A Guide to Medicare Part D
Understanding Medicare Part D plans and prescription drug coverage
Understanding Medicare Part D plans and prescription drug coverage
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Did you know that roughly 90 percent of people over the age of 65 take one or more prescription medications? If you fall in this majority, you may want to consider a Medicare Part D prescription drug plan. Many adults enroll in a Part D plan to help cover the costs of the prescriptions they need. Keep reading to learn more about what drugs may be covered, where and how you can enroll, the Part D coverage phases, and costs.
Medicare Part D is prescription drug coverage that helps cover the cost of your medications. These prescription drug plans are offered by private companies, and they can be purchased as stand-alone plans or included in a Medicare Advantage plan.
Even if you do not currently take prescription drugs, considering Medicare Part D can prove to be helpful down the line. If you decide not to get Medicare Part D when you’re first eligible and decide to sign up at a later time, you may have to pay a late enrollment penalty.
Pro Tip: Visit our list of SeniorLiving.org's Part D plan recommendations to learn more about the industry’s top providers.
Medicare Part D covers a wide range of generic and name-brand drugs. Each plan has its own formulary (list of covered drugs), so make sure the plan you choose covers any specific medications you need.
All plans rank drugs in four tiers which are based on their formularies and are divided in different ways:
Because plans rank drugs in four tiers based on their formulary, the price also varies. Drugs in low tiers, for example, will usually be cheaper than those in high tiers.
When it comes to cost, each plan varies in terms of deductibles, premiums, and the percentage of coverage. Many plans, however, require you to pay only their Part D premium.
Pro Tip: For more information regarding Part D pricing, Medicare’s website is the perfect reference.
If a drug you take isn’t included in your plan’s formulary, a similar one should be available. In other cases, if the drug you take isn’t listed in your plan’s formulary, you or your prescriber can submit a request to make an exception. Regardless, it’s important to keep in mind that a provider can make changes to its Part D plans at any time, adhering to Medicare guidelines. Your plan can also change its formulary due to drug therapy alterations, new drug releases, or new medical information.
Here are a few additional things to consider about formularies:
Pro Tip: If you’re enrolling in Medicare or Medicaid for the first time, check out our comprehensive Medicare enrollment guide.
By law, certain drugs are excluded under Part D. They are:
According to Medicare,2 many drug plans have a monthly premium, but the price varies by plan and other elements such as:
You may be expected to pay your monthly Part B premium on top of this. If you take insulin, you may be able to find a drug plan that covers a good portion. If so, you won’t have to pay over $35, and you may not pay a deductible. As mentioned previously, if you don’t sign up for Part D when eligible, there’s a chance you will be subject to a Part D late enrollment penalty.
Pro Tip: Check out Medicare.gov’s tool to see how much a Part D plan costs near you.
You may also have to pay more if:
If the plan you choose has a monthly premium, then you may be able to get it deducted from your monthly Social Security or Railroad Retirement Board (RRB) payment.
Medicare Part D has four coverage phases that impact your drug coverage and costs:
Tool Tip: If you have Extra Help, you do not have a coverage gap, which means you will pay different drug costs during the year.
Part D coverage is optional, but it’s automatically offered with Original Medicare. You can receive it via Medicare Cost Plans, private fee-for-service plans, and Medical Savings Account plans, but you’re required to have Medicare Part A or Part B to join a separate Part D plan. You also need to be a U.S. citizen or lawfully present in the U.S.
You can receive Part D coverage two ways: via Medicare Advantage plans or a stand-alone Part D plan. It’s important to know there are different enrollment periods, as well as different ways to enroll. When registering for the first time, you’ll have to do so either during your initial enrollment period, open enrollment period, or a special enrollment period. You can enroll a few different ways, such as:
If you don’t enroll in a Medicare Part D plan during an enrollment period and then decide to enroll at another time, you may face late enrollment penalties. To avoid this, enroll in Part D as soon as you're eligible. If you wait, you could pay a 1 percent Part D late-enrollment penalty every month.
Pro Tip: The Part D late-enrollment penalty is determined via the national base beneficiary premium. Your calculated penalty won’t decrease if you enroll in a Part D plan that has a lower premium.
Part D won't cover all prescription drugs, but there are other ways you may be able to save.
KFF. (2019). Data Note: Prescription Drugs and Older Adults.
Medicare.gov. (2023). Costs for Medicare drug coverage.