Medicare Part D

Medicare Part D is a plan sold through private insurers that can cover prescription drugs. Drug coverage is not available through Original Medicare. Beneficiaries can acquire Part D through a stand-alone plan or by enrolling in a Medicare Advantage plan that includes it.

Christian Simmons, writer and researcher for RetireGuide
  • Written by
    Christian Simmons

    Christian Simmons

    Financial Writer

    Christian Simmons is a writer for RetireGuide and a member of the Association for Financial Counseling & Planning Education (AFCPE®). He covers Medicare and important retirement topics. Christian is a former winner of a Florida Society of News Editors journalism contest and has written professionally since 2016.

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    Lamia Chowdhury
    Lamia Chowdhury, editor for RetireGuide.com

    Lamia Chowdhury

    Financial Editor

    Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.

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  • Published: May 14, 2020
  • Updated: September 13, 2022
  • 6 min read time
  • This page features 2 Cited Research Articles
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APA Simmons, C. (2022, September 13). Medicare Part D. RetireGuide.com. Retrieved September 30, 2022, from https://www.retireguide.com/medicare/part-d/

MLA Simmons, Christian. "Medicare Part D." RetireGuide.com, 13 Sep 2022, https://www.retireguide.com/medicare/part-d/.

Chicago Simmons, Christian. "Medicare Part D." RetireGuide.com. Last modified September 13, 2022. https://www.retireguide.com/medicare/part-d/.

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What Is Medicare Part D?

Part D coverage is provided by government-approved private insurance companies that Medicare later reimburses.

Every plan has its own formulary, or a list of medications it covers. This list sets the price for each drug.

About 45 million of the more than 60 million people covered by Medicare are enrolled in Part D plans.

Terry Turner | 0:28 What is a Medicare drug plan?
What is a Medicare drug plan? - Featuring Terry Turner
Get Free Help Enrolling and Choosing Your Medicare Coverage
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Terry Turner, senior financial writer and financial wellness facilitator, explains Medicare Part D and how it works with Original Medicare.

How Does Medicare Part D Work?

There are several different ways for Medicare beneficiaries to get a Part D plan. Even though Original Medicare does not include any coverage for prescription drugs, beneficiaries can purchase a stand-alone drug plan to pair with Medicare through a private insurer.

But the most common option is to switch to a Medicare Advantage plan, which often includes Part D as well as other expanded benefits like dental and vision coverage. According to the Kaiser Family Foundation, 89% of Medicare Advantage plans for individual enrollment include prescription drug coverage in 2022.

One of the benefits of opting for a Medicare Advantage plan that includes Part D instead of pairing Original Medicare with a drug plan is that all your coverage is in one place. An all-inclusive plan prevents you from having to juggle multiple plans and premiums at once.

What Drugs Are Covered by Medicare Part D?

Since Part D is provided through private insurance companies, each plan can vary as far as exactly what drugs are covered. But in general, prescription drug plans cover a wide variety of medications, both brand-name and generic.

Types of Drugs Covered Under Part D
  • Antidepressants
  • Antipsychotics
  • Anticonvulsants
  • Antineoplastics
  • Antiretrovirals
  • Immunosuppressants

Prescription drug plans can also cover vaccines and other types of medication like HIV treatments.

Each Part D plan will have a formulary that lists out what types of drugs are covered. Remember, when selecting a plan, compare both coverage and cost. The price for a drug can vary between plans, as well as the level of coverage available.

How Much Does Medicare Part D Cost in 2022?

The national average monthly bid amount for Medicare Part D is $38.18 for 2022. That’s down from $43.07 in 2021.

But an analysis of the prescription drug benefits found that actual premiums paid by Part D recipients in 2022 vary widely across the country, from a low of $5.50 in Colorado to a high of $207.20 in South Carolina.

High-income households pay even more. The income-related monthly adjustment amount (IRMAA) is added to the standard Part D premium.

You may also have a deductible or copay cost.

When you’re looking for the right prescription drug plan, keep this in mind:
  1. No plan covers every drug.
  2. The same drug can cost much more or much less, depending on the plan.
  3. Plan costs — including premiums, deductibles and copays — can fluctuate each year.

Monthly Premiums

The monthly premium that you will pay for Part D depends on the specific plan. Costs can vary widely based off the insurer you purchase your plan through and the amount of coverage available.

Monthly Adjustment

Depending on your annual income, you may also pay a monthly adjustment to your premium. Higher yearly incomes result in higher premiums. For example, your Part B premium would jump from $170.10 to $238.10 if you made more than $91,000.

Yearly Deductibles

Each Part D plan also comes with an annual deductible that you will have to meet before your plan kicks in. Just like your monthly premium, your deductible will vary depending on your specific plan. There are some premium-free plans as well as others that don’t include a deductible.

Preview to the New to Medicare PDF New to Signing Up for Medicare?
Medicare can be confusing. This free PDF will help guide you through the many enrollment periods, penalties and Medicare's "alphabet soup" of plans.

Medicare Part D Enrollment & Eligibility

Beneficiaries are eligible for a Part D plan when they become eligible for Medicare. They can enroll in Part D by purchasing a stand-alone plan or enrolling in a Medicare Advantage plan that includes prescription drug coverage.

Initial Enrollment

You can purchase a Part D plan during initial enrollment, which is when you first become eligible for Medicare when you turn 65. For example, in the months leading up to or just after your 65th birthday, you could opt to enroll in a Medicare Advantage plan that includes Part D.

Annual Election

Medicare has an open enrollment period each year that runs from Oct. 15 through Dec. 7. You can make changes to your plan or enroll in a new plan during this time. For example, you may have been on Original Medicare for several years but, during this period, you can now decide to add a stand-alone drug plan or join a Medicare Advantage plan that includes one.

Special Enrollment Periods

Beneficiaries are occasionally able to make coverage changes like adding a Part D plan during special enrollment periods, which typically occurs from a life change. Special enrollment periods are also useful if you’re moving to a new area or if you lose your existing coverage.

Learn more about when you can change your Medicare Part D plan from Tom Parkin, a Medicare expert who has more than a decade of experience in the insurance industry.

Late Enrollment Penalty

Most people become eligible for Medicare around their 65th birthday.

If you do not enroll in drug coverage when you first become eligible, you will face a late enrollment penalty if you try to sign up later.

This penalty is added to your premium each month for as long as you have drug coverage.

Eligibility

While Part D is available through private insurers, you must be eligible for Original Medicare to be able to purchase a plan. Aside from several rare circumstances, you must be 65 or older to be eligible.

How to Choose Medicare Part D Coverage

Research is key to selecting the best Medicare Part D plan for you. Plans can vary heavily depending on where you live, and you should consider everything from the level of coverage you are seeking to whether a stand-alone plan or switching to Medicare Advantage is the best option for you.

How to Evaluate Your Medicare Part D Needs
  • Step 1: Consider your necessities. Determine what medications are most important to you to receive coverage for and what level of coverage you are hoping to have.
  • Step 2: Consider your costs. You should figure out how much money you can reasonably spend on health care in a year and determine how much you are willing to commit to a Part D plan
  • Step 3: Research and compare plans. Examine each plan’s formulary to make sure the drugs you care about most are listed. If you take mostly generic prescriptions, look for plans with coverage tiers. Tiers group drugs into different pricing categories, with generic drugs being the cheapest. If you don’t generally take prescription drugs, consider plans with low monthly premiums. These usually come with high deductibles.
John Clark, licensed insurance advisor and owner of Senior Solutions Insurance Agency, explains how to select the right Part D prescription drug plan.

Frequently Asked Questions About Medicare Part D

How Does Medicare Part D Work?
Part D is a plan sold through private insurers that can cover prescription drugs. If you purchase a stand-alone plan, then it works as its own insurance with its own premiums and deductibles, and it can be used when you are prescribed medication. If you get Part D through a Medicare Advantage plan, then it is just part of your Medicare coverage.
What Happens If You Don’t Have Medicare Part D?
Without Part D, you will have to pay for any prescription drugs out-of-pocket. Original Medicare does not include prescription drug coverage.
How many Medicare Part D plan choices are available?
Beneficiaries in each state had an average of 19 to 27 Medicare prescription drug plans to choose from in 2022, according to KFF. There are also numerous Medicare Advantage prescription drug plans offered at the local level.
Last Modified: September 13, 2022

2 Cited Research Articles

  1. Kaiser Family Foundation. (2021, November 2). Medicare Advantage 2022 Spotlight: First Look. Retrieved from https://www.kff.org/medicare/issue-brief/medicare-advantage-2022-spotlight-first-look/
  2. Kaiser Family Foundation. (2021, October 13). An Overview of the Medicare Part D Prescription Drug Benefit. Retrieved from https://www.kff.org/medicare/fact-sheet/an-overview-of-the-medicare-part-d-prescription-drug-benefit/