What you should know
  1. Medicare Part D is a prescription drug coverage plan offered to Medicare beneficiaries by private insurance companies. Failure to enroll in a Part D plan may result in a late enrollment penalty.
  2. Part D prescription drug plans cover a wide range of prescription drugs from the most commonly prescribed categories for people on Medicare.
  3. You can enroll in Medicare Part D as a standalone prescription drug plan (PDP) or it can be combined with a Medicare Advantage Plan (MA-PD).
  4. There are tools available to help you compare available prescription drug plans, and you have the option to change your plan each year as your needs change

What is a Medicare Part D Prescription Drug Plan?

Medicare Part D is prescription drug coverage that’s available to people on Medicare. Unlike Part A and Part B, Medicare Part D is offered by private companies, either as a standalone prescription drug plan (PDP) or as part of a Medicare Advantage Plan with prescription drug coverage (MA-PD). Medicare drug plans cover most outpatient prescriptions.

What’s covered

Medicare Part D prescription drug plans are regulated by Medicare and must cover:

  • A wide range of prescription drugs are covered that people with Medicare take, including generic options
  • Medication Therapy Management (MTM) programs for complex health needs

Some Medicare Part D prescription drug plans participate in the senior savings model that offers savings on insulin. You could pay no more than $35 for a month’s supply.

Learn how the plan works

Medicare drug plans offered by private companies help pay for your prescription drugs after you meet your annual deductible, if there is one. You are billed a monthly premium for a standalone PDP, and you may have to pay a premium for a MA-PD.

Part D plans have drug lists called formularies, which are typically divided into “tiers” based on the cost of the drug. For instance, generic drugs may be in “tier one” with a zero or low copay. Higher tiers include brand name and speciality drugs and come with higher costs.

There are phases of prescription drug coverage in every drug plan. After you meet your deductible, you pay copays or coinsurance for your prescription drugs until you reach the “coverage gap.” Once you and your plan spend $4,660 combined on drugs (including deductible) in 2023, you’ll owe no more than 25% of the cost for prescription drugs until your out-of-pocket spending reaches the max out of pocket for your plan. You will then enter the catastrophic coverage phase and only pay a small copay or percentage for your drugs for the rest of the year. Plans must also cover two drugs minimum per category.

How the plan works with other insurance

If you have creditable prescription drug coverage through other insurance, such as employer-sponsored group insurance, you may want to defer enrollment in a Medicare Part D plan. To avoid late enrollment penalties, check to make sure your current insurance coverage is creditable. Review Medicare’s site or speak with a licensed insurance broker.

Compare your Part D options

There are two ways to get your Medicare.gov drug coverage. Here are the pros and cons of each:

Advantages of a standalone Part D Plan (PDP)
  • If you don’t require prescription drugs now, you can purchase a low premium plan to avoid late enrollment penalties.
  • You can keep Original Medicare with or without a Medigap plan.
Disadvantages of a standalone Part D Plan (PDP)
  • You owe monthly premiums whether or not you use the Medicare drug coverage plan.
  • You must pay an annual deductible for any prescription drug before your plan pays.
Advantages of a Medicare Advantage Plan with Part D coverage (MA-PD)
  • All of your health and drug services are bundled together in one plan.
  • With the drug coverage part, you likely have access to at least one zero-premium plan in your area.
Disadvantages of a Medicare Advantage Plan with Part D coverage (MA-PD)
  • With Medicare prescription coverage, you may be restricted to a smaller network of pharmacies.
  • Prior authorization requirements may be more stringent, depending on your plan.

Who should get a standalone Medicare Part D Plan (PDP)?

A PDP might be a good fit if you:

  • Want to keep Original Medicare instead of choosing a Medicare Advantage Plan.
  • Can find an option that covers your medications.
  • Can find a plan with your preferred pharmacies.
  • Have access to a low premium offering if you don’t need prescription drugs now.
  • Want a Medicare Advantage PFFS plan without drug coverage.
  • Do not have creditable coverage through other insurance.

Who should get Medicare Advantage with Part D coverage (MA-PD)?

A MA-PD might be a good fit if you:

  • Want to bundle all your health and drug services together.
  • Don’t want to pay a premium for drug coverage and can choose a MA-PD zero-premium plan in your area.
  • Don’t mind using medications that are on your plan’s formulary.
  • Don’t mind using network pharmacies which may be more restrictive than PDPs.
  • Don’t mind following your plan’s rules for getting prescription drugs.
  • Want an HMO or PPO plan. You cannot purchase a PDP if you have an HMO or PPO, even if you don’t have drug coverage with your MA plan.

Who is eligible for a Medicare Part D Plan?

You should plan to enroll in a Medicare prescription drug plan when you’re eligible, which is either when you turn 65 or when your creditable coverage through an employer ends. If you miss the cutoff, you’ll pay a late enrollment penalty that will continue for the entire time you receive Medicare drug coverage, which may be the rest of your life.

You must be eligible for Medicare and enrolled in Original Medicare Part A and/or B to join a standalone Medicare Part D plan. You can search for an available plan in your area on the Medicare website.

If you choose to get your drug coverage benefit through a Medicare Advantage plan, you must be enrolled in Original Medicare Parts A and B. You can search for a MA-PD plan in your area on the Medicare website.

How much does a Medicare Part D Plan cost?

Expect to pay about $33 per month for your standalone Medicare Part D plan. Expect to pay an average plan cost of $19 for your Medicare Advantage Plan that includes health and drug coverage.

In addition to your monthly premium, you’ll make these payments throughout the year in a Medicare drug plan:

  • Yearly deductible. Medicare part plans must have a deductible of no more than $505 in 2023. Some Medicare part drug plans don’t have a deductible.
  • Copayments or coinsurance. This is the amount you pay for covered drugs after you meet your deductible. Copays and coinsurance amounts vary from plan to plan and change depending on which coverage phase you are in.
  • Costs in the coverage gap (“donut hole”). Once you and your plan spend $4,660 combined on drugs (including deductible) in 2022, you’ll pay no more than 25% of the cost for prescription drugs until your out-of-pocket spending is reacjed.
  • Catastrophic coverage. You pay a small copay or coinsurance for drugs the rest of the year.
  • Costs if you get Extra Help. You may qualify for financial assistance to help pay your out-of-pocket costs if you meet income and resource requirements.
  • Costs if you pay a late enrollment penalty. This cost depends on how long you went without creditable drug coverage.

Your actual costs will vary depending on your insurer and these factors:

  • Your prescriptions and whether they’re on your plan’s formulary. Your costs will be lowest if you get preferred generic drugs from preferred pharmacies.
  • What “tier” the drug is in. The lower the “tier,” the lower your cost.
  • Which drug benefit phase you’re in (like whether you’ve met your deductible, or if you’re in the catastrophic coverage phase)
  • If you take insulin and whether your plan participates in the senior savings model.

When you compare costs for plans available in your area, whether they are for standalone Part D plans or Medicare Advantage Plans with drug coverage, you will be able to see premium and deductible costs at a glance. Medicare Part D plans must include coverage for at least two drugs per drug category. Before choosing a plan, check the formulary and tier costs for your drugs. You will be able to get a more accurate cost estimate. 

If you create an account on Medicare.gov, you can input your list of medications and save it. Your drug list can be applied to any plan you view, so you won’t have to input it every time.

For more help comparing plan costs, contact your State Health Insurance Assistance Program (SHIP).

For example, compare these standalone Part D plans available in Denver, CO in 2022 (no prescription drugs have been added. Premium costs may increase if you use your plan):

Plan name Monthly premium Annual deductible Initial Coverage Limit Annual out-of-pocket threshold amount
Wellcare Value Script (PDP)  $5.50 $480 (applies to tiers 3, 4, 5) $4,430 $7,050
SilverScript Smart RX (PDP) $7.60 $480 $4,430 $7,050
Humana Walmart Value Rx Plan (PDP) $22.70 $480 $4,430 $7,050

How do I enroll in a Medicare Part D Plan?

To enroll in a standalone Medicare Part D Plan, you must first be enrolled in Medicare Part A and/or B. You can:

  • Enroll on the Medicare Plan Finder or on the plan’s website.
  • Complete a paper enrollment form.
  • Call the plan.
  • Call 1-800-MEDICARE (1-800-633-4227). TTY: 1-877-486-2048.

Be ready to provide:

  • Your Medicare Number and effective dates for your Part A and/or Part B coverage. This information is on your Medicare card.
  • Information about your other health coverage (if any), including policy and group numbers
  • Dates that any changes take effect, like if you’re moving to a long-term care facility.

To enroll in a Medicare Advantage Plan with drug coverage, you first must be enrolled in Original Medicare Part A and Part B. After you’re enrolled in Original Medicare, you can enroll in a MA-PD plan during your Initial Enrollment Period or during other enrollment periods throughout the year:

  • Initial Enrollment Period (IEP): This seven-month period starts three months before the month of your 65th birthday, the month of your birthday,  and ends three months after your birthday month.
  • Initial Coverage Enrollment Period (ICEP): This is for enrollees  who want to enroll in Medicare part drug coverage and often occurs at the same time as the IEP for Original Medicare.
  • Annual Enrollment Period: This period runs from October 15th through December 7th.
  • Medicare Advantage Open Enrollment: Medicare beneficiaries who already enrolled in a Medicare Advantage Plan can switch plans between January 1st and March 31st.
  • If you are already enrolled in a part drug plan and want to make changes, you can do so during a Special Enrollment Period.

Use the Medicare Plan finder to research available plans in your area. When you’ve chosen a plan, go to the insurer’s website to check for online enrollment options or contact the insurance company by phone or email to request a paper enrollment form. You can also enroll by calling Medicare at 1-800-633-4227.

To enroll, you need your Medicare number and the date your Parts A and B coverage began. Your Medicare card has this information.

Medicare consultant

LeRon Moore has guided Medicare beneficiaries and their families as a Medicare professional since 2007. First as a Medicare provider enrollment specialist and now a Medicare account executive, Moore works directly with Medicare beneficiaries to ensure they understand Medicare and Medicare Advantage Plans.

Moore holds a bachelor’s degree from Southern New Hampshire University and is A+ Certified with a Medical Records Clerk Certification and Medical Terminology Certification from Midlands Technical College.

He’s passionate about educating, informing, and resolving issues concerning Medicare and Medicare Advantage Plans, and considers it imperative that he does all he can to educate and inform the senior community as much as possible about Medicare.