What Does Medicare Part D Cover?
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The Ultimate Guide to Medicare Part D Prescription Drug Coverage
Medicare Part D prescription drug coverage helps beneficiaries pay for covered prescription drugs bought at certain centers, including retail locations and pharmacies. This benefit could help reduce prescription drug costs significantly.
Where to Get Part D
Prescription drug coverage is available to every Medicare beneficiary. But, if you don’t choose a Medicare Part D plan when you are eligible, and you don’t join a Medicare Part C plan (Medicare Advantage) that includes prescription drug coverage, you could pay a late enrollment penalty if you try to join later. Exceptions exist if you have creditable prescription drug coverage or if you receive Extra Help.
Prescription Drug Coverage
Medicare Part D adds prescription drug coverage to your Medicare Parts A and B, some Medicare Cost Plans, some Medicare Private Fee-for-Service Plans, and Medicare Medical Savings Account Plans. They are offered by insurance companies and other Medicare-approved private insurers. The cost of each plan depends on the provider and your location. The Medicare Advantage and Prescription Drug Plan Annual Enrollment Period (AEP) takes place from October 15 to December 7 each year. During this period, you can get a prescription drug plan or a Medicare Part C plan.
If you are about to turn 65 or otherwise become eligible for Medicare outside of the AEP, you have seven months to enroll in the following year’s plan in order to avoid a Late Enrollment Penalty.
Those seven months consist of:
The three months before your 65th birthday
The month of your birthday
The three months after your birthday
Coverage begins on the first day of your birthday month if you enroll during the three months before your birthday. If you join during or after your birthday month, your coverage begins on the first day of the month after you enroll.
Example for someone born on August 22:
Join in May, June, or July → coverage begins August 1
Join in August → coverage starts September 1
Join in September → coverage starts October 1
You can join up to and including the month of November
Important enrollment dates each year:
October 15 – December 7: Annual Enrollment Period — make changes to your Medicare prescription drug coverage for the next year.
January 1 – December 31: You can enroll during your Initial Enrollment Period as described above.* When you join, provide your Medicare number and the dates when your Part A and Part B coverage started (on your Medicare card).
Late Enrollment Penalty
If you go 63 consecutive days, or more, without prescription drug coverage after your Initial Enrollment Period ends and don’t have a Medicare Prescription Drug Plan, a Medicare Advantage Plan (that offers prescription drug coverage), another Medicare health plan that offers prescription drug coverage, or creditable prescription drug coverage, you may face a penalty should you choose to enroll later. The penalty depends on how long you went without coverage.
At present, Medicare multiplies 1% of a “national base beneficiary premium figure” ($32.74 in 2020) by the number of months you went without coverage. This penalty is rounded to the nearest $0.10 and added to your monthly Part D premium.
Example (based on 2020 figures):
If your Initial Enrollment Period ended on February 22, 2017, but you didn’t join a plan until October 14, 2018 (effective November 1), you would be 19 months late:
$0.3274 × 19 = $6.22 → rounds to $6.20
You would pay an extra $6.20 each month on top of your Part D premium.
Cost of Coverage
Most Medicare Part D plans charge a monthly premium that varies by plan. Prices for prescriptions also differ by “tier.” You may have your premium deducted from your Social Security payment — contact your drug plan to set this up.
Another cost is your annual deductible — what you pay before the plan starts paying its share. Deductibles vary by plan; in 2020, no plan could charge more than $435 per year.
Co-pay / Co-insurance
After the deductible, a co-payment is a fixed amount per prescription within a tier (e.g., generics vs. brands). Co-insurance is a percentage of the drug’s cost (e.g., 25% of a $100 drug = you pay $25).
The Coverage Gap
The coverage gap is a temporary limit on what your plan covers for prescriptions. In 2020, you entered the gap after you and your plan spent a combined $4,020 on covered drugs. While in the gap in 2020, you paid 25% of the plan’s cost for covered brand-name and generic drugs.
Catastrophic Coverage
In 2020, after your out-of-pocket costs reached $6,350 for covered drugs, you exited the gap and received catastrophic coverage, which reduced your out-of-pocket share for covered prescriptions.
Prescription Drugs Covered by Part D
Each Medicare Part D plan has a formulary (its covered drug list), often grouped into tiers — lower tiers generally cost less. Formularies can change during the year; if a drug you take is affected, your plan must either notify you at least 60 days in advance or provide a 60-day supply upon refill with written notice.
Example tier levels (each plan may differ):
Tier 1 / Lower co-payment: Most generic drugs
Tier 2 / Medium co-payment: Preferred brand-name drugs
Tier 3 / Higher co-payment: Non-preferred brand-name drugs
Specialty tier / Highest co-pay or co-insurance: Unique, high-cost drugs
Plans may create their own formularies and don’t have to cover every Part D drug, but cannot design a discriminatory formulary. If your plan won’t cover a drug you need, you can request a written explanation or ask for an exception.
Formularies generally must include at least two drugs in each category and cover nearly all drugs in these protected classes:
HIV
AIDS
Antidepressant
Anticancer
Immunosuppressant
Anticonvulsant
Medicare Part D must cover all commercially available vaccines, when medically necessary to prevent illness, except for vaccines covered under Medicare Part B.
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Frequently Asked Questions
Do I have to pay for your services?
No, our help is 100% free. We’re paid by the insurance companies if you enroll in a plan, not by you. There’s no extra cost for working with us.
When can I enroll in Medicare?
Most people enroll around age 65 during their Initial Enrollment Period. There are also specific enrollment windows each year, such as the Annual Enrollment Period (October 15 – December 7), when you can make changes to your coverage.
What’s the difference between Medicare Part A, B, C, and D?
Medicare Part A: Hospital coverage (inpatient stays, skilled nursing, hospice, some home health).
Medicare Part B: Medical coverage (doctor visits, outpatient care, preventive services).
Medicare Part C: Medicare Advantage plans offered by private companies, combining Parts A & B and often including extra benefits like dental, vision, or prescriptions.
Medicare Part D: Prescription drug coverage.
Can I change my Medicare plan later?
Yes. You can make changes during the Annual Enrollment Period each year, and sometimes during Special Enrollment Periods if you qualify (for example, moving to a new area or losing other coverage).
Will I lose my doctor if I switch plans?
It depends on the plan you choose. Some Medicare Advantage and Part D plans have provider networks. Before switching, we’ll help you check whether your doctor is included in the plan’s network so you can keep your preferred providers.