Medicare Part D is the prescription drug coverage that comes with Original Medicare

Medicare Part D is a prescription drug insurance plan you can add to Original Medicare (Parts A and B). It covers the cost of medications your doctor prescribes, from blood pressure pills to cancer treatments. You do not have to take it, but if you wait to sign up after you first become may be able to access, you may pay a penalty for as long as you have Medicare.

Part D is run by private insurance companies that contract with Medicare. Each company offers different plans with different drugs covered, different pharmacies, and different costs. You choose which plan to join during your enrollment period, and you can switch plans once a year.

Part D works alongside Original Medicare — it does not replace it. If you have a Medicare Advantage plan (Part C) instead of Original Medicare, that plan usually includes drug coverage built in, so you would not buy Part D separately.

Key Takeaways

  • Part D is optional but comes with a lifetime penalty if you delay signing up after you first become may be able to access at 65.
  • You choose from multiple private plans, each with a different list of covered drugs, different pharmacies, and different out-of-pocket costs.
  • Part D has a yearly deductible, copays or coinsurance for each drug, and a coverage gap (called the "donut hole") where you pay more out of pocket.
  • You can change plans once a year during the annual enrollment period, which runs from October 15 to December 7.
  • Extra Help is a federal program that lowers Part D costs for people with lower incomes and assets.

How Part D costs are structured

Part D plans charge a monthly premium, which varies by plan and by where you live. The premium is separate from what you pay for Original Medicare Parts A and B. In 2024, premiums range widely — some plans cost under $10 a month, while others cost $100 or more.

After you pay your premium, you also pay out of pocket when you fill a prescription. Most plans have a yearly deductible (the amount you pay before the plan starts to help), though some plans have no deductible. Once you meet the deductible, you typically pay a copay (a flat amount like $5 or $15) or coinsurance (a percentage of the drug's cost) for each prescription.

There is also a coverage gap, sometimes called the "donut hole." Once you and your plan have spent a certain amount on drugs in a year, you enter the gap and pay more out of pocket until you reach a catastrophic coverage threshold. After that, the plan pays most of the cost. The exact amounts change each year.

Which drugs are covered under each plan

Each Part D plan publishes a formulary — a list of drugs it covers. The same drug may be covered by one plan but not another, or covered at different costs. Some plans cover brand-name drugs but charge more; others push generic versions and charge less for those.

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 the plan, asking them to cover the drug anyway — this sometimes works if you have already tried other drugs and they did not work for you. Or you can switch to a different Part D plan during the next enrollment period.

You can search the formulary for any plan on Medicare.gov before you sign up. This is the single most important step in choosing a plan: look up the drugs you actually take and see which plans cover them at the lowest cost.

When you can sign up for Part D

You become may be able to access for Part D when you turn 65 and sign up for Medicare. You can join a plan during your initial enrollment period, which is the three months before the month you turn 65, the month itself, and the three months after. If you miss this window, you can still join during the annual enrollment period (October 15 to December 7 each year), but you will owe a penalty.

The penalty is 1 percent of the national average Part D premium for each month you were may be able to access but not enrolled. If you go without Part D for two years, your penalty doubles. The penalty stays with you for life — it does not go away once you finally sign up.

There are exceptions to the penalty. If you had other drug coverage (through an employer, a union, or a veterans program) that was at least as good as Part D, you do not owe a penalty when you switch to Part D later. You will need to prove you had that coverage, so keep records of any health insurance cards or plan documents.

Extra Help for people with lower incomes

If your income and assets are low enough, you may be able to get Extra Help, a federal program that pays most or all of your Part D costs. Extra Help covers your monthly premium, your deductible, and your copays or coinsurance. You do not have to be on Medicaid to may have access to.

Income and asset limits change each year. In 2024, you may be may be able to access if your monthly income is below a certain threshold (which varies by state and household size) and your assets are below $15,510 for an individual or $31,020 for a couple. These numbers are higher than Medicaid limits, so you may may have access to for Extra Help even if you do not may have access to for Medicaid.

To explore for Extra Help, contact Social Security at 1-800-772-1213 or visit your local Social Security office. You can also explore online at ssa.gov. You will need to provide proof of income (tax returns, W-2s, or pay stubs) and proof of assets (bank statements, investment statements).

How to choose a Part D plan

Start by listing the drugs you take and the doses. Then go to Medicare.gov and use the Plan Finder tool. Enter your drugs and your pharmacy, and the tool will show you which plans cover each drug and what you will pay out of pocket at that pharmacy.

Compare the total yearly cost, not just the monthly premium. A plan with a low premium might have high copays, while a plan with a higher premium might save you money overall if you take expensive drugs. The Plan Finder calculates your estimated yearly costs for each plan, so you can see the full picture.

Check whether your preferred pharmacy is in the plan's network. Some plans work with most pharmacies; others have a smaller network. If your pharmacy is not in the network, you can ask the plan whether they will cover it anyway, or you can switch pharmacies.

Frequently Asked Questions

What happens if I do not sign up for Part D when I turn 65?

You can still sign up during the annual enrollment period (October 15 to December 7), but you will owe a lifetime penalty of 1 percent of the national average Part D premium for each month you were may be able to access but not enrolled. The penalty is added to your monthly premium and never goes away.

Can I switch Part D plans if I change my mind?

Yes, you can switch plans once a year during the annual enrollment period (October 15 to December 7). Changes take effect January 1. If you have a life event like moving to a new state or losing other drug coverage, you may be able to switch outside the enrollment period.

What if my doctor's drug is not on my plan's formulary?

You can ask your doctor to prescribe a covered alternative, request an exception from the plan (which sometimes works if you have tried other drugs first), or switch to a different Part D plan during the next enrollment period. The plan's customer service number is on your card.

Does Part D cover over-the-counter drugs?

No, Part D covers only prescription drugs. Over-the-counter medications like aspirin or cold medicine are not covered, though some plans offer a small allowance you can use at certain pharmacies for OTC items.

Can I get Part D if I have a Medicare Advantage plan?

No, Medicare Advantage (Part C) plans include drug coverage built in. You cannot buy Part D separately if you are in a Medicare Advantage plan. If you want to switch to Part D, you would need to switch back to Original Medicare first.