Summary:Medicare Part D is prescription drug coverage. You can enroll in stand-alone Medicare prescription drug plan or a Medicare Advantage prescription drug plan. Both are available from Medicare-approved private insurance companies.
Medicare Part D coverage is optional, but if you don’t enroll in Medicare Part D as soon as you’re eligible, you might pay a late-enrollment penalty if you enroll later.
Your monthly plan premium and out-of-pocket expenses for prescription drugs will vary from plan to plan.
Tip: Review your Medicare Prescription Drug Plan coverage every year to see if your plan covers the medications you need now and may need in the upcoming year.
Every Medicare prescription drug plan has a formulary — that is, a list of covered drugs. The formularies vary among plans.
Be aware that your plan may change its formulary. You may want to review the Annual Notice of Change that the plan sends you every fall to make sure it will still cover your prescription medications in the coming year.
What else should you know about Medicare Part D prescription drug plans?
No matter what type of Medicare prescription drug plan you have, here are some things to keep in mind.
- Costs before you’ve met your deductible: If the plan has an annual deductible, you generally pay the full amount of your prescription drug costs until the deductible is met.
- Costs in the initial coverage phase: After you meet the annual deductible, you will pay a share of the costs according to the terms of your plan. Your share, which you typically pay to the pharmacy at the time of pickup, could be a flat amount (copayment) or a percentage of the total amount (coinsurance).
- Costs in the coverage gap: If you and your plan spend a combined $4,430 in 2022 (an amount called the initial coverage limit), you’ll enter a different Medicare Part D coverage phase. During this phase, you’ll pay no more than 25% of the cost for each covered prescription. The initial coverage limit may change from year to year.
- Costs in catastrophic coverage: Once you have paid a certain annual maximum amount out of your own pocket for covered prescription drugs, you automatically get “catastrophic coverage.” This means for the rest of that particular year, you would only pay a small copayment or coinsurance amount for prescription drugs. Medicare Part D catastrophic coverage begins when you’ve spent $7,050 in 2022. This amount may change from year to year.
Be sure to talk to your doctor to see if you are taking the lowest cost medications available to you. Specific coverage may vary from plan to plan, so read your documentation carefully.
Who’s eligible for a Medicare Part D prescription drug plan?
Any beneficiary who is eligible for Original Medicare, Part A and/or Part B can sign-up for a stand-alone Medicare Part D prescription drug plan. If you’d prefer a Medicare Advantage prescription drug plan, you need to have both Part A and Part B.
In either case, you must live within the plan’s service area.