Each prescription drug plan under Medicare Part D must provide a level of basic coverage set by Medicare. The medications available can vary based on your plan’s drug list, also called a formulary.
Medicare Part D plans may cover both generic and brand-name medications. The costs for Part D plans vary based on the coverage you choose and the area where you live.
Medicare Part D is an optional add-on to Original Medicare (parts A and B). It’s available through private insurers and provides prescription drug coverage. You can also get prescription drug coverage as part of a Medicare Advantage (Part C) bundled plan.
The different Medicare Part D plans vary depending on the list of prescription drugs they cover, called a formulary. Plus, different insurers may place a drug into different categories, or tiers, on the list.
Because of these differences, it’s important to research your options to help you determine which plan is best for you.
The list of prescription drugs covered under Part D depends on the type of plan you have. Each plan must provide a basic level of coverage that Medicare sets.
Medicare Part D plans cover:
- A formulary of prescription drugs: This list can sometimes change, but the insurer must follow Medicare guidelines. Changes may include drugs moving tiers or being added or removed from the list. Your plan will notify you if the formulary changes.
- Generic and brand-name medications: Medicare prescription drug plans include both brand-name and generic prescription drugs.
- Different tiers of prescription drugs: Many Medicare prescription drug plans offer coverage across various tiers to lower medication costs. Tiers may be divided by generic or brand name or by how preferred the prescription drug is. Typically, more expensive medications are in higher tiers.
Sometimes, a doctor may think it’s more beneficial to your health to prescribe you a medication that’s in a higher tier, rather than a similar drug in a lower tier. They may also recommend a medication that isn’t included in the formulary at all.
In these cases, you can file an exception and ask your Medicare drug plan to consider covering a nonlisted drug or lowering copayments for the medication.
The table below outlines how formularies typically break drug classes into the tier system:
| Tier | Coverage | Expected costs |
|---|---|---|
| tier 1 | most generic prescription drugs | lowest copay |
| tier 2 | preferred brand-name prescription drugs | mid-level copay |
| tier 3 | nonpreferred brand-name prescription drugs | higher copay |
| specialty tier | prescription drugs with a very high cost | highest copay |
Preferred vs. nonpreferred brand-name drugs
Generic prescription drugs are generally less expensive than brand-name drugs, and most Part D plans cover generic medications.
Yet generic versions of prescription drugs are not always available to buy. An insurer may consider these medications to be preferred brand names because an alternative option isn’t available.
Nonpreferred brand name prescription drugs, on the other hand, are medications that do have a comparable generic version available.
Since you won’t always know which drugs are generic, preferred brand name, or nonpreferred brand name, it’s important to ask a prescribing doctor whether your prescription is for the generic version.
If it’s not a generic drug, you can ask the doctor whether a generic version is available. This is especially important if you want to keep your drug costs low.
The costs of your prescription drug plan will depend on various factors, including:
- the kinds of medications you need
- the plan you have
- whether you go to a pharmacy in your plan’s network
- whether the medications you need are on your plan’s formulary
- whether you get Extra Help from Medicare
Some of the costs you’ll be responsible for may include:
- annual deductibles
- monthly premiums
- copayments or coinsurance
- Extra Help costs (if you get Extra Help)
- late enrollment penalties (if you pay them)
Deductibles and premiums may vary, depending on your Medicare prescription drug plan. Medicare dictates that yearly deductibles in 2025 cannot exceed $590.
Medicare Part D out-of-pocket cap
Beginning in 2025, you will pay no more than $2,000 in out-of-pocket drug expenses. You will now also have the option to spread out-of-pocket expenses over the plan year.
Once you reach the $2,000 cap, you will enter the catastrophic coverage stage of a drug plan, and you will not have to pay any further out-of-pocket costs for the rest of the calendar year.
It may help to consider these points when choosing a plan:
- Rules for switching plans: You can switch drug plans only during certain times and under specific conditions.
- Options for veterans: If you’re a veteran, TRICARE is the Veteran’s Administration (VA) plan and is generally more cost-effective than a Medicare Part D plan.
- Employer-based prescription plans: Check to see what your employer’s healthcare plans cover to compare out-of-pocket costs with a Part D plan.
- Medicare Advantage plans: Some Health Maintenance Organizations (HMO) or Preferred Provider Organizations (PPO) Medicare Advantage plans cover costs for parts A, B, and D combined. They may also pay for dental and vision care.
- Premiums and out-of-pocket costs can vary: You can compare plans to see which offers the best coverage for your specific medication and healthcare needs. Medicare Advantage plans might have a network of doctors and pharmacies that you have to use. If so, you may want to check to make sure the doctors and facilities you need are on the plan.
- Medigap plans: Medigap plans, also called Medicare supplemental insurance, help pay out-of-pocket costs of Original Medicare. If you bought your plan before January 1, 2006, you might have prescription medication coverage, too. Since this date, Medigap hasn’t offered medication coverage.
- Medicaid: If you have Medicaid when you become eligible for Medicare, you’ll be switched to a Part D plan to pay for your medications.
Questions to ask yourselfWhen deciding on a Part D plan, keep these points in mind:
- Does the plan cover my current medications?
- What is the monthly cost of my medications on the plan?
- How much do medications that are not covered on the plan cost?
- What are the out-of-pocket costs: copays, premiums, and deductibles?
- Does the plan offer extra coverage for any high cost drugs?
- Are there any coverage limits that might affect me?
- Do I have a choice of pharmacies?
- What if I live in more than one place during the year?
- Does the plan offer multistate coverage?
- Is there a mail-order option?
- What is the plan’s rating?
- Is there customer service with the plan?
You can get prescription drug coverage in two ways: a Medicare prescription drug plan (Part D) or a bundled Medicare Advantage (Part C) plan.
If you’re enrolling in Original Medicare (parts A and B) for the first time, you may benefit from also enrolling in Part D — even if you don’t currently need medications.
If you don’t opt into Medicare Part D coverage when you initially sign up for Medicare, you’ll likely have to pay penalty fees to enroll later. These fees generally last for as long as you have prescription drug coverage.
To enroll in Part D, you must choose a Medicare drug plan. When selecting a plan, consider all medications you’re currently taking. Check the plan’s formulary to see whether the plan covers them and how much you’ll owe, including premiums and copays.
After you’ve chosen a plan, you can enroll in a few ways:
- completing and mailing in a paper enrollment form
- using Medicare’s online plan finder tool
- calling the plan provider to enroll over the phone
- calling Medicare at 800-633-4227 to enroll over the phone
You must provide your Medicare number and the date that your Part A and Part B coverage started. This information is on your Medicare card.
You may also get prescription drug coverage through a Medicare Advantage plan. Medicare Advantage plans offer the same coverage as Original Medicare plans, and many offer prescription drug coverage as well.
If you’re interested in this option, you can search the Medicare site for Part C plans in your area that include prescription drug coverage.
You have different options for getting prescription drug coverage under Medicare. You can talk with a doctor, healthcare professional, or a local State Health Insurance Assistance Program counselor about which Medicare plan might be best for you.
The plan you choose should be tailored to your health needs and budget. Medicare offers several resources to assist in paying for prescription drug coverage, such as a tiered list of medications and programs like Extra Help.