Medicare Part D is the prescription drug coverage program that helps pay for medications. Whether you have Original Medicare or a Medicare Advantage plan, understanding how Part D works can help you save money on your prescriptions.
What is Medicare Part D?
Medicare Part D is optional prescription drug coverage offered through private insurance companies approved by Medicare. You can get Part D coverage in two ways:
- Standalone Part D Plan (PDP): A separate drug plan you add to Original Medicare
- Medicare Advantage Plan with Drug Coverage (MA-PD): A bundled plan that includes Part D
How Part D Coverage Works
Part D plans have different coverage phases throughout the year. Understanding these phases helps you plan for your drug costs:
1. Deductible Phase
You pay the full cost of your drugs until you reach your plan's deductible (maximum $590 in 2026). Some plans have no deductible or waive it for certain drugs.
2. Initial Coverage Phase
After meeting your deductible, you pay a copay or coinsurance for each prescription. Your plan pays the rest until your total drug costs reach $5,030.
3. Coverage Gap (Donut Hole)
Once you reach $5,030 in total drug costs, you enter the coverage gap. In 2026, you pay no more than 25% for brand-name and generic drugs.
4. Catastrophic Coverage
After your out-of-pocket costs reach $8,000, you enter catastrophic coverage. You pay only a small copay or coinsurance for the rest of the year.
Understanding Formularies
Each Part D plan has a formulary - a list of covered drugs organized into tiers:
- Tier 1: Preferred generic drugs (lowest cost)
- Tier 2: Non-preferred generic drugs
- Tier 3: Preferred brand-name drugs
- Tier 4: Non-preferred brand-name drugs
- Tier 5: Specialty drugs (highest cost)
Tips for Choosing a Part D Plan
- Make a complete list of all your current medications
- Use Medicare's Plan Finder to compare plans in your area
- Check which tier your drugs are on in each plan
- Consider total annual costs, not just monthly premiums
- Verify your pharmacy is in the plan's network
- Look for plans that cover your drugs without prior authorization
When to Enroll
You can enroll in a Part D plan during:
- Initial Enrollment Period: 7-month window around your 65th birthday
- Annual Open Enrollment: October 15 - December 7 each year
- Special Enrollment Periods: After qualifying life events
Need Help Finding a Part D Plan?
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