Prescription Drug Plans (Part D)

RX Drugs

Medicare prescription drug coverage is an optional benefit. Medicare offers prescription drug coverage to everyone with Medicare. If you decide not to get Medicare drug coverage when you’re first eligible, you’ll likely pay a late enrollment penalty if you join later, unless one of these applies:

• You have other credible prescription drug coverage
• You get extra help through the state

Generally, you’ll pay this penalty for as long as you have Medicare prescription drug coverage.

To get Medicare drug coverage, you must join a plan approved by Medicare that offers Medicare drug coverage. Each plan can vary in cost and drugs covered.

Medicare Part D

Medicare Part D has distinct coverage phases that determine how much you pay for your medications throughout the year.

• Deductible Phase:

  • Some Part D plans have a yearly deductible. This is the amount you must pay out-of-pocket for your prescriptions before your Medicare Prescription Drug Plan begins to pay its share.
  • Not all plans have a deductible, and for plans that do, not all drugs may be subject to the deductible.
  • No Medicare drug plan may have a deductible more than $615 in 2026.

• Initial Coverage Phase:

  • After meeting the deductible (if your plan has one), you enter this phase.
  • During this phase, you pay a copayment (a fixed amount) or coinsurance (a percentage of the drug’s cost) for each covered drug.
  • Your plan pays the rest of the cost.
  • You remain in this phase until your total drug costs (what both you and the plan have paid) reach a certain amount for the year.
  • After you reach your full deductible (if your plan has a deductible), you’ll pay 25% of the cost as coinsurance for your generic and brand-name drugs until your out-of-pocket spending on covered Part D drugs reaches $2,000 in 2026 (including certain payments made on your behalf, like through the Extra Help program). Then, you’ll automatically get “catastrophic coverage.

• Catastrophic Coverage Phase:

  • After you’ve spent a certain out-of-pocket amount on drugs for the year, you enter the catastrophic coverage phase.
  • In this phase, You won’t have to pay out-of-pocket for covered Part D drugs for the rest of the calendar year.

Every year, the exact dollar amounts associated with these phases may change. It’s essential for Medicare beneficiaries to review their Part D plan materials each year and be aware of any changes to understand their potential costs.

Key details about Medicare Part D:

• Coverage: Medicare Part D provides coverage for prescription drugs. Each Part D plan has a specific list of covered drugs, called a formulary. The formulary may be divided into tiers, and drugs in each tier have a different cost.
• Private Plans: Part D plans are offered by private insurance companies that are approved by Medicare. You can get Part D coverage through a stand-alone Prescription Drug Plan (PDP) or as part of a Medicare Advantage Plan that includes drug coverage (MA-PD).
• Enrollment: Enrollment is not automatic. Beneficiaries need to choose and enroll in a Part D plan unless they have equivalent drug coverage from another source (like a current or former employer).
• Costs: Beneficiaries usually pay a monthly premium for the Part D plan. Costs for Part D plans can vary based on the drugs used, the plan chosen, the pharmacy used, and the beneficiary’s income. Some people may qualify for Extra Help, a program to help pay for Part D costs based on financial need.
• Late Enrollment Penalty: If a beneficiary doesn’t sign up for Part D when they’re first eligible and they don’t have other creditable prescription drug coverage, they may have to pay a late enrollment penalty for as long as they have Part D.
• Annual Election Period: Similar to Medicare Advantage plans, there’s an annual election period (often referred to as “open enrollment”) during which beneficiaries can join, switch, or drop a Medicare drug plan.
• Medication Therapy Management Program: If beneficiaries have multiple chronic conditions, take multiple Part D drugs, and meet certain other criteria, they might be automatically enrolled in a free Medication Therapy Management (MTM) program. This program helps beneficiaries and their doctors make sure the medications are working as intended and are safe.
• Protection Against High Out-of-Pocket Costs: After beneficiaries reach a yearly out-of-pocket limit, they enter a phase called “catastrophic coverage,” where You won’t have to pay out-of-pocket for covered Part D drugs for the rest of the calendar year.

When considering a Medicare Part D plan, it’s important for beneficiaries to review the plan’s formulary to ensure that their medications are covered and to understand the associated costs.

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