What is Medicare Part D?

Medicare Part D is a prescription drug benefit that you can add to your Medicare coverage. Medicare Part D helps cover the cost of most outpatient prescription drugs, including many recommended vaccines and shots.

Part D is entirely voluntary, you can choose to enroll in Part D Coverage at the time of initial Medicare enrollment. You can also enroll at a later enrollment period, although there is a late enrollment penalty in that case.

These plans are private plans that are approved by Medicare. Part D plans may be standalone plans to supplement your original Medicare, or may come as part of a Medicare Advantage plan.

How Much is Medicare Part D?

The cost of your Part D plan can vary. Your Part D plan will require some payment from you throughout the year. You will want to compare costs of each of these requirements between plans. Some of the costs to pay attention to include:

• Your monthly premium. Average estimated premium in 2024 was $55.50.
• Your yearly deductible. Annual maximum deductible in 2024 was $545.
• Copayments or coinsurance. These are either a fixed cost (copayment) or a fixed percentage (coinsurance) that you will pay for services. Copays usually hover around $40, and coinsurance  can range from 16% all the way up to 50%, depending on preferred vs non-preferred brands, or if the drugs are considered “specialty-tier.”
• Costs if you get Extra Help. Extra help can reduce the amount you pay on your premium and deductible if you are a low-income individual or family.
• Costs if you pay a late enrollment penalty. These costs can vary depending on how late you enroll. If you have Extra Help, you do not have to pay a late-enrollment penalty.

Your actual drug coverage costs will also vary, depending on:

• Which prescriptions you fill, and whether they’re on your plan’s list of covered drugs (also known as your formulary).
• What “tier” the drug is in. Plans tend to have 4 tiers, and a specialty tier. Some plans may also have a sixth tier. The lower the tier, the lower the costs, typically.
• Which benefit phase of your plan you’re in (like whether you’ve met your deductible, or reached your out-of-pocket limit).
• Which pharmacy you use (in-network vs out of network, for example). Your out-of-pocket drug costs may be less at a preferred pharmacy because it has agreed with your plan to charge less.
• Whether you get Extra Help, which will also reduce the costs of some medications.

What does Medicare Part D Cover?

All Medicare drug plans must cover a wide range of prescription drugs that people with Medicare take. This includes most drugs in certain protected classes, like drugs to treat cancer, HIV/AIDS, or depression. A plan’s list of covered drugs is called a “formulary,” and each plan has its own formulary.

Medicare drug coverage typically places drugs into different tiers on their formularies. Drugs in each tier have a different cost.

The Formulary will include both brand-name prescription drugs and generic drug coverage. The plans can choose which drugs to cover, although they must include at least 2 drugs in the most commonly prescribed categories and classes. This helps make sure that people with different medical conditions can get the prescription drugs they need.

A plans formulary might not include your specific drug. When choosing between different plans, you can check to see if a drug is on the formulary. In most cases, however, a similar drug should be available even if yours is not. If you, or the one who wrote your prescription, believes none of the drugs on your plan’s formulary will work for your condition, you can ask for an exception.

Your plan may change its drug list during the year. This is allowed because drug therapies change, new drugs are released, or new medical information becomes available. However, all plans must change the lists following the guidelines set by Medicare.

How do I get Medicare Part D?

There are 2 ways to get Medicare Part D:

1. You can add a standalone prescription drug plan with Medicare. If you have Original Medicare Part A and Part B, you may add a Part D prescription drug plan to your existing coverage.
2. You can enroll in a Medicare Advantage plan. Medicare Advantage plans usually bundle your Part A and Part B coverage with additional benefits. These benefits may include your Part D prescription drug insurance. Though many do, not all Medicare Advantage plans include prescription drug coverage. Ensure your coverage before you enroll in a Medicare Advantage plan.  You must already have Part A and Part B to qualify for Medicare Advantage.

As with everything, there are specific times during which you can enroll in Part D. You may do so during the Initial Enrollment Period, when you first become eligible for Medicare. There are also Special Enrollment Periods, which you are eligible for at certain events. Such events include retiring and lose employer drug coverage, or if you move out of one Part D plan’s service area to another area. Doing so during initial or special enrollment will ensure you are not penalized for late enrollment.

Then there is the Annual Open Enrollment Period, which takes place each year from Oct. 15-Dec. 7. During this time, people with Medicare can join, leave, or switch Part D and/or Medicare Advantage plans.

Which Part D Plan is right for me?

The best way to start picking a plan is to look at your priorities. Some ways you can determine the right plan for you is by looking at the following:

• Do you take specific drugs? If so, find a plan that has your prescription on their formulary. Make sure it’s covered.
• Do you instead take a lot of generic prescriptions? If so, look for a plan with tiers, that have small, or no, payments on generic prescriptions.
• Do you want your expenses balanced throughout the year? If so, check plans with a small, or no, deductible. You can also consider a Medicare Prescription Payment Plan.
• Do you have low drug costs, or just want peace of mind? If so, consider plans with little, or no, premiums.
• Do you want all benefits in one plan, with extra benefits and lower costs, and don’t mind a network of providers? If so, shop Medicare Advantage plans that include Part D coverage.

Once you determine which is important to you, you can compare costs between plans that cover your needs.

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