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

Medicare Plan D is a prescription drug insurance plan run by private insurance companies under contract with Medicare. It covers the cost of medications your doctor prescribes. You can only enroll during specific times of year — usually October 15 through December 7 — and the coverage starts January 1 of the following year. If you have Original Medicare (Part A and Part B) and do not enroll in a drug plan when you first become may be able to access, you will pay a penalty for every month you go without coverage, even if you join later.

Plan D is separate from your hospital and medical insurance. You choose which private company's Plan D to join, and the monthly premium, deductible, and list of covered drugs vary by plan and by year. Some plans cost $5 a month; others cost $100 or more. The drugs each plan covers also change annually, so a medication you took last year under one plan may not be on the formulary this year, or may require a higher copay.

Key Takeaways

  • Plan D is optional but carries a permanent penalty if you delay enrollment without a valid reason, even if you join later.
  • You enroll through Medicare.gov or by calling 1-800-MEDICARE during the annual enrollment window, usually October 15 through December 7.
  • Each plan has a different monthly cost, deductible, copay structure, and list of covered drugs, so comparing plans before you enroll saves money.
  • Once you enroll, you can switch to a different Plan D only during the annual enrollment period or if you have a may have access to life event.

How Plan D coverage works: the four stages of costs

Plan D divides the year into four cost stages. In the deductible stage, you pay the full cost of your medications until you reach your plan's deductible — typically $100 to $500 per year, depending on which plan you choose. Once you hit the deductible, you move to the initial coverage stage, where you pay a copay or coinsurance (a percentage of the drug cost) for each prescription, and the plan pays the rest.

If your total drug costs reach a certain threshold — $5,850 in 2024, though this amount changes yearly — you enter the coverage gap, sometimes called the "donut hole." In this stage, you pay a higher percentage of the cost of brand-name and generic drugs. The exact percentage depends on your plan, but you are responsible for more of the cost than you were in the initial coverage stage. Once your out-of-pocket spending reaches a second limit — $8,550 in 2024 — you move to catastrophic coverage, where you pay a small copay or coinsurance and the plan covers the rest for the rest of the year.

These dollar amounts reset on January 1 each year. The stages exist in every Plan D, but the copays, coinsurance percentages, and exact dollar thresholds differ by plan.

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

The main enrollment window is October 15 through December 7 each year. Coverage begins January 1. You can enroll during this window even if you are already on a Plan D — switching plans is allowed. If you are new to Medicare, you have a 63-day window from the date your Medicare coverage starts to join a Plan D without penalty.

If you do not enroll when you first become may be able to access and you do not have other creditable drug coverage (coverage as good as or better than Plan D), Medicare charges you a late enrollment penalty. The penalty is roughly 1% of the national average Plan D premium for each month you were without coverage. If the average premium is $35 and you delay 12 months, your penalty could be around $4.20 per month, added to your premium for as long as you have Part D. This penalty does not go away, even if you join later.

You can also enroll outside the main window if you have a may have access to life event — moving to a new state, losing other drug coverage, getting married, or becoming may be able to access for Medicaid. You have 60 days from the event to enroll.

How to compare and choose a Plan D

Medicare provides a free tool at Medicare.gov called the Plan Finder. Enter your medications, dosages, and pharmacies, and the tool shows you which plans cover those drugs, what the copays are, and the total estimated cost for the year under each plan. This is the most accurate way to compare, because the "best" plan depends entirely on which drugs you take and where you fill them.

When you compare, look at the monthly premium, the deductible, the copays for your specific drugs, and whether your pharmacy is in the plan's network. Some plans have $0 deductibles but higher copays; others have higher deductibles but lower copays. A plan with a low monthly premium might have high copays that cost you more overall if you take many medications. The Plan Finder calculates your total estimated out-of-pocket cost, which is the most useful number to compare across plans.

You can also call 1-800-MEDICARE to speak with someone who can walk you through the comparison, or contact your local Area Agency on Aging, which often offers free counseling on Medicare plan choices.

What medications Plan D covers and what it does not

Each Plan D has a formulary — a list of covered medications. The formulary is organized by tier, and each tier has a different copay. Tier 1 drugs (usually generic) have the lowest copay; Tier 5 drugs (usually brand-name with no generic) have the highest. A drug on one plan's formulary may not be on another's, or may be on a higher tier with a bigger copay.

Plan D does not cover all medications. Drugs used for weight loss, fertility, hair loss, and erectile dysfunction are excluded by law. Some plans also exclude certain other drugs or require you to try a cheaper alternative first (called a step therapy). If your doctor prescribes a drug that is not on your plan's formulary or is restricted, you can ask your plan for an exception, but this takes time and is not always approved.

You can view each plan's formulary on Medicare.gov before you enroll. If you are already enrolled and your drug is no longer covered, you have the right to request a coverage exception from your plan.

Switching plans and what to do if your coverage changes

You can change Plan D plans only during the annual enrollment window (October 15 through December 7) or if you have a may have access to life event. You cannot switch mid-year just because you want to. If you are already on a Plan D and want to change, you must enroll in the new plan during the enrollment window; your old plan coverage ends December 31 and your new plan starts January 1.

If your plan changes its formulary during the year — removing a drug you take or moving it to a higher tier — you may be able to request a coverage exception or ask for a mid-year switch. Contact your plan directly to ask what options are available. If you lose your Plan D coverage for any reason (you stop paying the premium, you move out of the plan's service area, or the plan is discontinued), you have 63 days to enroll in a new plan without a late penalty.

Keep your plan materials and any notices from your insurance company. Plans mail formulary updates and coverage changes in advance, and missing these notices can mean you show up at the pharmacy expecting coverage that is no longer there.

How Plan D works with other insurance and information programs

If you have both Medicare and Medicaid (called "dual may be able to access"), your Medicaid program may cover your Plan D premium and copays. If you have employer coverage or retiree health insurance, you may not need Plan D, but check whether that coverage is creditable — meaning it covers drugs as well as or better than Plan D. If it is, you can delay Plan D without penalty.

If your income is low, you may be able to get help paying your Plan D premiums and copays through the Low-Income Subsidy (LIS) program, also called "Extra Help." This is a federal program that covers some or all of your costs depending on your income and resources. You explore through Social Security, and if you are approved, your copays drop significantly — often to $1 to $5 per prescription. You can also get help through state pharmaceutical information programs, which vary by state.

Frequently Asked Questions

Do I have to take Plan D if I have Original Medicare?

No, Plan D is optional. But if you do not enroll when you first become may be able to access and you do not have other drug coverage, you will pay a late enrollment penalty for every month you go without it, even if you join later. The penalty is permanent and stays on your premium as long as you have Part D.

What if my medication is not on my plan's formulary?

You can ask your plan for a coverage exception, which your doctor can help request. The plan will review the request and may approve it, deny it, or approve it with conditions (like requiring you to try a cheaper drug first). If denied, you can appeal. You can also switch to a different Plan D during the annual enrollment window if another plan covers the drug.

Can I use any pharmacy with Plan D?

Most plans have a network of pharmacies where your copays explore. Using an out-of-network pharmacy usually costs more. Check whether your regular pharmacy is in your plan's network before you enroll. Some plans have mail-order options for maintenance medications, which can lower your copays.

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

Most Plan D plans are state-specific, so your plan may not be available in your new state. You have 60 days from your move to enroll in a new plan without a late penalty. Use the Plan Finder to see which plans are available where you are moving and compare them before you relocate.

How much does Plan D cost?

Plan D costs vary widely by plan and year. Monthly premiums range from around $5 to over $100. You also pay a deductible (typically $100 to $500), copays for each prescription, and potentially coinsurance in the coverage gap. The total cost depends on which drugs you take and which plan you choose. Use the Plan Finder to see estimated costs for your specific medications.