When you enroll in Original Medicare Parts A and B you will be without prescription drug coverage. You will need to enroll in a Medicare Part D plan that offers prescription drug coverage. There are a few different ways to get prescription drug coverage with Medicare Part D. Each will vary in how much the plan will cost and how much your own prescription drugs will cost.
Here are some of the costs to consider when you are choosing a Medicare Part D plan that works best for you, as well as more information on the types of plan coverage available and what situations you may encounter with gaps in your prescription drug coverage.
How Much Does Medicare Part D Cost?
There are both standard and variable costs to Medicare Part D, so the exact amount you pay will depend on your individual plan and what kind of medication you need. Annual standard payments for your Medicare Part D plan include:
- A yearly premium
- A yearly deductible
- Any copayments or coinsurance costs
- Coverage gap costs
- Late enrollment penalty, if applicable
On top of the typical costs of Medicare Part D plan coverage, the exact price you will pay also depends on other factors, such as:
- What prescription medication you take and if they are covered by your specific plan.
- The tier a drug is in. Drugs in different tiers may have different costs. Different plans often place the same drug in different tiers.
- Which plan stage you’re in. For example, the cost will be different if you’ve met your deductible than if you’re still paying your deductible, or if you’re in the catastrophic coverage phase.
- The type of pharmacy you use. The costs associated with certain pharmacies may differ, as some pharmacies work with specific plans to charge less. Additionally, some pharmacies offer cost-sharing and mail order prescriptions, which will affect cost, or the pharmacy may be out-of-network in your plan.
- If you have any Extra Help for your prescription drug coverage costs.
The Centers for Medicare and Medicaid Services offers an updated online Medicare Part D drug spending dashboard to help provide the most up-to-date information on the cost of current medications. The dashboard provides an average cost of medications, as well as reports on changes in the average cost. Additionally, the dashboard includes information about the drug’s use and what conditions it’s used for. Most medications in the Part D spending dashboard are medications that are administered by you, meaning they don’t require a healthcare professional to give them.
If you need additional assistance affording your prescription drug coverage, there is a program called Extra Help that may be able to lower costs. Qualifying for the Extra Help program depends on your yearly income and assets. The exact income thresholds may change yearly, but the 2020 qualifications are:
- A yearly income of up to $19,140 and up to $14,610 in resources (including money in a checking or savings account, stocks, and bonds) for an individual
- A yearly income of up to $25,860 and up to $29,160 in resources for married couples
While your bank accounts, stock, and bonds count in your yearly income and assets, you don’t have to count your home, one vehicle, burial plot and up to $1,500 for burial expenses, furniture, and any household and personal items you own. If you do qualify for Extra Help, the exact amount of support for paying for prescription drug coverage will vary based on your actual income and resources. It’s possible that you may even get the full plan premium and yearly deductible covered. Yearly limits for each drug are also set as no more than:
- $3.70 for each generic drug
- $9.20 for each brand-name covered drug
What Part D Coverage is Available?
There are two ways to get Medicare Part D coverage:
- Through a standalone Medicare drug plan. In order to get this option, you must be entitled to Medicare Part A and/or enrolled in Medicare Part B. You can also add a standalone drug plan to some Medicare Cost plans, some private fee-for-service plans, and some Medical Savings Account plans.
- Through a Medicare Part C Advantage Plan with Drug Coverage (MA-PD). A Medicare Advantage plan is a Medicare health plan that can include drug coverage. Advantage plans come in many forms, including HMO, PPO, PFFS, and Medical Savings Accounts.
The specific Medicare standalone drug plans and Medicare Advantage plans that are available to you will vary based on your specific situation as well as your location, so Medicare recommends that you use their online plan comparison tool to research plans, then call the specific plan provider for more details or to enroll. You can also contact your State Health Insurance Assistance Program (SHIP) for help navigating plan comparisons or with specific questions about a Medicare drug plan or Medicare Advantage Plan.
There are different kinds of Medicare Part D coverage available, so it can help to narrow down the type of coverage you’re looking for based on your needs. If you:
|Take specific medications||Check the drug plans’ formularies for your prescriptions, then compare those plans that cover the meds you are taking to find the lowest-cost plan.|
|Want to avoid high costs during coverage gaps||Look specifically at drug plans that offer coverage during coverage gaps. Then, check to be sure your medications are covered by the plan.|
|Want your drug costs to be remain about the same all year||Choose a drug plan with no or a low deductible, or with additional coverage in the coverage gap.|
|Take mostly generic prescriptions||Consider a tiered Medicare drug plan that may offer low-cost or no-cost copayments for generic prescriptions.|
|Don’t need coverage right now||Choose a low monthly premium plan. There is a penalty for being eligible to enroll and failing to do so.|
|Want an all-in-one plan||Consider a Medicare Advantage plan for all your coverage, including drug coverage and extra benefits.|
Medicare Part D also works differently with individual co-insurance plans, so if you have additional insurance coverage, you can check how Part D will work with your plan:
- Employer or union health coverage
- Medicare Supplement Insurance (Medigap) policy with prescription drug coverage
- Supplemental Security Income Benefits
- State Pharmaceutical Assistance Program
- Long-term care facility
- HUD housing assistance
- Food stamps
- Health Insurance Marketplace
- Federal Employee Health Benefits (FEHB) Program
- Veterans’ Benefits
- TRICARE (military health benefits)
- Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA)
- Indian Health Services
If you have a complex medication condition and have many different medications that you take, you may also qualify for a free Medication Therapy Management (MTM) program. The MTM program helps you work directly with your doctor for yearly reviews of your medications, along with written explanations of why you need the drugs, how they work and an action plan.
Medicare Part D drug plan tiers
Every Medicare Part D drug plan includes coverage for prescription medications including:
- Opioids (pain medicine)
The only exception to the medication coverage under Part D are medications you will receive in an outpatient hospital setting, like the emergency room. Medicare Part D drug plans do not cover these types of medications. However, drugs that are considered self administered, such as basic Tylenol, for instance, aren’t usually included in this exception.
Medicare Part D prescriptions are organized into tiers. Lower-cost tiers contain the lowest-cost drugs, while the higher tiers contain higher copayments and more specialty drugs. The exact type of drug in each tier will vary by plan and the organization of tiers can differ among plans as well. In general, tiers are organized this way:
- Tier 1: Preferred generic drugs
- Tier 2: Non-preferred generic drugs
- Tier 3: Preferred brand-named drugs
- Tier 4: Non-preferred brand-named drugs
- Tier 5: High-cost specialty and injectable drugs
Does Medicare Part D Have Coverage Gaps?
Almost all Medicare drug plans have a coverage gap, sometimes referred to as a donut hole, that’s a temporary limit on the coverage your plan offers for prescriptions. Essentially, the coverage gap occurs when you reach the initial coverage limit. Not everyone will hit a coverage gap. For example, you could avoid it if you don’t reach the coverage limit. You may also qualify for Extra Help that can help cover costs in the coverage gap or quality for no additional costs.
Your yearly deductible, coinsurance, and any copayments count towards reaching your coverage gap. The following costs will not count toward your coverage gap:
- Your drug plan’s annual premium
- Your pharmacy’s dispensing fee
- The cost of drugs that aren’t covered in your plan
- Purchases out of network, or out of country
The yearly spending limit for your plan is set every year. In 2021, the plan limit for coverage drugs is $4,130. Once you and your plan have spent $4,130 on coverage drugs, you will enter into the coverage gap and become responsible for paying no more than 25% of the cost for prescription drugs covered under your plan.
If the cost of your covered prescription medications will place you into the coverage gap, you’ll want to choose a plan that offers additional coverage or use the Medicare.gov online resource tool to connect you to someone to speak to in your state about coverage options.
- Medicare.gov | Costs for Medicare drug coverage
- CMS.gov | Medicare Part D Drug Spending Dashboard & Data
- Medicare.gov | Lower prescription costs
- Medicare.gov | How to get prescription drug coverage
- Medicare.gov | How Part D works with other insurance plans
- Medicare.gov | Coverage gap
- Medicare.gov | Medication Therapy Management programs for complex health needs
- Medicare.gov | Drug plan coverage rules