Medicare Part D – Prescription Drug Coverage

Medicare Part D helps you manage the cost of prescription medications and is available through private insurance companies approved by Medicare. You can join a stand-alone Part D plan to pair with Original Medicare, and each plan has its own premium, formulary (list of covered drugs), pharmacy network, and cost-sharing requirements such as copayments and deductibles. Part D covers a wide range of brand-name and generic medications—but not all drugs are covered by every plan, so it’s important to compare plan formularies to ensure your specific prescriptions are included.

It’s also important to know that most Medicare Advantage (Part C) plans include prescription drug coverage as part of their all-in-one benefits. Enrolling in a Medicare Advantage plan that includes drug coverage will satisfy Medicare’s requirement to have credible prescription drug coverage, just like having a stand-alone Part D plan with Original Medicare.

Beginning in 2025, there is a $2,000 annual cap on out-of-pocket costs for covered prescription drugs. This means that once your out-of-pocket spending on covered medications in a calendar year reaches $2,000, you will pay nothing for additional covered prescriptions for the rest of that year. This cap only applies to medications included on your plan’s formulary; drugs not covered by your plan will not count toward the cap, and you may pay the full cost for those.

To avoid a permanent late enrollment penalty, it’s recommended to sign up for prescription drug coverage when you’re first eligible, even if you use few or no medications. Each year, you can review and change your Medicare drug coverage during the Annual Enrollment Period (October 15 – December 7) to ensure your plan’s costs, pharmacy network, and list of covered medications still best meet your needs.