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

Medicare Part D is a prescription drug benefit run by private insurance companies under contract with Medicare. It covers the cost of medications your doctor prescribes, from common blood pressure pills to cancer treatments. You do not have to take it — Original Medicare (Part A and Part B) does not include drug coverage — but most people who take regular medications find it saves money.

Part D is separate from the other parts of Medicare. You choose a plan from the companies Medicare approves in your area, pay a monthly premium, and the plan pays its share of your drug costs. The amount you pay depends on which plan you pick, which drugs you take, and how much of the drug's cost the plan covers at different price levels.

Key Takeaways

  • Part D covers brand-name and generic prescription drugs, but each plan has its own list of covered medications called a formulary.
  • You pay a monthly premium, and then you also pay out-of-pocket costs when you fill prescriptions, with the amount depending on your plan and the drug's price tier.
  • You can join a Part D plan during the Initial Enrollment Period when you first become Medicare-may be able to access, or during the Annual Enrollment Period each fall.
  • If you do not join when first may be able to access and do not have other drug coverage, you may pay a permanent penalty on your premium.
  • You can switch plans once per year during the Annual Enrollment Period if your current plan no longer fits your needs.

How Part D plans charge you for medications

Part D plans use a system called a formulary — a list of drugs the plan covers. Each drug is placed in a tier, and your out-of-pocket cost depends on which tier it is in. Tier 1 drugs (usually generic) cost the least; Tier 2 (preferred brand-name) cost more; Tier 3 and Tier 4 cost even more. Some plans also have a Tier 5 for the most expensive drugs.

When you fill a prescription, you pay a copay (a flat dollar amount like $5 or $15) or coinsurance (a percentage of the drug's cost, like 20 percent). The plan then pays its share. Your costs go toward your annual deductible first — the amount you must pay out-of-pocket before the plan starts paying — and then toward your out-of-pocket maximum, the most you will pay in a year.

Once you reach your out-of-pocket maximum (which varies by plan but is set by Medicare each year), the plan pays most or all of your drug costs for the rest of that year. This protection matters most for people taking expensive medications or multiple drugs.

The coverage gap and how it affects your costs

Part D has a stage called the coverage gap, sometimes called the "donut hole." After you and your plan have spent a certain amount on drugs together, you enter the gap and pay a higher share of drug costs until you reach your out-of-pocket maximum. The gap exists because Medicare sets a limit on how much the plan will pay before you take on more of the cost yourself.

The coverage gap has shrunk over time. In recent years, Medicare has required drug manufacturers to offer discounts on brand-name drugs in the gap, and plans often cover generic drugs at a lower cost during this stage. Still, your costs will be higher in the gap than they were before you entered it, so it is worth knowing whether your regular medications will push you into it.

You can check whether your drugs will trigger the gap by using the Medicare Plan Finder tool on Medicare.gov. Enter your medications, and the tool will show you which plans cover them and what your costs will be at each stage, including whether you will hit the gap.

When you can join or change a Part D plan

You have a Initial Enrollment Period of seven months centered on the month you turn 65 or first become Medicare-may be able to access. This period runs three months before, the month of, and three months after your may be able to access month. If you join during this window, your coverage can start as early as the first day of the month you turn 65.

If you miss the Initial Enrollment Period and do not have other drug coverage (such as from an employer or union), you will pay a late enrollment penalty added to your premium for as long as you have Part D. The penalty is calculated based on how many months you went without coverage, so joining late costs more over time.

Every year, the Annual Enrollment Period runs from October 15 through December 7. During this time, you can switch to a different Part D plan, drop your plan if you have other coverage, or join a plan for the first time. Changes take effect January 1 of the following year. You can also switch plans if you have a may have access to life event, such as moving to a new state or losing employer coverage.

How to find and compare Part D plans in your area

Medicare.gov has a tool called the Plan Finder that shows all Part D plans available where you live. You enter your zip code and the medications you take, and the tool lists plans ranked by cost, showing your estimated out-of-pocket expenses for the year. You can compare plans side by side, see which pharmacies they work with, and read customer ratings.

The Plan Finder is free and does not require you to sign in. It updates each year before the Annual Enrollment Period, so the information reflects the plans and prices for the coming year. You can also call Medicare at 1-800-MEDICARE (1-800-633-4227) and speak with someone who can walk you through the plans available to you.

When comparing plans, look at three things: the monthly premium, the drugs on the formulary (especially your regular medications), and the pharmacies in the plan's network. A plan with a low premium might have a high deductible or place your drugs in expensive tiers, so the lowest premium is not always the best deal for your situation.

What happens if your drug is not on your plan's formulary

If a medication you take is not on your plan's formulary, you have options. You can ask your doctor whether a different drug on the formulary would work for you — often a generic or a different brand-name drug in the same class will do the job. You can also ask your plan for an exception, a formal request to cover a drug that is not on the formulary. Plans must respond to exceptions within 72 hours.

To request an exception, contact your Part D plan directly. You will need your doctor to write a letter explaining why the drug on the formulary would not work for you and why this specific drug is medically necessary. Plans approve many exceptions, especially when there is a medical reason the formulary drug is not suitable.

If your plan denies the exception, you can appeal. Your doctor can also appeal on your behalf. The appeals process takes longer than the initial exception request, but it is a real option if the drug matters to your health.

Extra help paying for Part D if your income is low

Extra Help is a federal program that pays Part D premiums and reduces out-of-pocket costs for people with limited income and resources. If you may have access to, the program can cover most or all of your monthly premium and lower your copays and deductible. You do not have to be on Medicaid to get Extra Help.

Income and resource limits vary by year and household size. You can check whether you might may have access to by visiting Medicare.gov or calling 1-800-MEDICARE. If you think you may have access to, you can submit an process to Social Security, either online at ssa.gov, by phone at 1-800-772-1213, or in person at your local Social Security office.

If you are already receiving Medicaid or Supplemental Security Income (SSI), you may be automatically enrolled in Extra Help. You will receive a notice in the mail if this happens. If you are not automatically enrolled but think you may have access to, explore through Social Security — do not wait.

Frequently Asked Questions

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

No, Part D is optional. But if you do not join when you first become may be able to access and later decide you want it, you may pay a permanent penalty on your premium. The only exception is if you have other drug coverage, such as from an employer or retiree plan, that is at least as good as Part D.

Can I use my Part D plan at any pharmacy?

No, each Part D plan has a network of pharmacies where you get the best prices. You can use out-of-network pharmacies, but you will pay more. The Plan Finder tool shows you which pharmacies are in each plan's network before you join.

What if my medication costs more than my plan's out-of-pocket maximum?

Once you reach your out-of-pocket maximum for the year, your plan covers most or all of your remaining drug costs through December 31. The out-of-pocket maximum resets on January 1. If a single drug is very expensive, ask your plan about manufacturer discounts or patient information programs that might lower your cost.

Can I change my Part D plan if my health changes during the year?

You can only change plans during the Annual Enrollment Period (October 15 to December 7) or if you have a may have access to life event, such as moving or losing other coverage. If your health changes mid-year and your current plan no longer works, contact your plan to discuss your options or call Medicare for guidance.

What is the difference between a Part D plan and a Medicare Advantage plan with drug coverage?

Part D is drug coverage you add to Original Medicare. Medicare Advantage (Part C) is an alternative to Original Medicare that includes drug coverage built in. If you choose Medicare Advantage, you do not need a separate Part D plan. The choice between them depends on your doctors, hospitals, and medications.