Medicare Part D is prescription drug coverage you add to Original Medicare

Medicare Part D is a monthly insurance plan that covers the cost of prescription medications. It is not automatic — you choose a plan from private insurance companies and pay a monthly premium. Part D works alongside Original Medicare (Parts A and B) to cover drugs your doctor prescribes, whether you take them at home, in a hospital, or at a nursing facility.

You do not have to join Part D when you first become may be able to access for Medicare, but waiting can cost you. If you go without Part D coverage for more than 63 days after you become may be able to access, you will pay a permanent penalty on your monthly premium for as long as you have Medicare. The penalty is roughly 1% of the national average Part D premium for each month you were uninsured.

Part D plans vary widely in which drugs they cover, how much you pay, and which pharmacies you can use. The same drug can cost $15 at one pharmacy under one plan and $80 at another pharmacy under a different plan. Comparing plans before you enroll — or during the annual open enrollment period — is the only way to find the lowest cost for your specific medications.

Key Takeaways

  • Part D is optional prescription drug coverage run by private insurance companies, not Medicare itself, and you must choose and enroll in a plan.
  • Waiting more than 63 days after you become may be able to access to join Part D results in a permanent monthly penalty added to your premium.
  • Each Part D plan covers a different list of drugs at different costs, so the cheapest plan for you depends entirely on which medications you take.
  • You can change Part D plans once per year during the annual enrollment period from October 15 to December 7, or if you have a may have access to life event.
  • Part D covers most prescription drugs, but some medications require prior approval from your insurance company before the pharmacy will fill them.

How Part D plans are structured and what you pay

Every Part D plan has the same basic cost structure, though the dollar amounts differ by plan and by year. You pay a monthly premium (the base cost of the plan), a deductible (the amount you pay out of pocket before the plan starts helping), and then copayments or coinsurance (your share of the drug cost after the deductible is met).

After you and your plan together spend a certain amount on drugs — the "catastrophic threshold" — your costs drop sharply. For 2024, once combined spending reaches $7,050, you pay only a small copayment (usually $3.95 to $10.35 per drug) for the rest of the year. Plans vary in their deductibles and copayments, so a plan with a higher monthly premium might save you money overall if you take expensive drugs regularly.

Part D does not cover all drugs. Plans have a formulary — a list of covered medications — and the formulary changes each year. If your doctor prescribes a drug not on your plan's formulary, you can ask the insurance company to cover it anyway (called a "formulary exception"), but approval is not may provide. Some drugs require prior authorization, meaning your doctor must get permission from the insurance company before the pharmacy will fill the prescription.

Which drugs Part D covers and how to check before you enroll

Part D plans must cover at least two drugs in each major therapeutic category — meaning at least two blood pressure medications, at least two diabetes medications, and so on. But "covered" does not mean affordable. One plan might cover your blood pressure medication with a $5 copayment, while another covers it with a $45 copayment or does not cover it at all.

Before you enroll in a Part D plan, use the Medicare Plan Finder tool on Medicare.gov to search for your specific medications. Enter each drug name, strength, and quantity, and the tool will show you which plans cover it, what you will pay at different pharmacies, and what your total yearly cost would be under each plan. This step takes 15 to 20 minutes and can save you hundreds of dollars per year.

If a drug you need is not covered by any plan, or if all plans charge more than you can afford, you can ask your doctor whether a similar drug is available that costs less. Many insurance companies will also make exceptions for drugs not on the formulary if your doctor documents that you have tried the covered alternatives and they did not work for you.

When you can enroll in Part D and what happens if you miss the important date

You can enroll in Part D during your Initial Enrollment Period, which is the seven-month window that includes the month you turn 65 and the three months before and after. If you miss this window, you can only enroll during the Annual Enrollment Period from October 15 to December 7 each year, when coverage begins January 1.

If you do not enroll during your Initial Enrollment Period and you do not have other creditable prescription drug coverage (such as coverage through a current or former employer), you will owe a late enrollment penalty. The penalty is roughly 1% of the national average Part D premium for each full month you were without coverage. If the national average premium is $35 per month and you waited 12 months to enroll, your penalty would be about $4.20 per month for life. The penalty compounds: if you wait three years, your penalty would be roughly $12.60 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 — during the gap. If you have coverage through your employer, your spouse's employer, a union, the Veterans Administration, or Medicaid, that coverage may count as creditable. When you do enroll in Part D, bring proof of your creditable coverage to avoid the penalty.

Part D plans versus other ways to get prescription drug coverage

If you have Original Medicare (Parts A and B), Part D is the standard way to cover prescriptions. But you have other options. If you join a Medicare Advantage plan (Part C), that plan includes prescription drug coverage built in — you do not buy Part D separately. Medicare Advantage plans often have lower monthly premiums than Original Medicare plus Part D, but they usually have smaller networks of doctors and pharmacies.

If you have Medicaid (state health insurance for people with low income), Medicaid covers your prescriptions and you do not need Part D. If you are still working and have health insurance through your employer, you may be able to delay Part D without penalty as long as your employer coverage includes prescription drugs. When you do retire and lose that coverage, you have 63 days to enroll in Part D without penalty.

Some people with very low income and limited assets may be able to get help paying Part D premiums and out-of-pocket costs through the Low-Income Subsidy program (also called "Extra Help"). This program is run by Social Security, and you can learn whether you may have access to by calling Social Security at 1-800-772-1213 or visiting ssa.gov.

How to compare Part D plans and switch if your needs change

Every October, Medicare sends you a notice listing the Part D plans available in your area for the coming year. Costs and covered drugs change annually, so a plan that was cheapest last year may not be cheapest this year. The Medicare Plan Finder tool lets you compare plans side by side: enter your medications, your preferred pharmacy, and your budget, and it ranks plans by total yearly cost.

You can change Part D plans once per year during the Annual Enrollment Period (October 15 to December 7). If you have a may have access to life event — such as moving to a new state, losing other drug coverage, or a significant change in your medications — you may be able to change plans outside the annual window. Call Medicare at 1-800-MEDICARE to ask whether your situation qualifies.

When you switch plans, your new coverage begins on January 1. Make sure you enroll before December 7, and give your pharmacy the new plan information before your prescriptions run out. If you run out of medication before your new plan takes effect, ask your doctor for a short-term supply or ask your current plan for an emergency refill.

Common mistakes to avoid when choosing and using Part D

The biggest mistake is not comparing plans. Many people enroll in the cheapest plan by monthly premium and then discover it does not cover their medications or charges high copayments. Spend 20 minutes with the Medicare Plan Finder before you enroll — it is the only way to know your true cost.

The second mistake is not updating your plan when your medications change. If your doctor prescribes a new drug, check whether your current Part D plan covers it and at what cost. If the cost is high, ask your doctor whether a covered alternative exists, or call your plan to ask about a formulary exception. Do not wait until your next annual enrollment to address this.

A third mistake is not using mail-order or preferred pharmacies. Most Part D plans charge less at mail-order pharmacies and at pharmacies in their preferred network. If you use an out-of-network pharmacy, you will pay more. Ask your plan which pharmacies are in-network before you fill a prescription.

Finally, do not assume your plan covers a drug just because it is a common medication. Always ask the pharmacy to check your coverage before you pick up a prescription, or use the Medicare Plan Finder to check in advance. If a drug is not covered, your doctor may be able to request an exception, but that takes time — do not wait until you run out.

Frequently Asked Questions

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

No, Part D is optional. But if you go without it for more than 63 days after you become may be able to access, you will pay a permanent penalty on your monthly premium. The only exception is if you have other creditable prescription drug coverage, such as through an employer or the VA.

Can I use any pharmacy with my Part D plan?

Most Part D plans work at any pharmacy, but you will pay less at in-network pharmacies. Some plans have preferred pharmacies where copayments are lower. Check your plan's pharmacy network before you fill a prescription, or ask the pharmacy whether it is in-network.

What happens if my Part D plan stops covering a drug I take?

You can ask your insurance company for a formulary exception, which means asking them to cover the drug anyway. Your doctor will need to explain why you need that specific drug. You can also switch to a different Part D plan during the annual enrollment period that does cover it.

Can I change Part D plans if I realize I chose the wrong one?

Yes, during the Annual Enrollment Period from October 15 to December 7. If you have a may have access to life event — such as moving, losing other coverage, or a major change in your medications — you may be able to switch outside this window. Call Medicare at 1-800-MEDICARE to ask.

Does Part D cover over-the-counter medications?

No, Part D covers only prescription drugs. Over-the-counter medications are not covered, even if your doctor recommends them. Some Part D plans offer a small benefit for certain over-the-counter items, but this is rare and limited.