Medicare Part D Prescription Drug Coverage
What is Medicare Part D?
Part D is Medicare’s prescription drug benefit. This is an optional federal program that subsidizes the cost of prescription drugs, and can save beneficiaries thousands on the cost of recurring medications.
With a Part D plan, Medicare beneficiaries can pay monthly premiums in exchange for their recurring monthly prescriptions. The benefits are administered by private insurance companies, and then reimbursed by Centers for Medicare and Medicaid Services (CMS).
Part D plans only cover generic and name-brand prescriptions. No other benefits are provided with a Part D plan.
Reviewed by Lou Spatafore
Fact checked by Leslie Jablonski
Which drugs are covered under Medicare Part D?
The specific list of prescription drugs covered by your Part D plan (known as the formulary) will vary depending on both the provider and plan options. However, all plan formularies are required to include at least two chemically distinct drugs in each of these six pharmacological categories:
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- Antidepressants
- Antipsychotics
- Anticonvulsants
- Immunosuppressants (for treatment or prevention of transplant rejection)
- Antiretrovirals
- Antineoplastics (except in limited circumstances)
Additionally, except for a few doctor-administered vaccines covered under Medicare Part B, Part D plans must include all medically necessary vaccinations needed to prevent disease.
Part D plans can and do include other drugs over and above the minimum required in each category. But every Part D plan is different.
Formularies typically don’t include all possible drugs within any one category. So your specific prescribed drug may not be on your plan’s formulary. Usually, however, the plan will include a clinically effective alternative.
If you or your physician or other prescriber believes that none of the plan’s covered drugs will be effective for you, you can apply for an exception.
NEW INSULIN BENEFIT: Covered insulin products are now capped at $35 for a one month supply. You do not have to cover a deductible to get this benefit.
If you choose a 60- or 90-day insulin supply, the cost cannot exceed the equivalent of $35 per month.
Questions? Your MediGap Advisors Personal Benefits Manager can help you find a plan that includes the drugs you need. You can join or switch a Medicare Part D plan during the Fall Enrollment Period, which runs from October 7th through December 15th every year.
Make an appointment with a Personal Benefits Manager.
New in 2025! The Medicare Prescription Payment Plan
Starting in 2025, you have the option to spread your out-of-pocket prescription drug costs over the course of the plan year rather than all up front to the pharmacy. You can pay nothing to the pharmacy, and your Part D plan will bill you for the monthly payments.
How do I enroll in Medicare Part D?
There are two options for obtaining a Medicare Part D plan:
- PDP only: This option is for a stand-alone Part D plan (PDP) designed to work in conjunction with your original Medicare.
- Medicare Advantage (MA): Switching to a Medicare Advantage plan can get you all the drug coverage of Part D, in addition to coverage for medical services. These supplemental plans are designed to cover the things that Original Medicare does not.
Medicare Advantage plans are available through a number of different companies and include numerous plan options.
Don’t go it alone: Work with one of our expert MediGap Advisors Personal Benefits Managers for free personalized help in finding and enrolling in the plan that best meets your individual needs.
It costs nothing extra. And we can save you hours of research into individual plan formularies and other documents.
How much does Medicare Part D cost?
Like other healthcare plans, the cost of Part D premiums, deductibles, and copayments can change from year to year. In addition, your premium will vary depending on which plan you choose, your location, and your income.
For some low-income Medicare enrollees, the Extra Help program can provide a subsidy that pays for a portion of your Part D premium. Find out if you qualify for Extra Help.
Part D cost breakdown: 2024
Average monthly premium
- Standard – $55.50
- with Partial Extra Help – $10 – $30
- with Full Extra Help – $0
Annual deductible limit
- Standard – $545
- with Partial Extra Help – $92
- with Full Extra Help – $0
Copay (after deductible)
- Standard – $25
- with Partial Extra Help – 15%
- with Full Extra Help – $4.15 generic / $10.35 name brand
Initial coverage limit
- Standard – $5030
- with Partial Extra Help – $5030
- with Full Extra Help – $5030
Out-of-pocket threshold
- Standard – $8000
- with Partial Extra Help – $8000
- with Full Extra Help – $8000
Copay (after OOP threshold)
- Standard – $4.15 generic / $10.35 name brand
- with Partial Extra Help – $4.15 generic / $10.35 name brand
- with Full Extra Help – $0
| Standard | with Partial Extra Help | with Full Extra Help | |
|---|---|---|---|
| Average monthly premium | $55.50 | $10 - $30 | $0 |
| Annual deductible limit | $545 | $92 | $0 |
| Copay (after deductible) | $25 | 15% | $4.15 generic / $10.35 name brand |
| Initial coverage limit | $5030 | $5030 | $5030 |
| Out-of-pocket threshold | $8000 | $8000 | $8000 |
| Copay (after OOP threshold) | $4.15 generic / $10.35 name brand | $4.15 generic / $10.35 name brand | $0 |
Medicare Part D 2024 cost:
Average monthly premium
For 2025, the average cost of a PDP premium is expected to be around $46.50 per month.
It is possible that your own premium could be significantly lower depending on which plan options you choose.
Annual deductible
The average annual deductible for Part D Plans in 2025 will be $466. The maximum deductible allowed by law in 2025 is capped at $590 – up from $545 in 2024.
The Extra Help Program
Additionally, you’ll pay reduced copays as follows:
- Up to $4.90 for each generic drug
- Up to $12.15 for each brand-name drug
You can find the Extra Help eligibility criteria here.
Costs During The Initial Coverage Phase
After you meet your Part D deductible, you’ll enter the Initial Coverage Phase of your prescription drug plan.
For 2025, you’ll pay 25% coinsurance for covered Part D drugs. This phase ends when the enrollee has reached the annual OOP threshold of $2,000 for CY 2025.
Costs During The Catastrophic Phase
In 2025, once you have incurred $2,000 in out-of-pocket costs for covered drugs (including coinsurance and copays, but not including premiums), you will enter the your Part D plan’s Catastrophic Phase.
Your coinsurance/copay costs will fall to zero, and you will have no further out-of-pocket charges for the rest of your plan year.
Out-of-Pocket Threshold
The Part D out-of-pocket threshold for 2025 is $2,000.
When you reach this threshold, you enter the catastrophic phase of coverage. This reduces your further medication costs to zero for the rest of the plan year.
This is a substantial reduction from the 2024 out-of-pocket threshold of $8,000.
In future years, the new, lower out-of-pocket threshold is expected to be adjusted annually along with inflation.
Paying your Medicare Part D monthly premiums
When paying the monthly premium, you have the option to have the payment automatically deducted from your Social Security check.
The insurance company you choose can arrange this payment method. You can also choose to have the premiums automatically deducted from a checking account, or pay through the mail.
When to Sign-up for Medicare Part D Coverage – Enrollment Periods
You can enroll for Part D Prescription Drug Coverage when you become eligible at age 65, or during the open enrollment period.
1. Annual Enrollment Election Period
The Annual Enrollment Election Period runs from October 15 through December 7 of every year. During this time, you may enroll in or change Medicare Prescription Drug Plans under the following qualifications:
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- You are entitled to Medicare Part A or are enrolled in Part B.
- Your permanent residence is within the United States. You must continue to pay your Medicare Part B Premium, if not otherwise paid for under Medicaid or by another third party.
- You are not enrolled or do not plan to stay enrolled in another Medicare Prescription Drug Plan.
- You may enroll in only one Medicare Prescription Drug Plan at a time and may not be enrolled in a Medicare Advantage Plan at the same time. If you choose a Medicare Advantage Plan, your prescription drug coverage is included.
If you currently have a Medicare Supplement plan, you can also switch to a different plan during the Annual Enrollment Election Period
2. Initial Enrollment Period
The Initial Enrollment Period is a seven-month period that includes the month during which you first become eligible (at age 65 or earlier if you qualify due to a disability or end-stage renal disease) plus the three months before and the three months after the month in which you become eligible.
If you do not enroll during your seven-month Initial Enrollment period, you will have an opportunity to join a prescription drug plan every year from October 15 through December.
However, if you enroll after the Initial Period you will be assessed a late enrollment penalty.
The late penalty is currently 1% of the national average monthly premium for each month you were eligible but were not enrolled in a Medicare Prescription Drug Plan. The penalty will be added to your premium for as long as you are enrolled in Medicare’s prescription drug coverage.
You can delay enrollment in Medicare’s prescription drug coverage without paying a penalty if you have prior creditable coverage on an individual policy or through an employer group policy. Creditable coverage means you have a drug benefit that equals (or is better than) Medicare’s standard prescription drug coverage.
3. Special Enrollment Period
A Special Enrollment Period is available in certain situations, such as if you become disabled or move outside of the service area your plan provides. In these cases, you may enroll in or change Medicare Prescription Drug Plans at any time.
Save Money on Your Prescriptions
Since there is a late-enrollment penalty for delaying the purchase of a PDP, you may benefit from signing up for a Part D plan even if you are not currently on any medications. In this way, you can choose the least expensive plan in order to avoid the penalty, with the option of switching to a more comprehensive plan if your needs change.
Compare Quotes on the Best Rated Medicare Part D Plans
If you are not comfortable with the online quote process, or if you have any other questions, please contact one of our MediGap Personal Benefits Manager at 800-913-3416. You may also e-mail us at [email protected], or schedule a free consultation. Remember that our services are offered to you with zero cost and with no obligation. Our goal at MediGap Advisors is simply to help you understand your Medicare Part D Prescription Drug Plan and help you make informed decisions regarding your coverage.
Where To Go From Here:
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE (TTY users should call 1-877-486-2048) 24 hours a day/7 days a week to get information on all of your options.