Medicare Part D – Prescription Drugs

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Medicare Drug Plan (Part D) covers prescription drugs and some vaccines.

Medicare drug plans are purchased when you elect to use Original Medicare, Not Medicare Advantage.

You will want to sign up for Medicare Part D (prescription drug coverage) during the Initial Enrollment Period, if applicable, to avoid late enrollment penalties. Generally, the Initial Enrollment Period lasts for 7 months, starting 3 months before you turn 65, and ending 3 months after the month you turn 65. You will need to first sign up for Medicare Part A and Part B.

Each year, you can make changes to your Medicare prescription drug coverage for the following year during the “Open enrollment period”, October 15 – December 7.

There is a premium for Medicare Part D (Prescription Drug Plans).

Prescription drug plans are purchased separately from a private company/insurer that is approved by Medicare.

Beginning in 2025, the Inflation Reduction Act drug law, requires all Medicare prescription drug plans (Part D) — including both standalone Medicare prescription drug plans and Medicare Advantage plans with prescription drug coverage — to offer enrollees the Medicare Prescription Payment Plan option to pay out-of-pocket prescription drug costs in the form of capped monthly installment payments instead of all at once at the pharmacy.

You can use the Medicare site to Find a Medicare Prescription Drug Plan in your area. You do not have to have an account. You can select the option for “Continue without logging in” and enter your zip code. Make sure you specify the correct year.

You will be prompted to select what types of Medicare coverage you want to review or you can select the “What type of plan should I choose?” link to review a brief description of Medicare Advantage (Part C), Medicare Drug Plan (Part D), or Medigap Policy”.

At this time, make sure you select Medicare Drug Plan (Part D) to review plans in your zip code, then, you’ll answer a few more questions. You can answer the questions different ways and search multiple times.

You can elect to enter your current drugs or not. Before you actually select a plan, you should definitely do this step with your drugs entered so you know how much your drugs will cost.

You’ll then see a list of available Medicare Prescription Drug plans in your area. You can click on the Plan Details link to drill down to see more details about the plan, which will then include a link directly to the plan providers web site for even more information.

You will want to add a Pharmacy (or Pharmacies) to see which pharmacy the plan covers.

If you add your current drugs and add a Pharmacy, you will be able to see the costs for premiums and drugs in each plan by looking at the Plan Details of each plan one at a time. There is a compare option but you don’t see the complete information using that option. When you look at the Plan Details you will want to drill down again to scroll through the coverage to ensure your drug(s) are covered. In addition, select the +View more drug coverage link to see cost by drug tier and to ensure your drug is covered.

Each Medicare drug plan has its own list of covered drugs (called a formulary). Many Medicare drug plans place drugs into different “tiers” on their formularies. Drugs in each tier have a different cost.

A drug in a lower tier will generally cost you less than a drug in a higher tier. Your prescriber may think you need a drug that’s on a higher tier. If so, you or your prescriber can sometimes ask your plan for an exception to get a lower copayment.

You may have: to get prior authorization, quantity limits, step therapy

Vaccine coverage
Except for vaccines covered under Medicare Part B (Medical Insurance), Medicare drug plans must cover all commercially available vaccines (like the shingles vaccine) when medically necessary to prevent illness.

Your costs in Medicare – Part D (Prescription Drug Plans)

You will pay a monthly premium,
yearly deductible (No Medicare drug plan may have a deductible more than $590 in 2025 ($545 in 2024, $505 in 2023, $480 in 2022). Some Medicare drug plans don’t have a deductible.),
copayments and/or coinsurance,
cost in the coverage gap (see coverage gap details below),
costs if you get Extra Help (for those with limited income),
cost if you pay a late enrollment penalty.

Extra Help is a Medicare program to help people with limited income and resources pay Medicare prescription drug program costs, like premiums, deductible, and coinsurance.

Optionally, a person can elect to choose Medicare Advantage (Part C).
Medicare Advantage (Part C) is a type of Medicare health plan offered by a private company that contracts with Medicare.
Private insurer Medicare Advantage Plans provide all of your Part A and Part B benefits. You will not get benefits through Original Medicare. You must first enroll in Original Medicare — both Part A and Part B to get a Medicare Advantage Plan.
Most Medicare Advantage Plans include prescription coverage (Medicare Part D).

Medicare Advantage (Part C) may be less expensive than separately obtaining benefits from Medicare Plan A, Plan B, Plan D, and Medigap. However, there may be limitations on coverage areas and provider (doctors, hospitals, etc.) selection.

Most Medicare prescription drug plans had a coverage gap (also called the “donut hole”).

Because of the Inflation Reduction Act, in 2025, the coverage gap ends on December 31, 2024.

New for 2025: $2,000 cap on covered Part D drugs. Note, this is for “covered” drugs. If you are paying out-of-pocket for some drugs that are not covered that cost is not included in the $2,000 cap.

Starting in 2025, all Medicare plans will include a $2,000 cap on what you pay out-of-pocket for prescription drugs covered by your plan. If your out-of-pocket spending on covered drugs reaches $2,000 (including certain payments made on your behalf, like through the Extra Help program), you’ll automatically get “catastrophic coverage.” That means you won’t have to pay out-of-pocket for covered Part D drugs for the rest of the calendar year. If you have a Medicare plan with drug coverage, compare plans during Medicare Open Enrollment (October 15 – December 7) to make sure your plan covers the drugs you take and meets your needs.

Pre-2025 Coverage Gap –

Coverage Gap means there’s a temporary limit on what the drug plan will cover for drugs. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs ($5,030 in 2024, $4,660 in 2023, $4,430 in 2022, $4,130 in 2021, $4,020 for 2020, $3,820 for 2019, $3,750 for 2018). The period in which your prescription drug costs have exceeded the initial coverage limit of your plan.

Once you’ve reached this coverage gap (donut hole) period, you are responsible for covering the full cost of your drugs.

Thanks to the Affordable Care Act, the coverage gap is shrinking. The coverage gap does not close entirely but it shrinks to where beneficiaries will pay no more than 25% out of their pocket in 2020/2021 and later for generic drugs instead of 44% as in 2018 or 37% in 2019. Beneficiary out of pocket costs for brand name drugs drops to 25% in 2019 (one year earlier than generic drugs) instead of 35% in 2018.

If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan’s coverage has been applied to the drug’s price.

When the total cost of your prescription drugs reaches your yearly out-of-pocket spending limit ($8,000 in 2024, $7,400 in 2023, $7,050 in 2022, $6,550 in 2021, $6,350 in 2020, $5,100 in 2019, $5,000 in 2018), you will get out of the coverage gap.

Once you get out of the coverage gap (Medicare prescription drug coverage), you automatically get “catastrophic coverage.”

Catastrophic coverage assures you only pay a small coinsurance (percentage) amount or co-payment (set amount) for covered drugs for the rest of the year.

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