What Medicare Part D Covers

Medicare Part D is prescription drug coverage that helps pay for medications you take at home. It covers both brand-name and generic drugs, as well as some biologics (medications made from living cells). Part D does not cover medications you receive while in the hospital or nursing facility — those are covered under Part A or Part B instead.

Each Part D plan maintains a formulary, which is a list of covered drugs. The formulary changes yearly, and not every medication is on every plan's list. If your doctor prescribes a drug that is not on your plan's formulary, you can ask your doctor to prescribe a different drug that is covered, or you can request an exception from your plan (though this takes time and is not always approved).

Part D is optional, but there is a financial penalty if you wait to join. If you do not sign up when you first become may be able to access and go without coverage for more than 63 days, you will pay a higher premium for as long as you have Part D — even if you join years later.

Key Takeaways

  • Part D covers prescription drugs you pick up at a pharmacy, but not drugs given to you in a hospital or facility.
  • You choose a Part D plan during Open Enrollment (October 15 to December 7 each year), and coverage starts January 1.
  • Each plan has a different formulary, so the same drug may be covered by one plan but not another, or may cost different amounts.
  • You pay a monthly premium, and then you also pay out-of-pocket costs when you fill prescriptions — the exact amounts depend on your plan and the drug.
  • Delaying enrollment beyond your initial may be able to access period results in a permanent penalty added to your premium.

How Part D Plans Work and What You Pay

When you join a Part D plan, you pay a monthly premium to the insurance company. On top of that, you pay costs at the pharmacy when you fill a prescription. These costs typically follow a structure called the coverage stages.

In the first stage, called the deductible, you pay the full cost of your drugs until you reach a certain amount (this amount varies by plan, typically $100 to $500 per year). After you meet your deductible, you move into the second stage, where you pay a copay or coinsurance — a fixed amount or a percentage of the drug's cost. In the third stage, if your drug costs become very high, you enter the coverage gap (sometimes called the "donut hole"), where you pay a larger share of the cost. Once your out-of-pocket spending reaches a certain limit (around $7,000 to $8,000, depending on the year), you move into catastrophic coverage, where you pay only a small copay for the rest of the year.

The exact amounts you pay at each stage depend on which plan you choose. Two people with the same drug may pay very different amounts if they are in different Part D plans.

Choosing a Part D Plan

You have two main ways to get Part D coverage. If you have Original Medicare (Part A and Part B), you join a standalone Part D plan run by a private insurance company. If you have a Medicare Advantage plan (Part C), that plan usually includes drug coverage built in, though you may be able to switch to a different plan's drug coverage during Open Enrollment.

When comparing plans, look at three things: the monthly premium, the drugs on the formulary (especially any drugs you take regularly), and the copays or coinsurance for those drugs. A plan with a low premium may have high copays, or it may not cover a drug you need. Medicare provides a tool called the Medicare Plan Finder on Medicare.gov where you can enter your medications and see which plans cover them and what you would pay.

You can change your Part D plan once per year during Open Enrollment, which runs from October 15 to December 7. Changes take effect on January 1. If you have a major life change (such as moving to a different state, losing other drug coverage, or a significant change in income), you may be able to change plans outside of Open Enrollment, but you must contact your plan or Medicare within 60 days of the change.

When Your Drugs Are Not on Your Plan's List

If your doctor prescribes a medication that is not on your Part D plan's formulary, you have several options. The simplest is to ask your doctor if there is a similar drug on your plan's list that would work for you. Many conditions have multiple medications that can treat them, and switching to a covered drug may be straightforward.

If there is no suitable alternative, you can request a formulary exception from your plan. This is a formal request asking the plan to cover a drug that is not on the list. Your doctor must submit the request and explain why this specific drug is medically necessary for you. The plan has 72 hours to respond (or longer in some cases). If the plan denies the exception, you can appeal the decision, but this process takes time — sometimes several weeks.

While you wait for an exception decision, ask your pharmacy if they can fill a smaller supply of the drug at a reduced cost, or ask your doctor for samples. Do not assume the exception will be approved; have a backup plan in case it is denied.

Extra Help if You Have Low Income

If your income and resources are below certain limits, you may may have access to for Extra Help (also called the Low-Income Subsidy program). Extra Help pays part or all of your Part D premium and reduces your out-of-pocket costs at the pharmacy. The income limits vary by state and change yearly, but generally include people with income below 150% of the federal poverty level.

To learn whether you may may have access to, contact your local Social Security office, call Social Security at 1-800-772-1213, or visit the Social Security website. You can also contact your State Health Insurance information Program (SHIP), which is a free counseling service in every state. SHIP staff can help you understand whether you may have access to and can help you with the process process.

If you receive Extra Help, you do not have to pay the penalty for late enrollment, and you can change your Part D plan three times per year instead of just once.

What to Ask Your Doctor and Pharmacist

Before you choose a Part D plan, talk to your doctor and pharmacist about the medications you take. Ask your doctor: "Are there any generic versions of my medications that would work just as well?" and "If my insurance does not cover one of my drugs, what would be your second choice?" Ask your pharmacist to review your medications and tell you which ones are typically the most expensive and which ones have generic options.

Once you have chosen a plan, give your pharmacist a copy of your plan's formulary or the plan name and number. Your pharmacist can then tell you when ready whether each of your drugs is covered and what your copay will be. If a drug is not covered, your pharmacist can contact your doctor right away to discuss alternatives, rather than you finding out when you try to fill the prescription.

If your plan changes your formulary during the year (which happens occasionally), your pharmacy will usually catch this before you pick up your medication. Ask your pharmacist to call you if there is any change to your coverage or cost for your regular medications.

When to Seek Help or Contact Medicare

Contact Medicare or your plan when ready if you are denied coverage for a drug and you believe the denial is wrong, if your plan stops covering a drug you have been taking, or if your copay suddenly increases. You have the right to appeal any coverage decision, and your doctor can help you make that appeal.

If you cannot afford your medications even with Part D coverage, contact your plan's patient information program or ask your pharmacist about manufacturer information programs. Many drug makers offer free or reduced-cost medications to people who meet income requirements. Your pharmacist often knows which programs are available for your specific drugs.

If you are struggling to pay your Part D premium itself, contact your State Health Insurance information Program (SHIP) to learn about Extra Help or other programs. You can find your state's SHIP by calling 1-877-839-2675 or visiting the Eldercare Locator website.

Frequently Asked Questions

Do I have to join Part D when I turn 65?

Part D is optional, but if you do not join when you first become may be able to access and you go without drug coverage for more than 63 days, you will pay a permanent penalty on your premium for as long as you have Part D. The penalty is about 1% of the national average Part D premium for each month you were without coverage. If you do not take any medications now, you can delay enrollment, but once you need drugs, the penalty applies.

Can I switch Part D plans if I do not like the one I chose?

Yes. You can change plans once per year during Open Enrollment (October 15 to December 7), and the new plan starts January 1. If you have a major life change — such as moving, losing other coverage, or a big change in income — you may be able to change plans outside of Open Enrollment. Contact your plan within 60 days of the change to ask.

What happens if my drug is removed from my plan's formulary?

Your plan must notify you before removing a drug, usually giving you time to request an exception or switch to a different plan. If your drug is removed and you cannot get an exception, you can change to a different Part D plan outside of Open Enrollment. Contact your plan or Medicare as soon as you learn the drug will no longer be covered.

Will my copay stay the same all year?

Your copay for a specific drug should stay the same throughout the year, but if your plan changes the formulary or your drug moves to a different tier, your copay could change. Some plans also adjust copays mid-year for certain drugs. Check your plan's notices or call your plan if you notice a change.

What if I cannot afford my medications even with Part D?

Talk to your doctor about generic alternatives or lower-cost drugs. Ask your pharmacist about manufacturer information programs — many drug companies offer free or reduced-cost medications based on income. If you have low income, contact Social Security or your State Health Insurance information Program to learn about Extra Help, which can significantly reduce your out-of-pocket costs.