What Medicare Part D Actually Covers

Medicare Part D covers prescription drugs — both brand-name and generic — that your doctor prescribes for you. The specific drugs covered depend on which Part D plan you choose, because each plan has its own formulary, which is the list of drugs the plan will pay for. Part D does not cover all drugs, and it does not cover them equally: you may pay different amounts for different medications, and some drugs may require your doctor to get prior approval before the pharmacy will fill them.

Part D is optional. If you have Original Medicare (Part A and Part B), you can choose to add a Part D plan during the annual enrollment period, or you can go without it — though waiting to sign up later usually costs you more in monthly premiums. If you have a Medicare Advantage plan (Part C), that plan may include drug coverage built in, so you do not need a separate Part D plan.

The drugs covered fall into categories called tiers. Tier 1 drugs (usually generics) cost you the least. Tier 2 and Tier 3 drugs (brand-name and some generics) cost more. Tier 4 and Tier 5 drugs (specialty and high-cost drugs) cost the most. Your plan's formulary tells you which tier each drug is on and what you will pay.

Key Takeaways

  • Each Part D plan has its own formulary listing which drugs it covers and what tier they are on, so the same drug may cost different amounts under different plans.
  • Part D covers prescription drugs your doctor prescribes, but not all drugs, and some require prior approval from the plan before the pharmacy will fill them.
  • You pay different amounts depending on which tier the drug is on: generics cost less, specialty drugs cost more.
  • If you do not sign up for Part D when you first become may be able to access, you will usually pay a penalty added to your monthly premium for as long as you have Medicare.
  • Your plan's formulary can change each year, so a drug that was covered last year may not be covered this year, or may move to a higher tier.

What Part D Does Not Cover

Part D does not cover over-the-counter drugs, even if they treat the same condition as a prescription drug. It does not cover vitamins, minerals, or supplements, even if your doctor recommends them. It does not cover drugs used for cosmetic purposes, such as hair loss treatments or wrinkle creams, even if a doctor prescribes them.

Part D does not cover drugs that are not on your plan's formulary. If your doctor prescribes a drug that your plan does not cover, you have options: you can pay for it out of pocket, you can ask your doctor to prescribe a different drug that is on the formulary, or you can ask your plan to make an exception. Some plans will cover a non-formulary drug if your doctor submits a request explaining why that specific drug is medically necessary.

Part D does not cover drugs prescribed by doctors outside the United States, and it does not cover drugs you buy outside the United States, even if you bring them back into the country. If you travel abroad and need prescriptions filled, you will pay out of pocket.

How Much You Pay: The Coverage Stages

Part D coverage works in stages, and your out-of-pocket costs change as you spend more. In 2024, the stages work like this, though the dollar amounts change each year:

Deductible stage: You pay the full cost of your drugs until you reach your plan's deductible (usually $0 to $500, depending on the plan). Once you hit the deductible, your plan starts to help pay.

Initial coverage stage: After you meet the deductible, you and your plan share the cost. You might pay 25% and the plan pays 75%, or the amounts might be different — it depends on the plan and the drug tier. You stay in this stage until your total drug costs (what you paid plus what the plan paid) reach $4,500.

Coverage gap (the "donut hole"): Once your total drug costs hit $4,500, you enter the coverage gap. In this stage, you pay a larger share of the cost — usually 25% for brand-name drugs and 25% for generics, though the exact amounts vary. You stay in the gap until your out-of-pocket spending reaches $7,050.

Catastrophic coverage stage: Once you have spent $7,050 out of pocket, your plan covers most of the cost for the rest of the year. You pay only a small copay (usually $3.95 to $9.85 per drug, depending on the drug type).

These dollar amounts are for 2024 and change each year. Your plan's materials will show the current amounts for the year you are enrolled.

Prior Authorization and Step Therapy

Some drugs require prior authorization, which means your doctor must get approval from your Part D plan before the pharmacy will fill the prescription. This usually happens for expensive drugs, drugs that have cheaper alternatives, or drugs that are sometimes misused. Your doctor's office typically handles this request, but it can add a few days to the time it takes to get your prescription filled.

Some plans use step therapy, which means you must try a cheaper drug first. If that drug does not work for you, your doctor can then request the more expensive drug. Step therapy is common for drugs that treat high blood pressure, high cholesterol, and depression, where several options exist and generics are available.

If your plan denies a drug or requires prior authorization, your doctor can appeal the decision. You can also contact your plan directly to ask about the process. Do not assume a drug is not covered — sometimes the issue is just that the plan needs more information from your doctor.

How to Find Out What Your Plan Covers

Your Part D plan sends you a formulary each year, usually in October or November. The formulary is a long document that lists every drug the plan covers, which tier it is on, and whether it requires prior authorization or step therapy. You can also search your plan's website for a specific drug — most plans have a tool where you type in the drug name and it tells you the tier and your cost.

If you are comparing Part D plans before you sign up, you can use the Medicare Plan Finder tool on Medicare.gov. Type in the drugs you currently take, and the tool will show you which plans cover them and how much you will pay under each plan. This is the fastest way to see which plan is cheapest for your specific medications.

If you cannot find the information you need online, you can call your plan's customer service number. Have your prescription bottles handy so you can give them the exact drug names and doses.

When Your Plan's Formulary Changes

Part D plans can change their formularies each year. A drug that was covered last year might not be covered this year, or it might move to a higher tier and cost you more. Plans must notify you of major changes by October 15 each year, but the changes take effect on January 1.

If a drug you take is removed from your plan's formulary or moved to a higher tier, you have options. You can switch to a different Part D plan during the annual enrollment period (October 15 to December 7). You can ask your plan to make an exception and cover the drug anyway. Or you can ask your doctor to prescribe a different drug that is still covered.

If your plan removes a drug you have been taking and you do not find out until you try to refill it at the pharmacy, you can ask the pharmacy to contact your doctor for an alternative, or you can call your plan to ask about exceptions or appeals.

Specialty Drugs and High-Cost Medications

Specialty drugs — medications for conditions like cancer, rheumatoid arthritis, hepatitis C, and HIV — are almost always on Tier 4 or Tier 5, which means you pay much more. Some specialty drugs cost hundreds or thousands of dollars per month, and even with Part D, your out-of-pocket costs can be very high.

If you take a specialty drug, compare Part D plans carefully, because the cost difference between plans can be thousands of dollars per year. Some plans have specialty tiers with different cost-sharing rules. Some plans have copays instead of coinsurance, which can be cheaper if the drug is very expensive.

If you cannot afford a specialty drug even with Part D, ask your doctor or pharmacist about patient information programs. Many drug manufacturers offer these programs to people who meet income requirements, and they can reduce or eliminate your out-of-pocket cost.

Frequently Asked Questions

What happens if I do not sign up for Part D when I first become may be able to access?

You will usually pay a penalty added to your monthly Part D premium for as long as you have Medicare. The penalty is based on how long you went without coverage. If you sign up later, the penalty stays with you permanently, so it is usually cheaper to sign up when you first become may be able to access, even if you do not take many drugs right now.

Can I switch Part D plans if my drug is no longer covered?

Yes. You can switch plans during the annual enrollment period (October 15 to December 7) without penalty. If your plan removes a drug you are taking mid-year, you may also be able to switch outside the enrollment period — contact your plan to ask about this option.

Do I have to use the pharmacy my plan tells me to use?

Most Part D plans have a network of pharmacies where you pay the plan's copay or coinsurance. If you use an out-of-network pharmacy, you will usually pay more. Some plans allow you to use any pharmacy but charge higher copays for out-of-network ones. Check your plan's pharmacy network before you sign up.

What if my doctor prescribes a brand-name drug but a generic version exists?

Your plan will likely charge you more for the brand-name drug. Ask your doctor if the generic version works the same way — for most drugs, it does. If your doctor believes the brand-name drug is medically necessary, they can request that your plan cover it, but you may still pay more.

Are insulin and other diabetes drugs covered by Part D?

Yes, insulin and most diabetes drugs are covered by Part D. However, the amount you pay depends on your plan and which tier the drug is on. Some plans have special rules for insulin that cap your monthly copay at $35, but this varies by plan and year. Check your plan's formulary to see what you will pay for your specific insulin.