Medicare Part D
Prescription Drug Coverage
Part D adds prescription drug coverage to Medicare. You can get it through a standalone Prescription Drug Plan (PDP) added to Original Medicare, or it's often bundled into a Medicare Advantage plan (MAPD).
How Part D Works
Formulary
Each Part D plan has a list of covered drugs called a formulary, organized into tiers. Tier 1 is usually the least expensive (generic drugs); higher tiers cost more. Plans change their formularies annually.
What You Pay
You pay a monthly premium (varies by plan), an annual deductible (up to a set maximum per year), and then copays or coinsurance at the pharmacy depending on your drug's tier.
Out-of-Pocket Cap (2025 and beyond)
Starting in 2025, there is a $2,000 annual out-of-pocket cap on prescription drugs under Part D. Once you reach $2,000 in covered drug costs, you pay $0 for the rest of the year. This is a major improvement from prior years.
Two Ways to Get Part D
Standalone Part D Plan (PDP)
Add a standalone drug plan to your Original Medicare (Parts A & B). This works alongside a Medicare Supplement policy. You'll pay a separate monthly premium for the drug plan.
Best with: Original Medicare + Medigap
Medicare Advantage + Part D (MAPD)
Most Medicare Advantage plans bundle drug coverage. You get your medical and drug coverage in one plan from one insurer. Drug coverage is included — often at $0 additional premium.
Best with: Medicare Advantage plans
The Part D Late Enrollment Penalty
If you don't sign up for Part D (or a Medicare Advantage plan with drug coverage) when you're first eligible, and you don't have other "creditable" drug coverage, you'll pay a late enrollment penalty.
The penalty is 1% of the national base beneficiary premium for every month you went without creditable coverage. This is added to your monthly Part D premium permanently.
Creditable coverage means drug coverage from an employer, union, TRICARE, VA, or other source that's at least as good as Medicare's standard drug benefit. If you have this, you can delay Part D without penalty — but keep your proof of coverage letter.
Tips for Choosing a Part D Plan
Check the formulary for your specific drugs
Plans vary widely. A plan with a $0 premium may cost you more overall if your drugs are on a higher tier.
Compare plans annually during AEP (Oct 15 – Dec 7)
Plans change their formularies, premiums, and pharmacy networks each year. The best plan from last year may not be the best this year.
Use preferred pharmacies
Most Part D plans have preferred pharmacy networks where your copays are lower. Using an out-of-network pharmacy can dramatically increase your costs.
Consider mail-order
Most Part D plans offer a 90-day supply via mail-order pharmacy at a lower cost than monthly retail fills.
Find the Right Part D Plan for Your Medications
The best drug plan depends entirely on what you take. We'll compare plans side-by-side based on your specific medications and preferred pharmacy — at no cost.
Compare Drug Plans