2023 might have a higher premium in 2024, or it might drop a drug you take from its formulary (the list of drugs it covers). Pharmacies change too — a plan might add or drop pharmacies in your area. For this reason, you should review your plan every fall during the Annual Enrollment Period, even if you have been happy with it.

Medicare sends you a notice called the Annual Notice of Change in the fall that lists what is changing in your current plan. Read it carefully. If your plan is no longer a good fit, you can switch to a different plan during the enrollment period. If you do nothing, you stay in your current plan.

Frequently Asked Questions

Can I get Part D for free if I am on Medicaid?

Not automatically. Medicaid and Part D are separate programs. However, if you are on both Medicaid and Medicare (called "dual may be able to access"), you may be able to get Extra Help, which can make Part D very cheap or free. Contact your state Medicaid office or call 211 to find out what you may have access to for.

What happens if I cannot afford my Part D copays?

Talk to your doctor or pharmacist about lower-cost alternatives, such as generic drugs or drugs on a lower tier of your plan. You can also ask the drug maker if they offer patient information programs. If you are struggling, contact your local Area Agency on Aging or a patient advocate at your pharmacy — they may know about programs that help with costs.

Do I have to join Part D when I turn 65?

You do not have to, but if you do not have other creditable coverage and you wait, you will pay a penalty. If you are still working and have coverage through your employer, you can delay joining Part D without penalty as long as your employer coverage is creditable. Ask your benefits office to confirm.

Can I switch Part D plans in the middle of the year?

No, unless you have a may have access to life event such as moving out of your plan's service area, losing other coverage, or becoming newly may be able to access for Extra Help. Otherwise, you can only switch during the Annual Enrollment Period from October 15 to December 7.

What if my plan stops covering a drug I need?

You can ask your doctor to request an exception from the plan, or you can switch to a different plan during the next Annual Enrollment Period. If you need the drug urgently and your plan denies the exception, you can file an appeal or ask your doctor to help you find a covered alternative.