Key Takeaways

  • When choosing a Part D prescription drug plan, it’s important to consider your current medications, monthly costs, out-of-pocket expenses, and pharmacy choices.
  • Private insurers administer Medicare Part D prescription drug plans, which provide coverage for many take-home prescribed medications. You can have a stand-alone plan if you have Original Medicare, but coverage may be included in Medicare Advantage plans.
  • The cost of Medicare Part D plans depends on the plan you choose, the medications you need, and whether you are eligible for Extra Help.

Medicare Part D is an optional add-on to Original Medicare (parts A and B). It’s available through private insurers and provides coverage for take-home prescription drugs. You can also get prescription drug coverage as part of a Medicare Advantage (Part C) bundled plan.

Medicare Part D plans may cover both generic and brand-name medications, but the specific drugs covered will vary by insurer. Each plan has its own list of covered drugs, called a formulary, and each drug is placed on a tier. The drug’s tier will determine its cost.

The costs for Part D prescription drug plans vary based on the coverage you choose, the plan provider, and plan availability in the area in which you live.

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.

The table below outlines how formularies typically break drug classes into the tier system:

Tier CoverageExpected costs
tier 1most generic prescription drugslowest copay
tier 2preferred brand-name prescription drugsmid-level copay
tier 3nonpreferred brand-name prescription drugshigher copay
specialty tierprescription drugs with a very high costhighest copay

Preferred vs. nonpreferred brand-name drugs

Generic prescription drugs are generally less expensive than brand-name drugs. Most Part D plans cover generic medications.

However, generic versions of prescription drugs are not always available, and an insurer may consider a brand-name medication as “preferred” simply because no alternative option is available.

Nonpreferred brand-name prescription drugs, on the other hand, are medications for which a comparable generic version is 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 or brand-name 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.

Medicare Part D Exceptions

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 Part D plan provider to consider covering a nonlisted medication or lowering copayments for the medication.

The costs of your prescription drug plan will depend on various factors, including:

  • the kinds of medications you need
  • the plan you have
  • whether the medications you need are on your plan’s formulary
  • whether you go to a pharmacy in your plan’s network
  • whether you get Extra Help from Medicare

Some of the costs you’ll be responsible for may include:

Deductibles and premiums may vary, depending on your Medicare prescription drug plan.

Medicare Part D out-of-pocket cap 2025 and 2025

In 2025, you will pay no more than $2,000 in out-of-pocket drug expenses. Once you reach the $2,000 cap, you will enter the catastrophic coverage stage of the plan, which means you will not have to pay any further out-of-pocket costs for the rest of the calendar year.

In 2026, this expense cap is expected to increase to $2,100.

About Medicare prescription payment plans (M3Ps)

You will now also have the option to spread out-of-pocket expenses over the plan year with a Medicare prescription payment plan (M3P).

You can contact your plan’s provider to set up an M3P. Once it is in place, you will no longer pay the pharmacy for your prescriptions. Instead, you will receive a monthly bill with the total cost of all prescriptions you fill spread out over the calendar year.

The sooner you set up the plan, the more time you will have to manage the cost of your prescriptions.

In 2026, Part D plan providers will be required to automatically renew M3Ps if you had one in 2025. Unless you specify this otherwise, this rule will apply if you keep the same plan benefit package.

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 Veterans Administration (VA) plan and is generally more cost-effective than a Medicare Part D prescription drug 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 Medicare Advantage Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO) plans cover costs for parts A, B, and D combined. They may also pay for additional benefits, like dental or 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 supplement plans, 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 had Medicaid when you became eligible for Medicare, you’ll be switched to a Part D plan to pay for your medications.
Questions to ask yourself

When 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 customer service available with the plan?

You can get prescription drug coverage in two ways:

  • Enroll in a stand-alone Medicare prescription drug plan (Part D). This option is available for those with Original Medicare only.
  • Enroll in a bundled Medicare Advantage (Part C) plan that includes prescription drug coverage.

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 do not opt into Medicare Part D coverage when you initially sign up for Medicare, you’ll likely have to pay a penalty, unless you have alternative creditable coverage. The penalty fee generally lasts for as long as you have prescription drug coverage.

You can search for a plan using Medicare’s online plan finder tool. When comparing options, consider all medications you’re currently taking and check the plan’s formulary to see whether it covers the medications you need and how much you’ll pay, including premiums and copayments.

After you’ve chosen a plan, you can enroll in a few ways:

  • by completing and mailing a paper enrollment form
  • by calling the plan provider to enroll over the phone
  • by 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. These plans offer the same coverage as Original Medicare, and many include prescription drug coverage and additional benefits.

You can also use Medicare’s plan finder tool to find Medicare Advantage plans in your area that include prescription drug coverage.

You can talk with a doctor, another healthcare professional, or a local State Health Insurance Assistance Program (SHIP) counselor about which Medicare plan might be best for you and your circumstances.

When looking for a Medicare Part D prescription drug plan, you will likely want to consider your current and future medication needs, budget, and whether there are any specific private insurers whose plans you would like to explore.

You can have a stand-alone Part D plan if you have Original Medicare. However, most Medicare Advantage plans include coverage for prescription medications. Remember to get prescription drug coverage as soon as you can to avoid a late enrollment penalty.

Medicare offers several resources to assist in paying for prescription drug coverage, including programs like Extra Help.