What Is Medicare Part D?

Medicare Part D is prescription drug coverage offered through private insurance plans approved by Medicare. Because Original Medicare does not cover most outpatient prescriptions, Part D fills that gap. You can get it as a standalone plan added to Original Medicare or as part of a Medicare Advantage plan that includes drug coverage.

Each Part D plan has a formulary, which lists the drugs it covers and groups them into cost tiers. Plans also have their own premiums, deductibles, and pharmacy networks, and these can differ significantly. Because formularies and costs vary, it is important to confirm that your specific medications are covered and to compare what you would pay before enrolling.

A key protection caps your out-of-pocket spending on covered Part D drugs at $2,000 per year, which helps people with high medication costs. Signing up when you are first eligible helps you avoid a late enrollment penalty. A licensed Medicare advisor can compare Part D plans based on your exact prescriptions and preferred pharmacy to help you find suitable coverage.

Even if you take few or no medications today, enrolling in a Part D plan when you are first eligible, or keeping other creditable drug coverage, helps you avoid a lasting penalty later. Because your prescriptions and the plans themselves can change, reviewing your Part D coverage each year during open enrollment is one of the simplest ways to keep your drug costs in check.