Two ways to get Part D
- A stand-alone Prescription Drug Plan (PDP) that adds drug coverage to Original Medicare (and works with Medigap or other Medicare cost plans).
- A Medicare Advantage plan with drug coverage (MA-PD) that includes Part D in a single plan.
Both are offered by private companies approved by Medicare. Each plan has its own list of covered drugs (a formulary), pharmacy network and costs.
Key Part D numbers
Once your out-of-pocket spending on covered drugs reaches the yearly cap, you pay nothing more for covered Part D drugs for the rest of the calendar year. Plans may set a lower deductible, or none at all.
How a Part D year works
Deductible
If your plan has one, you pay the full negotiated price for drugs until you meet it.
Initial coverage
You pay a copay or coinsurance for each prescription; the plan pays the rest.
Catastrophic
After you hit the yearly out-of-pocket cap, you pay $0 for covered drugs.
Understanding formularies and tiers
Plans group covered drugs into tiers. Lower tiers (often generics) cost less; higher tiers (brand-name and specialty drugs) cost more. Plans may also use prior authorization, step therapy or quantity limits. Formularies can change, so it's important to check your exact medications and dosages every year during Open Enrollment.
Spread costs with the Medicare Prescription Payment Plan
Anyone with Part D can choose to pay their out-of-pocket drug costs in monthly amounts over the calendar year instead of all at once at the pharmacy. It doesn't lower your total costs, but it can make large bills more manageable. Contact your plan to opt in.
Extra Help (Low-Income Subsidy)
Extra Help is a Medicare program that helps people with limited income and resources pay Part D premiums, deductibles and copays. If you have Medicaid, a Medicare Savings Program or Supplemental Security Income (SSI), you automatically qualify. Others can apply through Social Security.
If you go 63 or more days in a row without Part D or other creditable drug coverage after your Initial Enrollment Period ends, you may owe a penalty added to your Part D premium for as long as you have drug coverage. It equals 1% of the national base beneficiary premium for each full month you went without coverage.
Frequently asked
Can I switch Part D plans every year?
Yes. During Open Enrollment (October 15 – December 7) you can switch Part D plans, with changes effective January 1.
Do I need Part D if I take no medications?
You aren't required to enroll, but if you don't have other creditable coverage, you may face a late-enrollment penalty if you join later. A low-premium plan can be a hedge.
Does it matter which pharmacy I use?
Yes. Preferred network pharmacies often have lower copays. Mail-order options may lower costs for maintenance drugs.