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Medicare Part D is an optional federal government program to help Medicare beneficiaries pay for prescription drugs. If you’re approaching 65 or already have Medicare coverage, learning the ins and outs of Part D could save you from unwanted expenses and stress.
This guide will explain eligibility requirements, coverage, associated costs, the Extra Help program, the best Medicare Part D plan options, and how to enroll.
Medicare Part D prescription drug plans cover most outpatient prescription medications for Medicare beneficiaries. These plans are offered by private insurance companies and regulated by the Centers for Medicare and Medicaid Services (CMS).
There are two ways to be eligible for Medicare Part D coverage. How you get it depends on the other Medicare insurance you may have.
If you’re enrolled in Original Medicare Part A and/or Medicare Part B, you are eligible to enroll in a stand-alone Medicare Part D prescription drug plan. Many times, Original Medicare is enhanced with a Medicare Supplement plan.
When enrolled in Medicare Part A and B, you can also enroll in a Medicare Part C plan, known as Medicare Advantage. Medicare Part C plans must provide equal coverage to Original Medicare and may offer extra benefits like dental, vision, and hearing.
When you enroll in a Medicare Part C plan, you’ll likely bundle it with a Medicare Part D prescription drug plan. These plans are called Medicare Advantage Prescription Drug (MAPD) plans. When you consider Medicare Part C plan options, review the plan formulary to ensure your medications are covered at a cost you can afford.
It’s important to note that when you enroll in a Medicare Advantage plan, you usually can’t purchase a Medicare Part D stand-alone prescription drug plan. This can only be done in select circumstances. There are also Medicare Advantage plans that do not include drugs.
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Local, licensed insurance agents with 25+ years of experienceMedicare Part D plans vary but must cover a wide range of prescription drugs that most Medicare beneficiaries are likely to need. Part D plans must include at least two medications from most categories and must cover all drugs in certain protected classes, including:
Medicare Part D plans also cover most vaccines unless they are already covered by Original Medicare Part B.
Every plan has a list of medications it covers, called a “formulary.” Be aware that plans do not cover every medication, so it’s essential to check the formulary for your medications before enrolling. If you are enrolled and your medication is not on your plan’s formulary, you may request an exception, pay out-of-pocket, or file an appeal.
It’s important to know that Medicare drug plans change their formulary. This could happen during the plan year because of Medicare directions. Alternatively, your plan may change the medication list because drug therapies change, new drugs are released, or new medical information becomes available. This is why you must review your Part D plan’s coverage annually.
Different drug coverage levels are within a plan’s formulary, called “tiers.” Drugs in each tier have a different cost. For example, a drug within a lower tier will generally cost you less than a drug in a higher tier.
Here’s an example of a Medicare Part D plan’s tiers, although your plan’s tiers may vary:
As you consider your medication tier, don’t shy away from generic medications, which can save you money. According to the Food and Drug Administration (FDA), generic drugs are copies of brand-name medications. They are the same in dosage, safety, strength, route of administration, quality, performance characteristics, and intended use.
Because generic drugs use the same active ingredients as brand-name prescription drugs, consider generics for cost-savings.
Free, unbiased serviceCompare all major plans and carriers Local, licensed insurance agents with 25+ years of experienceThe costs of Medicare Part D can include a premium, annual deductible, copayments, and coinsurance, which can vary depending on the plan you choose and medications.
Most Medicare Part D plans charge a monthly fee, called a premium, although some have a $0 monthly premium. The premium varies depending on your plan and can change annually. This is why it’s essential to review your plan annually. Not only can the plan’s drug coverage change, but costs can too.
Medicare Part D plans set their premiums with the Centers for Medicare and Medicaid Services (CMS) approval. The plan premium cost depends on the plan that you choose.
According to the Centers for Medicare and Medicaid Services (CMS), the national base or average beneficiary premium for stand-alone Medicare Part D in 2024 is $34.70. However, your monthly premium will be determined by your plan choice.
If you enroll in a Medicare Advantage plan (Medicare Part C) that includes prescription drug coverage, your prescription drug premium will be included in your Medicare Advantage plan premium. This is only the case for Medicare Advantage Prescription Drug plans.
Your monthly premium can be deducted directly from your monthly Social Security or Railroad Retirement Board payment or billed directly. You must contact your plan to select how you want your monthly premium billed or deducted. Your plan will tell you when premium withholding will begin or if there are any problems; it may take up to three months to start.
If you’re a high-income earner, you may also need to pay a higher premium because of Medicare Part D-IRMAA. The Part D-IRMAA is an income-related monthly adjustment added to your Medicare Part D premium based on your modified adjusted gross income on your taxes two years prior. You may be able to file an appeal based on life-changing events like a change in salary.
Review the table below to determine if you’ll pay a Medicare Part D-IRMAA.
Most Medicare Part D plans have an annual deductible, which is the amount you must pay out-of-pocket for your prescriptions before your plan begins to pay for your covered drugs.
While deductibles vary between Medicare Part D drug plans, no plan may have a deductible higher than $545 in 2024. The Centers for Medicare and Medicaid Services (CMS) sets this threshold annually.
Some plans have a $0 deductible, and others cover select medications before the deductible. Let a local Connie Health agent know if you want a $0 Part D plan. And if you’re curious if your medication is covered before the deductible, ask your agent.
If you have an annual deductible and have paid it, your plan will then start cost-sharing. The Medicare Part D copayment or coinsurance is the amount you pay for a prescription, while the plan pays the remaining Medicare-approved amount.
If your plan has coinsurance, the amounts can change. That’s because drug plans and manufacturers can change their charges anytime throughout the year. Your plan could also start offering a generic form of your medication, but you could remain on the brand-name drug. The amount you end up paying also depends on the tier level assigned to the medication.
To reduce your coinsurance costs, request a generic version of your medication and learn which pharmacies in your area are preferred. Preferred pharmacies usually offer better prescription costs. When you get a prescription refill, ask whether your plan covers a generic option. Switching from brand-name to generic could save you a lot of money.
Once you and your insurance plan spend $5,030 (2024) combined on the plan deductible and drugs, you’ll pay no more than 25% of the cost for prescription drugs until your out-of-pocket spending limit is $8,000 (2024).
Most Medicare Part D drug plans have a coverage gap, more commonly known as the “donut hole.” You enter the coverage gap after you and your plan have spent a certain amount towards the plan (deductible, coinsurance, copayment).
In 2024, once you and your plan spend $5,030, you’ll be in the coverage gap. The Centers for Medicare and Medicaid Services sets this amount annually.
Once you’re in the coverage gap, you’ll pay no more than 25% of the cost of your plan’s covered prescription drugs. This discounted rate applies whether you purchase your prescription at a pharmacy or order through the mail. Some plans may offer lower costs when you’re in the coverage gap.
If you’re buying a brand-name prescription, almost the full price of the drug will count towards your out-of-pocket costs – even though you’re paying a discounted rate. When you purchase generic medications, only the amount you pay will count towards your out-of-pocket expenses toward getting you out of the coverage gap.
Once you’ve hit the catastrophic coverage threshold ($8,000 in 2024), you’ll pay nothing else for prescription medications for the remainder of the plan year. In 2025, the annual out-of-pocket costs for people with Medicare Part D will be capped at $2,000, thanks to the Inflation Reduction Act.
Those enrolled in Medicare and Part D Extra Help won’t enter the coverage gap.
The Medicare Extra Help program can help individuals with limited income and resources by reducing their Part D plan costs. Those who qualify for Extra Help will not have a coverage gap or pay a Part D late enrollment penalty, and they will receive assistance with their premiums and deductibles.
If you qualify for Medicare Part D Extra Help in 2024, you’ll pay $0 for plan premium and deductible. You’ll pay up to $4.50 for prescriptions for a one-month supply of generic drugs and $11.20 for a one-month supply of brand-name drugs.
Some people automatically qualify for Medicare Part D Extra Help if they receive full Medicaid coverage, help from their state paying for Part B premiums (Medicare Savings Programs), or Supplemental Security Income (SSI) benefits from Social Security. You’ll receive a letter about your Extra Help if you’re automatically enrolled.
For most people to qualify for Part D Extra Help, income and resources must be below specific amounts. However, income and resource limits may increase each year.
If you meet these income and resource thresholds, gather the following documents for you and your spouse:
Once you’ve gathered the documents, call to speak with a local licensed Connie Health agent who can help review your Part D Extra Help qualifications and help you apply for benefits.
The best Medicare Part D plan depends on your needs, medications, preferred pharmacy, and budget. Research each plan’s formulary and understand its pricing structure. A local licensed Connie Health agent can help you compare the different plans available in your area and find one that matches your health and budget needs.
Free, unbiased serviceCompare all major plans and carriers Local, licensed insurance agents with 25+ years of experienceEnrolling in Medicare Part D can be done during your Initial Enrollment Period or a Special Enrollment Period. If you enroll outside of these two enrollment periods, you may face lifetime late enrollment penalties.
And don’t worry. If you ever need to change your prescription drug plan, you can do that during the Annual Enrollment Period and the Medicare Advantage Open Enrollment Period (if you’re enrolled in a Medicare Advantage plan). Keep reading to learn about these critical periods.
Your seven-month Initial Enrollment Period is the best time to enroll in a stand-alone Medicare Part D or a Medicare Advantage Prescription Drug plan. This is when you first become eligible for Medicare. Your Initial Enrollment Period starts three months before your 65th birthday, includes your birth month, and three months after your 65th birthday.
Special Enrollment Periods allow you to sign up for Medicare Part D, even if it’s not your Initial Enrollment Period. Examples of Special Enrollment Periods include when you retire, lose employer drug coverage, or move from your Medicare Part D plan’s service area to another area.
Special Enrollment Periods generally last 60 days. For example, a 60-day Special Enrollment Period would begin the month after your employment ends or the month after losing creditable employer insurance, whichever happens first. You could owe late enrollment penalties if you lose creditable coverage and don’t sign up during your 60-day Special Enrollment Period.
Suppose you delay enrolling in Medicare Part D. In that case, you must have creditable prescription drug coverage from your or your spouse’s employer, union, or another source that provides equivalent coverage to Medicare’s standard drug coverage. If you don’t, you could face a late enrollment penalty when you do sign up for prescription drug coverage.
Suppose you enroll in Medicare Part D or a Medicare Advantage Prescription Drug plan outside of your Initial Enrollment Period or a Special Enrollment Period. In that case, you may face a Part D late enrollment penalty.
In either case, the Part D penalty will make your Part D monthly premium higher for the remainder of your prescription drug coverage from Medicare unless you’re enrolled in Part D Extra Help.
You can make Part D plan changes during the Annual Enrollment Period, also known as the Medicare Open Enrollment Period, which occurs annually from October 15 to December 7. During this enrollment period, Medicare enrollees can join, disenroll, or switch Part D or Medicare Advantage Prescription Drug plans.
Suppose you are enrolled in a Medicare Advantage plan. In that case, you can switch to another plan with prescription drug coverage or switch to Original Medicare with the option to purchase a stand-alone Medicare Part D plan and Medicare Supplement insurance. The Medicare Advantage Open Enrollment Period runs annually from January 1 through March 31. If you’re enrolled in Medicare Advantage, mark this time on your calendar.
You must find a Medicare Part D or Medicare Advantage Prescription Drug plan that covers your prescriptions at a cost you can afford. A local licensed Connie Health agent can help you compare costs between Medicare Part D and Medicare Advantage Prescription Drug plans in your area.
When comparing plans, we’ll help check the formulary to ensure your medications are covered. We’ll also help you estimate your prescription drug spending. To compare plans and enroll, call to speak with a Connie Health agent at (623) 223-8884.
By understanding Medicare Part D eligibility, coverage, and costs and knowing how to apply for coverage, you can make an informed decision that keeps your prescription drugs affordable. It’s important to review your Part D coverage annually, as plans and prescriptions may change.
The cost of Medicare Part D can vary based on the specific plan, the drugs you need, your pharmacy, and whether or not you qualify for Extra Help with Medicare prescription drug costs. Costs can include premiums, deductibles, copayments, and coinsurance.
Medicare Part D is designed to help with the cost of prescription drugs. Each Part D plan has a formulary, which is a list of covered medications. These formularies include brand-name prescription drugs and generic drug options.
The plans might differ in the drugs they cover and may change their formularies, but they are required to cover at least two drugs in the most commonly prescribed categories and classes. This ensures that people with different medical conditions can get the necessary prescription drugs.
The coverage is divided into different ‘tiers,’ with tier 1 generally being the lowest-cost medication, such as generic drugs. In contrast, higher tiers include brand-name drugs and are typically more expensive. Before choosing a plan, you must check the formulary to see if your prescription drugs are covered.
Medicare Part D covers a substantial list of prescription drugs; however, not all medications are included. Each Part D plan has a formulary, which is a list of covered medications. You must check your plan’s formulary to confirm that your necessary medications are covered.
Medicare Part D is generally available to anyone enrolled in either Medicare Part A or Medicare Part B. Essentially, if you are 65 years of age or older and entitled to Medicare benefits, you may opt into this coverage. There are also provisions for those under 65 with specific disabilities.
Coverage for specific drugs like Ozempic depends on the formulary of the Medicare Part D plan you select. Since formularies vary by plan, you’ll need to check the specifics of your plan to see whether Ozempic, a medication typically prescribed to improve blood sugar in adults with type 2 diabetes, is covered.
Medicare Part D coverage is provided through private insurers approved and regulated by the Centers for Medicare and Medicaid Services (CMS). You pay a monthly premium, which varies by plan, and in return, the plan typically covers a percentage of your prescription drug costs. Plan costs may include a monthly premium, deductible, coinsurance, and copayments.
Read more by David Luna
I am a Spanish-speaking Arizona Life and Health Insurance Licensed Agent and have been helping people with Medicare since 2005. I am a Marine Corps Veteran & former police officer. I enjoy watching football and basketball but hold family time in the highest regard.
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