Medicare Part D costs you a monthly premium, an annual deductible, and a share of drug costs once you start using prescriptions

Medicare Part D is prescription drug coverage, and what you pay depends on which plan you choose and which drugs you take. Every Part D plan has four separate costs: a monthly premium (the price of the plan itself), an annual deductible (what you pay before the plan starts helping), copayments or coinsurance (your share of each prescription), and potentially a coverage gap penalty if your costs spike. The exact amounts change year to year and vary widely between plans — a drug that costs $50 in one plan might cost $200 in another.

Because costs shift every January, the amount you paid last year will not be what you pay this year. The best way to know your actual costs is to compare the plans available to you in your area using the Medicare Plan Finder tool on Medicare.gov, entering the specific drugs you take. This takes about 10 minutes and shows you the total you would pay under each plan for a full year.

Key Takeaways

  • Part D premiums range widely depending on the plan and your location, and you pay them every month whether or not you fill a prescription.
  • Most plans have an annual deductible (usually $100 to $500) that you must pay out of pocket before the plan covers any drugs.
  • Once you meet the deductible, you typically pay a copay (a flat amount like $5 or $15) or coinsurance (a percentage of the drug cost) for each prescription.
  • There is a coverage gap where you pay more of the drug cost yourself, though this gap shrinks each year and disappears entirely once you reach a spending threshold.
  • Your actual costs depend entirely on which drugs you take, so comparing plans using your real prescription list is the only way to find the lowest price.

How Part D premiums work

The monthly premium is what you pay to enroll in a specific Part D plan. Premiums vary by plan and by geographic area — the same plan name may cost different amounts in different states or counties. In 2024, Part D premiums ranged from roughly $7 to $100 per month, though most common plans fell between $15 and $50. These amounts change every year, usually announced in October for the following year.

You pay the premium whether you fill any prescriptions that month or not. If you enroll in a plan and then do not use it, you still owe the premium. If you do not enroll in Part D when you first become may be able to access for Medicare (usually at 65), you may owe a late enrollment penalty — an extra amount added to your premium for as long as you have Part D coverage. The penalty is roughly 1% of the national average Part D premium for each month you were may be able to access but not enrolled.

Deductibles and what you pay per prescription

Most Part D plans have an annual deductible, which is the amount you must pay out of pocket for drugs before your plan starts to help. Deductibles typically range from $0 to $545 in 2024, though this amount changes yearly. Some plans have no deductible at all, which means you start paying your copay or coinsurance when ready. Once you meet the deductible, you move into the "initial coverage" stage.

During initial coverage, you pay either a copay (a fixed amount per prescription, like $5 for generic drugs or $50 for brand-name drugs) or coinsurance (a percentage of the drug's cost, like 20%). The copay or coinsurance amount depends on which tier the drug falls into — plans organize drugs into tiers, with generic drugs usually cheapest and brand-name or specialty drugs more expensive. Your plan's formulary (the list of covered drugs) shows which tier each drug is on and what you will pay.

The coverage gap and how it affects your costs

Once your total drug spending (what you and your plan have paid together) reaches a certain amount — $5,030 in 2024 — you enter the "coverage gap," sometimes called the "donut hole." In the gap, you pay a larger share of the drug cost yourself. The gap continues until your out-of-pocket spending reaches a second threshold — $7,050 in 2024 — at which point you move into "catastrophic coverage" and your costs drop again.

The coverage gap is confusing because it counts both what you pay and what your plan pays toward the spending threshold, but only what you pay counts toward your out-of-pocket maximum. This means you can spend more than $7,050 in actual money before reaching catastrophic coverage. However, the gap shrinks every year by law, and manufacturers' discounts on brand-name drugs have made the gap less painful than it was when it was first created. Many people with chronic conditions or expensive medications will hit the gap, so it is worth checking whether you will by using the Plan Finder tool.

Catastrophic coverage and your maximum out-of-pocket cost

Once your out-of-pocket spending reaches the catastrophic threshold ($7,050 in 2024), your plan covers most of the cost of your drugs for the rest of that year. You pay only a small copay (usually $3.95 to $9.85 for generic drugs and $9.85 to $24.70 for brand-name drugs) or 5% coinsurance, whichever is higher. This catastrophic stage protects you from unlimited drug costs if you have serious or multiple conditions that require expensive medications.

The out-of-pocket threshold resets on January 1 each year, so any spending you accumulate does not carry over. If you reach catastrophic coverage in December, you start fresh in January with a new deductible and new out-of-pocket maximum to meet.

How to find the lowest cost for your specific drugs

Because Part D costs depend entirely on which drugs you take, the only accurate way to compare plans is to enter your actual prescriptions into the Medicare Plan Finder at Medicare.gov. The tool shows you the total estimated cost for a full year under each available plan in your area, including premiums, deductibles, copays, and the coverage gap. This takes about 10 minutes and is far more useful than looking at premium prices alone.

If you do not have internet access or need help using the tool, you can call Medicare at 1-800-MEDICARE (1-800-633-4227) and speak with someone who can run the comparison for you. You can also visit your local Area Agency on Aging, which often has staff trained to help with Medicare decisions. Some pharmacies will also run a quick comparison if you ask, though they may not show all available plans.

When costs change and how to review your plan

Part D costs change on January 1 each year. In October, Medicare mails you a notice showing your plan's new premium, deductible, and copays for the coming year. This is your signal to re-run the Plan Finder comparison, because a plan that was cheapest last year may not be cheapest this year — your drugs may have moved to a different tier, or a cheaper plan may have become available in your area.

You have until December 31 to switch to a different Part D plan if you want to. If you do not actively switch, you stay in your current plan. Many people assume their plan will stay the same price, but costs often rise, so spending 10 minutes in October to check whether a different plan would save you money is usually worth it. If you have limited income, you may also be may be able to access for the Part D Low-Income Subsidy, which reduces your premiums, deductibles, and copays — ask about this when you call Medicare or visit your local aging agency.

Frequently Asked Questions

What if I cannot afford my Part D costs?

If your income is below 150% of the federal poverty level, you may be may be able to access for the Part D Low-Income Subsidy, which covers most or all of your premiums and reduces your copays and deductibles. Contact your state Medicaid office or call 1-800-MEDICARE to check. Some drug manufacturers also offer patient information programs that provide free or low-cost drugs to people who meet income requirements.

Do I have to enroll in Part D when I turn 65?

You do not have to, but if you go without Part D coverage and later enroll, you will owe a late enrollment penalty for as long as you have Part D. The only exception is if you have creditable coverage (prescription drug coverage as good as or better than Part D) through a current or former employer or union. If you do, you can enroll in Part D later without penalty.

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

Generally no — you can only switch during the annual enrollment period from October 15 to December 7 each year. However, if you experience a may have access to life event (such as losing employer coverage, moving to a new state, or becoming may be able to access for the Low-Income Subsidy), you may be able to switch outside the enrollment period. Call Medicare to ask.

Why does the same drug cost different amounts in different plans?

Each plan negotiates its own prices with pharmacies and drug manufacturers, so the same drug can be in different tiers (and have different copays) across plans. Plans also use different pharmacy networks, and some pharmacies charge different prices depending on which plan you use. This is why comparing your actual drugs across actual plans is the only way to find the real cost.

What happens to my Part D costs if I move to a different state?

Your current plan may not be available in your new state, and even if the same plan name exists there, the costs and covered drugs may be different. You should re-run the Plan Finder comparison for your new location before you move, or as soon as you arrive. Moving is a may have access to life event that lets you switch plans outside the normal enrollment period.