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.

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.

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.

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.

Prescription drug plans can also cover vaccines and other types of medication like HIV treatments. Starting in January 2023, Medicare beneficiaries won’t have any out-of-pocket costs for adult vaccines that are recommended by the Centers for Disease Control.

One of the biggest Part D drug coverage changes in January 2023 was for injectable insulin. There is a cap of $35 for a 30-day supply of any insulin that your Part D plan covers, even if you haven’t met your deductible yet.

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.

According to CMS, the national average monthly bid amount for Medicare Part D is $64.28 in 2024. The average monthly premium is projected to be $55.50 in 2024. 

But an analysis of the prescription drug benefits found that actual premiums paid by Part D recipients in 2023 varied widely across the country, from a low of $1.60 in Oregon to a high of $201.10 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.

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.

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 $174.70 to $244.60 if you made more than $103,000.

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.

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.

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.

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.

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.

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.

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.

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.