Medicare Part D Prescription Drug Coverage

What Medicare Part D is

Part D is prescription drug coverage offered through private insurance companies approved by Medicare. It is optional, but going without creditable drug coverage can create a lasting penalty, so most people enroll in some form of it when they first become eligible.

Standalone Part D plans

A standalone Part D plan adds drug coverage to Original Medicare, with or without a Medicare Supplement policy. You pay the plan's premium separately, and the plan handles your prescriptions while Medicare handles your medical care.

Medicare Advantage plans with drug coverage

Many Medicare Advantage plans build Part D coverage into the plan itself. In that case, medical and prescription benefits are administered together, and you generally do not add a separate Part D plan.

Formularies

A formulary is the list of drugs a plan covers. Plans organize their formularies into tiers and can apply utilization rules such as prior authorization, step therapy, or quantity limits.

Formularies can change during the year and are commonly revised for the next plan year, which is why checking your medication list each fall is a practical habit.

Drug tiers

Tiers determine what you pay. A typical structure places preferred generics in the lowest tier, then generics, preferred brands, non-preferred drugs, and finally specialty medications, with cost sharing rising at each level.

The same medication can sit on different tiers in different plans, which is a common reason two plans produce very different annual costs for the same person.

Preferred pharmacies

Many plans contract with a pharmacy network and designate some pharmacies as preferred, where cost sharing is lower. Filling the same prescription at a standard network pharmacy can cost more, and filling it outside the network may not be covered at all.

Deductibles and cost sharing

Part D plans may apply a deductible before coverage begins, and cost sharing continues after that as copayments or coinsurance depending on the drug tier. Plans are also subject to an annual limit on what enrollees pay out of pocket for covered Part D drugs.

Because these amounts are set each plan year and vary by plan, review the plan's own documents for the figures that apply to you rather than relying on a general description.

We deliberately avoid publishing plan-year dollar amounts that we have not independently verified. Confirm current figures at Medicare.gov or in the plan's Evidence of Coverage.

Late enrollment penalties

If you go without Part D or other creditable prescription drug coverage for a continuous period after you were first eligible, a late enrollment penalty may be added to your Part D premium. In most cases the penalty continues for as long as you have Part D coverage.

Creditable coverage from an employer, union, or certain other sources can prevent the penalty, but you should keep the notice that documents it.

Extra Help

Extra Help is a federal program that assists people with limited income and resources in paying Part D costs. Eligibility is determined by the Social Security Administration, not by an insurance agency.

If you think you may qualify, you can apply through Social Security or ask your state Medicaid agency about related assistance.

Reviewing your medications annually

• Make a current list of medications, dosages, and how often you fill them
• Check each drug against the plan's formulary and tier
• Confirm your pharmacy is in network, and whether it is preferred
• Look for prior authorization, step therapy, or quantity limits
• Compare estimated annual cost, not just the monthly premium

Important disclosures

• Formularies, pharmacy networks, tiers, and costs vary by plan and can change each plan year.
• We do not offer every plan available in your area. Any information we provide is limited to the plans Everlive Advisors LLC represents in your area.
• To learn about all of the options available to you, contact Medicare.gov, call 1-800-MEDICARE (TTY 1-877-486-2048), 24 hours a day, 7 days a week, or contact your local State Health Insurance Assistance Program (SHIP).
• The information on this page is general and educational. It is not legal, tax, medical, or financial advice.