Prescription Drug Plans

The basics of Medicare Part D. Medicare Part D prescription drug plans help to make prescription drugs more affordable.

Medicare Part D | Prescription Drug Plans

Medicare Part D plans provide coverage for prescription medication. Enrolling in a Medicare Prescription Drug plan can help make your prescribed medications costs more affordable. Part D coverage is only available through a standalone Prescription Drug plan or a Medicare Advantage plan with Part D included. This means that if you are currently only enrolled in Original Medicare, or Original Medicare plus a Medigap plan, you will not get help paying for your prescription medication and you will be responsible for covering the cost of your prescribed drugs.

How do Medicare Prescription Drug Plans work?

Part D Plans help reduce your out-of-pocket costs for prescription drugs. Prescription drugs are often expensive, with Part D coverage your insurance will be responsible for paying part of the costs helping make medication more affordable. Each Medicare Prescription Drug Plan has a Drug Formulary that divides covered drugs into tier levels. Each tier level has a set copay, with the copay amount increasing as the tier level increases. The drug formulary can vary by plan, which means that it is very important to compare the formulary for each of the plans in your area to ensure that you choose a plan that covers your prescribed drugs and offers affordable copays.

What do Medicare Prescription Drug plans cover?

Compare Medicare Prescription Drug Plans with a licensed sales agent to find the coverage that’s best for you:

Medicare Prescription Drug Plans help cover the cost of prescribed medication. However, it’s important to note that not all drugs are covered and coverage can vary by plan. Comparing multiple plans is a great way to find the coverage that best fits your healthcare needs.

KEY FACT:

If your prescribed drug is not in the plan’s formulary you may have to cover the full cost of the drug. You could also try an alternative drug or request a formulary exception from the plan.

Why choose a Medicare Prescription Drug Plan?

Medicare Part D is an important part of your Medicare coverage. Whether you choose to get Prescription Drug coverage as part of a Medicare Advantage plan or through a stand-alone Part D plan, making sure you have insurance to cover medication is strongly recommended. For those who choose to stay on Original Medicare, a stand-alone Part D plan is the only way to get Medicare prescription drug coverage. If you do not have a Part D plan you will be responsible for the full cost of your prescriptions. The retail cost of prescribed drugs is often very high and may be unaffordable; having Prescription Drug coverage in place helps ensure you can afford medication when you need it.

Who’s eligible for a Medicare Prescription Drug Plan?

To enroll in a Part D plan you must be enrolled in either Part A or Part B of Original Medicare. To qualify for Original Medicare you must be 65 or over (and meet the residence requirements) or have been on Social Security Disability Income (SSDI) for at least 24 months. There are also exceptions for people who have been diagnosed with ERSD (End-Stage Renal Disease) or ALS (Amyotrophic Lateral Sclerosis).

ESRD Exception – You are eligible for Medicare no matter how old you are if you meet all of the following criteria:

  • Your kidneys are no longer functioning
  • You need regular dialysis treatments or have had a kidney transplant
  • One of the following applies to you:
    • You have worked the required amount of time under Social Security, the Railroad Retirement Board, or as a government employee
    • You are eligible for or already received Social Security or Railroad Retirement benefits
    • You are the spouse or the dependent child of a person who meets either of the requirements listed
    • For more information please see Medicare.gov regarding End-Stage Renal Disease

ALS Exception – The 24-month waiting period is waived for Medicare coverage for disabled individuals medically determined to have Amyotrophic Lateral Sclerosis (ALS), better known as Lou Gehrig’s disease. The date of Medicare entitlement is based on the date of a diagnosis of ALS, or July 1, 2001, whichever is later. This provision affects both new and current beneficiaries.

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How much will Part D Expenses cost me?

The costs associated with Medicare Part D can be broken down into the following categories:

MONTHLY PREMIUM

You’ll pay a premium each month for your Medicare Part D coverage. The premium cost varies by plan, so it’s important to compare your options to find the right fit for your needs.

DEDUCTIBLE

You will be responsible for paying all drug costs until you reach your plan’s deductible. After this, you’ll pay the copay/coinsurance outlined by the plan. Plan deductibles vary from $0 – $505.

CO PAYMENTS

Once you’ve hit your plan’s deductible, you’ll pay a copay for each prescription. Copay amounts vary from plan to plan. It is important to compare your options to meet your financial needs.

Donut Hole Expenses

Most Medicare Part D plans currently have a coverage gap known as the donut hole; this is the coverage gap between the Initial Coverage Limit and the Catastrophic Benefit Period. This means there is a temporary limit on what the drug plan will cover. The coverage gap begins after you and your drug plan have spent $5030 on covered drugs in 2024. This amount may change each year.

Donut Hole Changes for 2025

Starting in 2025, Part D out-of pocket cost will be capped at $2,000 for the year.  You’ll also have the choice to pay your out-of-pocket cost in monthly payments over the year instead of when the costs happen.

When deciding between plans it is important to take into account multiple aspects such as the deductible, drug formulary, copays and the premium to find the right combination of benefits and costs to best fit your lifestyle.

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Do I have to have Medicare Part D coverage?

You do not have to have part D coverage BUT if you do not have some form of what is considered credible drug coverage you will be required to pay a late enrollment penalty when you do enroll in Medicare drug coverage after the 62 day grace period. You can get prescription drug coverage either through a stand alone Part D plan, as part of a Medicare Advantage plan, or through existing health insurance such as an employer sponsored plan. To prevent you from paying a late enrollment penalty your coverage must provide equal or better coverage than Medicare Part D plans. The Penalty for not enrolling in coverage when you are first eligible is 1% of the base premium for every month you weren’t covered, which is then added to each month.

PENALTY EXAMPLE:

If You First Qualified For Medicare At The Beginning Of Last Year And Missed A Full Year You’d Pay A Penalty For The Twelve Months Without Coverage. This Means You’d Have 12% Of The Base Premium For The Current Year Added To EVERY Month.

Are there any alternatives to Medicare Prescription Drug Plans?

Instead of choosing a stand alone Medicare Part D Plan you may prefer to enroll in a Medicare Advantage Plan that offers prescription drug coverage. Medicare Advantage Plans (known as Part C) provide coverage for Parts A, B and in many cases Part D.

When can I enroll in a Medicare Part D Plan?

7-Month Initial Enrollment Period  |  Begins 3 months before the month you turn 65

INITIAL ENROLLMENT PERIOD

You’re first eligible to enroll in a Medicare Part D plan during your initial enrollment period (IEP). Your IEP begins three months before the month of your 65th birthday, includes your birth month, and lasts for three months after your birth month. This gives you a total of 7 months to enroll in your plan of choice.

*Signing up for Parts A and B during months 5-7 may result in delayed coverage.

If you fail to sign up during this initial period you will have a yearly opportunity to enroll during the General Enrollment Period, which runs from January 1st to March 31st each year. Once you are enrolled in the Part A and/or Part B, you’ll have a yearly opportunity to enroll in Part D during the Annual Open Enrollment Period, which runs October 15th – December 7th every year.

SPECIAL ENROLLMENT PERIOD

Certain life changes trigger a Special Enrollment Period (SEP). This SEP allows you to enroll in a Prescription Drug Plan outside of the Annual Enrollment Period. You may be granted a SEP for numerous reasons including moving to a new address, entering or leaving a long-term care facility, leaving incarceration, losing existing coverage, and many more. Most Special Enrollment Periods last for 2-3 months but the duration may vary depending on the qualifying reason.

GENERAL ENROLLMENT PERIOD

If you miss your Initial Enrollment Period for Original Medicare you can enroll in Part A and/or Part B during the General Enrollment Period, which runs from January 31st to March 1st every year. If you enroll in Part A and/or Part B during this time, you’ll then be allowed to enroll in a Part D Plan between April 1st and June 30th.  (Note: if you qualify for premium free Part A, you can enroll at anytime that you are eligible).

WHEN CAN I CHANGE MY MEDICARE PART D PLAN?

You’ll be able to change your Medicare Part D plan during the Medicare Advantage & Prescription Drug Plan Annual Enrollment Period that runs from October 15th to December 7th every year.