Part D is Medicare's prescription drug coverage

Part D is the prescription drug insurance piece of Medicare. It covers the cost of medications you take at home — pills, inhalers, injections, and other drugs your doctor prescribes. Part D is optional, but if you don't take it when you first become may be able to access, you'll pay a penalty for as long as you have Medicare.

Part D is run by private insurance companies, not by Medicare directly. You choose which plan to join, and the plans vary in which drugs they cover, what you pay, and which pharmacies you can use. The coverage and costs change every year, so you need to check your plan's details annually.

Part D works alongside your other Medicare coverage. If you have Original Medicare (Parts A and B), you buy Part D separately. If you have a Medicare Advantage plan (Part C), prescription drug coverage may be included in that plan, or you may need to add it.

Key Takeaways

  • Part D covers prescription medications filled at pharmacies, but not over-the-counter drugs, vitamins, or supplies like syringes or test strips.
  • You choose a Part D plan during the annual enrollment period (October 15 to December 7), and coverage begins January 1 of the following year.
  • Part D plans have different costs and drug lists, so comparing plans each year can lower your out-of-pocket spending.
  • If you don't take Part D when first may be able to access and later enroll, you pay a permanent monthly penalty added to your premium.
  • Low-income beneficiaries may receive subsidies that reduce Part D premiums and out-of-pocket costs.

What Part D covers and what it doesn't

Part D covers prescription drugs that your doctor prescribes and that you pick up at a pharmacy. This includes brand-name and generic medications, as well as some biologics (drugs made from living cells). Each Part D plan publishes a formulary — a list of drugs the plan covers — and you can search it online before you join.

Part D does not cover over-the-counter medications like ibuprofen or antacids, even if your doctor recommends them. It does not cover vitamins, supplements, or medical supplies like test strips, lancets, or syringes. Drugs used only in a hospital or doctor's office are covered under Part B, not Part D. Some medications require prior authorization from your plan before the pharmacy will fill them, meaning your doctor must get approval first.

If a drug you take is not on your plan's formulary, you have options. You can ask your doctor to prescribe a different drug that is covered, request that your plan add the drug to its formulary (called a formulary exception), or pay out of pocket. Many plans will cover a formulary exception if your doctor explains why you need that specific medication.

How Part D costs work

Part D has five cost stages that you move through as you spend money on drugs during the year. The stages are designed so that costs are lowest at the start and highest when you've spent a lot, then drop again if you reach catastrophic coverage.

The first stage is the deductible. You pay this amount out of pocket before your plan starts to help. Not all plans have a deductible, and those that do can charge up to $545 in 2024 (this amount changes yearly). Once you've paid your deductible, you move to the second stage.

In the initial coverage stage, you and your plan share the cost of drugs. You typically pay a copay (a flat amount like $5 or $10) or coinsurance (a percentage of the drug's cost). Your plan pays the rest. This stage ends once your total drug costs reach $5,850 in 2024.

The third stage is the coverage gap, sometimes called the "donut hole." Once your total drug costs hit $5,850, you enter this stage and pay a higher percentage of the cost — usually 25 percent of the drug's price. This stage ends once you've paid $8,550 out of pocket in 2024. The coverage gap has shrunk over time due to federal law, and the percentage you pay continues to improve each year.

Once you've spent $8,550 out of pocket, you reach catastrophic coverage. Your plan pays most of the cost from that point forward, and you pay only a small copay or coinsurance for the rest of the year.

These dollar amounts change every January. You can find the current year's amounts on Medicare.gov or by calling 1-800-MEDICARE.

Choosing and changing a Part D plan

You choose a Part D plan during the annual enrollment period, which runs from October 15 to December 7 each year. Coverage from a plan you join during this window begins on January 1. You can join, switch, or drop a plan once per year during this period.

To compare plans, use the Medicare Plan Finder tool on Medicare.gov. Enter the medications you take, and the tool will show you which plans cover them and what your costs would be under each plan. Costs vary widely — two plans might cover the same drug but charge you $20 versus $50 per month. Spending an hour comparing plans can save you hundreds of dollars per year.

If you miss the annual enrollment period, you can still join a plan only if you have a may have access to life event — such as losing other drug coverage, moving to a new state, or becoming newly may be able to access for Medicare. If you don't have a may have access to event and you miss the important date, you cannot join until the next October 15.

If you already have a Part D plan, you don't have to do anything to keep it. But your plan's costs and drug list change every year, so it's worth reviewing your coverage each fall to see if a different plan would save you money.

The late enrollment penalty

If you don't take Part D when you first become may be able to access for Medicare, and you later join a plan, you will pay a late enrollment penalty for as long as you have Medicare. The penalty is calculated as 1 percent of the national average Part D premium for each month you were without coverage. In 2024, that works out to roughly $0.80 per month for each month you were uninsured, but the exact amount changes yearly.

The penalty is added to your Part D premium every month. If you were uninsured for two years, your penalty would be roughly 24 months × $0.80 = $19.20 per month, added to whatever your plan's premium is. This penalty never goes away, even if you later switch plans.

You can avoid the penalty if you have other drug coverage that is at least as good as Part D — called creditable coverage. This includes coverage through an employer, a union, TRICARE, the VA, or an individual plan. When you enroll in Part D, you'll be asked whether you had creditable coverage. Keep records of any other coverage you had, because you may need to show proof.

Help paying for Part D

If your income is low, you 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 it covers some or all of your Part D costs depending on your income and resources.

To learn whether you may have access to, contact Social Security at 1-800-772-1213 or visit ssa.gov. You can also ask your local Area Agency on Aging or call 211 for a referral to a counselor who can help you understand your options.

Some pharmaceutical companies also offer patient information programs that reduce the cost of specific drugs. Your doctor or pharmacist can tell you whether your medications have these programs available.

Frequently Asked Questions

Do I have to take Part D if I have Medicare?

Part D is optional, but if you don't take it when first may be able to access and enroll later, you'll pay a permanent monthly penalty. The only exception is if you have other drug coverage that is at least as good as Part D.

Can I use any pharmacy with Part D?

Each Part D plan has a network of pharmacies where you can fill prescriptions at the plan's negotiated prices. You can use pharmacies outside the network, but you'll pay more. Check your plan's pharmacy list before you join.

What happens if my doctor prescribes a drug that Part D doesn't cover?

You can ask your plan to cover it anyway (called a formulary exception), ask your doctor to prescribe a covered alternative, or pay out of pocket. Your doctor can submit the exception request on your behalf, explaining why you need that specific drug.

Can I switch Part D plans if my needs change during the year?

You can switch plans only during the annual enrollment period (October 15 to December 7) or if you have a may have access to life event like losing other coverage or moving. Otherwise, you're locked into your plan until the next enrollment period.

How do I know if I'm in the coverage gap?

Your pharmacy receipt will show you. Once your total drug costs reach the annual threshold (currently $5,850), you'll see your copay or coinsurance increase. Your plan will also send you a notice when you enter the coverage gap.