Prescription Drug Plans

Medicare Part D is the prescription drug benefit offered through private insurance companies approved by Medicare. Part D plans help cover the cost of prescription medications and are available as standalone plans that work with Original Medicare or as part of Medicare Advantage plans. Each plan has its own list of covered drugs called a formulary.

Every Part D plan has a formulary, which is the list of medications the plan covers. Drugs are organized into tiers, with lower tiers generally having lower costs. Before enrolling, it's important to check that all your current medications are on a plan's formulary. A licensed agent can help you compare plans based on your specific medications.

The coverage gap, often called the donut hole, is a temporary limit on what your drug plan will cover. After you and your plan have spent a combined amount on covered drugs, you may pay a higher percentage of drug costs until you reach the catastrophic coverage threshold. Recent legislation has been closing the donut hole, significantly reducing out-of-pocket costs for beneficiaries in the gap.

You can enroll in a Part D plan when you first become eligible for Medicare, during the Annual Enrollment Period from October 15 through December 7, or during a Special Enrollment Period if you qualify. It's important to enroll on time because you may face a late enrollment penalty if you go without creditable drug coverage for 63 days or more.

You may pay a late enrollment penalty if you go 63 or more consecutive days without Medicare drug coverage or other creditable prescription drug coverage. The penalty is calculated based on how long you went without coverage and is added to your monthly premium for as long as you have a Part D plan. It's generally best to enroll when you are first eligible to avoid this penalty.

Most Part D plans have a network of preferred and standard pharmacies. You can usually fill prescriptions at any in-network pharmacy, but you may pay less at preferred pharmacies. Many plans also offer mail-order pharmacy options for maintenance medications, which can save you money on 90-day supplies.