Part D covers prescription drugs, but not all of them, and your out-of-pocket costs depend on which plan you choose and which drugs you take

Part D is the prescription drug coverage piece of Medicare. It covers most common medications — both brand-name and generic — but excludes certain categories like over-the-counter drugs, vitamins, and some specialty medications. What you actually pay depends on your plan's formulary (the list of drugs it covers), your income, and where you are in the coverage cycle each year.

Part D is sold by private insurance companies, not Medicare directly. You choose a plan during your enrollment period, and different plans cover different drugs at different costs. The same medication can cost $15 in one plan and $60 in another, so comparing plans before you enroll or during the annual open enrollment period (October 15 to December 7 each year) matters.

Key Takeaways

  • Part D covers most prescription medications but excludes over-the-counter drugs, vitamins, and some specialty injectables.
  • Your costs include a monthly premium, an annual deductible (which varies by plan), copays or coinsurance at the pharmacy, and potentially higher costs once you reach a spending threshold called the donut hole.
  • Each plan has its own formulary — the list of covered drugs — so the same medication costs different amounts in different plans.
  • You can change plans every year during open enrollment, and switching plans can lower your costs if your medications or health needs change.
  • If you have limited income, you may pay reduced premiums and cost-sharing through the Low-Income Subsidy program.

What Part D Actually Covers

Part D covers most prescription medications that a doctor prescribes, including brand-name drugs, generic drugs, and some biologics. The exact list depends on your plan's formulary, which each insurance company creates. A drug on one plan's formulary might not be on another's, or it might be covered only with a higher copay or after you try a cheaper alternative first.

Part D does not cover over-the-counter medications like ibuprofen or antacids, even if your doctor recommends them. It does not cover vitamins, minerals, or supplements. It does not cover most injectable drugs you give yourself at home (though some are covered — your plan will specify). It does not cover drugs used for cosmetic purposes, like certain hair-loss treatments. And it does not cover medications primarily used to treat erectile dysfunction, though there are narrow exceptions.

If your doctor prescribes a drug that is not on your plan's formulary, you have options: you can ask your doctor to prescribe a different drug that is covered, you can request an exception from your insurance company (which sometimes works), or you can pay the full price out of pocket.

How Your Costs Break Down Each Year

Part D costs have four layers, and understanding them helps you predict what you will actually pay. First is the monthly premium — the base cost of the plan itself. This varies widely, from roughly $7 to $100+ per month depending on the plan and your location. Second is the annual deductible — the amount you pay out of pocket before the plan starts sharing costs with you. Many plans have no deductible, but some charge $100 to $500 or more.

Once you hit your deductible, you enter the initial coverage phase. Here you pay a copay (a fixed amount like $5 or $10) or coinsurance (a percentage of the drug's cost, like 20%) each time you fill a prescription. This phase continues until your total out-of-pocket spending reaches a threshold set by Medicare — in 2024, that threshold is $5,030. Note that this counts what you pay, not what the plan pays.

When your out-of-pocket costs hit that threshold, you enter the coverage gap, often called the "donut hole." In the gap, you pay a higher percentage of drug costs — typically 25% of the price for brand-name drugs and 25% for generics, though the exact percentage changes yearly. You stay in the gap until your total out-of-pocket spending reaches a second threshold (in 2024, roughly $7,860). Then you move to catastrophic coverage, where you pay a small copay or coinsurance and the plan covers most of the rest.

This structure means your costs are not predictable month to month. If you take expensive medications, you might hit the donut hole by summer and pay more for the rest of the year. If you take cheaper drugs, you might never leave the initial coverage phase.

How to Find Out What Your Specific Medications Cost

The only way to know what you will actually pay is to check your plan's formulary and pricing. Medicare provides a tool called the Plan Finder at Medicare.gov where you can enter your medications and see what each plan charges. You can also call the insurance company directly and ask about specific drugs.

When you check pricing, ask for the copay or coinsurance at each pharmacy tier. Most plans have three or four tiers: generic drugs (cheapest), preferred brand-name drugs, non-preferred brand-name drugs, and sometimes specialty drugs (most expensive). The same medication might be on different tiers in different plans.

If you take multiple medications, add up the annual costs across all of them in each plan you are considering. A plan with a lower premium might cost more overall if your drugs are expensive in that plan. The Plan Finder does this math for you, but calling the plan directly and asking a representative to walk through your specific list is often faster and more accurate.

The Donut Hole and How to Avoid Paying the Most

The coverage gap (donut hole) is where many people are surprised by costs. Once you have paid $5,030 out of pocket in 2024, you are in the gap and paying 25% of drug costs yourself until you reach about $7,860 in total spending. For someone taking expensive medications, this can mean hundreds of dollars in extra costs over a few months.

You can reduce donut hole costs by switching to generic drugs if your doctor agrees, by using mail-order pharmacies (which sometimes offer better pricing), or by choosing a plan with a lower initial coverage threshold. Some plans offer additional coverage in the donut hole — they pay part of your gap costs — so comparing plans specifically on gap coverage matters if you think you will hit it.

If you have limited income, the Low-Income Subsidy program can eliminate or reduce your donut hole costs. You can check whether you may have access to by contacting Social Security or your state Medicaid office.

When You Can Change Plans and Why You Might Want To

You can change Part D plans once a year during the annual open enrollment period, which runs from October 15 to December 7. Changes take effect on January 1. If you have a major life change — you move to a new state, your medications change, or you lose other insurance — you may be able to change plans outside this window. Contact Medicare to ask about a special enrollment period.

You should review your plan every year because formularies change, copays change, and new generic versions of drugs you take might become available. A plan that was cheap last year might be expensive this year. The Plan Finder lets you compare all available plans in your area side by side, and you can sort by your estimated annual costs.

What Happens If You Do Not Have Part D Coverage

If you are on Medicare and do not enroll in Part D when you first become may be able to access, you may face a permanent penalty. For each month you delay enrolling after you become may be able to access, your future premiums increase by about 1%. If you wait three years to enroll, your premiums will be roughly 35% higher for as long as you have Part D. The penalty applies even if you later switch plans.

There are exceptions: if you have other prescription drug coverage through an employer or union, or if you are covered by Medicaid or the Veterans Administration, you may not owe a penalty. But you need to prove you had coverage. If you are unsure, contact Medicare before your enrollment important date.

Frequently Asked Questions

Can I use my Part D coverage at any pharmacy?

Most plans work at major pharmacy chains like CVS, Walgreens, and Walmart, as well as many independent pharmacies. But some plans have preferred pharmacies where your copay is lower. Check your plan's pharmacy network before you enroll, especially if you have a pharmacy you prefer or if you live in a rural area with limited options.

What if my doctor wants me to take a drug that is not on my plan's formulary?

You can ask your insurance company for a formulary exception. Provide your doctor's reason for prescribing that specific drug. The company has 72 hours to respond. If they deny it, you can appeal or ask your doctor to prescribe a covered alternative. You can also pay the full price out of pocket, though this does not count toward your deductible or out-of-pocket threshold.

Does Part D cover insulin?

Yes, insulin is covered under Part D. However, your copay depends on your plan and which insulin you use. In 2024, Medicare capped insulin copays at $35 per month for covered insulins, but this applies only to those insulins on your plan's formulary. Some plans may cover insulin at lower costs.

What if I cannot afford my Part D copays?

If your income is below 150% of the federal poverty level, you may be may be able to access for the Low-Income Subsidy program, which reduces or eliminates your premiums and copays. Contact your state Medicaid office or Social Security to check your income level and explore. Some drug manufacturers also offer copay information programs for their medications.

Can I use Part D coverage if I travel outside the United States?

Part D coverage generally does not work outside the U.S., except in limited cases. If you travel to Canada or Mexico, you can sometimes fill prescriptions there and pay out of pocket, but your Part D plan will not cover the cost. Plan ahead if you travel regularly, and ask your doctor about getting extra supplies before you leave.