Terry Turner, writer and researcher for RetireGuide
  • Written by
    Terry Turner

    Terry Turner

    Senior Financial Writer and Financial Wellness Facilitator

    Terry Turner has more than 35 years of journalism experience, including covering benefits, spending and congressional action on federal programs such as Social Security and Medicare. He is a Certified Financial Wellness Facilitator through the National Wellness Institute and the Foundation for Financial Wellness and a member of the Association for Financial Counseling & Planning Education (AFCPE®).

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  • Edited By
    Matt Mauney
    Matt Mauney, Senior Editor for RetireGuide

    Matt Mauney

    Financial Editor

    Matt Mauney is an award-winning journalist, editor, writer and content strategist with more than 15 years of professional experience working for nationally recognized newspapers and digital brands. He has contributed content for ChicagoTribune.com, LATimes.com, The Hill and the American Cancer Society, and he was part of the Orlando Sentinel digital staff that was named a Pulitzer Prize finalist in 2017.

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  • Reviewed By
    Aflak Chowdhury
    Aflak Chowdhury

    Aflak Chowdhury

    Medicare Expert

    Aflak Chowdhury is a Medicare expert and independent insurance broker specializing in group health insurance. He has worked for major providers including Humana and Principal Financial Group and today works mainly in the small group market.

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  • Published: August 25, 2020
  • Updated: October 20, 2023
  • 6 min read time
  • This page features 15 Cited Research Articles
Fact Checked
Fact Checked

A licensed insurance professional reviewed this page for accuracy and compliance with the CMS Medicare Communications and Marketing Guidelines (MCMGs) and Medicare Advantage (MA/MAPD) and/or Medicare Prescription Drug Plans (PDP) carriers’ guidelines.

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How to Cite RetireGuide.com's Article

APA Turner, T. (2023, October 20). How Much Does Medicare Part D Cost? RetireGuide.com. Retrieved May 19, 2024, from https://www.retireguide.com/medicare/part-d/costs/

MLA Turner, Terry. "How Much Does Medicare Part D Cost?" RetireGuide.com, 20 Oct 2023, https://www.retireguide.com/medicare/part-d/costs/.

Chicago Turner, Terry. "How Much Does Medicare Part D Cost?" RetireGuide.com. Last modified October 20, 2023. https://www.retireguide.com/medicare/part-d/costs/.

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What Determines Medicare Part D Premiums?

Medicare Part D premiums are the monthly fee you pay for coverage. Medicare Part D prescription drug plans are sold by private insurance companies that contract with Medicare.

The companies set up their own formularies, or lists of prescription drugs they will cover. They also set their own rates for the Medicare Part D plans they sell.

As a result, monthly premiums vary depending on the plan you buy and the insurance company that sells them. Your location can also affect how much your monthly Medicare premium costs.

Premiums may change from year to year. But beginning in 2024, and continuing through 2029, premium prices cannot rise more than 6% per year.

The national base monthly premium for a Part D plan is $34.70 in 2024, according to the U.S. Centers for Medicare & Medicaid Services. Paying higher copays may lower your monthly premiums.

If you have a higher income — $103,000 for an individual tax filer, $206,000 if you and your spouse file jointly — you will have to pay extra Medicare Part D costs.

If you don’t sign up for Medicare Part D prescription drug coverage as soon as you are eligible, you may have to pay a Part D late enrollment penalty. This is an additional payment added on to your Part D monthly premium.

Medicare Part D Premium Payments from Social Security

You can have your monthly Medicare Part D premium automatically deducted from your Social Security payment each month.

It usually takes three months to start, and the first payment will withhold three months’ worth of premiums. After that, only one premium payment per month will be deducted.

Contact your drug plan — not Social Security — if you want your premiums automatically withheld.

Have you selected your 2024 Medicare plan?
Maximize your Medicare savings by connecting with a licensed insurance agent. Annual Enrollment is open until December 7th.

What Is the Medicare Part D Deductible?

The Medicare Part D deductible is the amount of money you have to pay out of your own pocket for your prescriptions each year before your prescription drug plan starts paying its share.

Deductibles vary based on the plan and the insurance company that sells it. But Medicare sets a maximum limit on the deductible that the company can set. In 2024, no company could set a deductible higher than $545.

Many Medicare Part D plans offer lower deductibles. Some plans even have a $0 deductible and will start paying a share of your drug costs immediately.

You should look at the overall cost of your drugs for a year — not just the deductible — when choosing a Part D plan. This means comparing your copay and coinsurance along with a year’s worth of premiums and comparing this to how much you’d save with lower deductibles.

You will only want to go with a $0 deductible plan if it has the lowest, overall yearly cost of the plans you’re considering.

Bob Glaze, a licensed insurance agent, explains the importance of Medicare Part D in terms of covering prescription drugs.

Medicare Part D Copays and Coinsurance

Once you pay your Medicare Part D deductible, you will only pay a portion of the cost for your prescriptions for the rest of the year. These payments will be in the form of either a copayment or coinsurance.

Part D plans may also have different levels of copayments or coinsurance called tiers. These tiers can have different costs you have to pay for different types of drugs.

Copayment vs. Coinsurance
Copayments are a set dollar amount for all drugs on the plan’s tier. You may pay a lower copayment if you go with a generic drug than a brand-name prescription drug.
With coinsurance, you will pay a set percentage of your prescription drug’s cost.

Each Medicare Part D prescription drug plan creates its own formulary, or list of drugs it covers. If you ask for a drug not on the list, you may have to pay the full price for it yourself. It’s important to see if your drugs are on a plan’s formulary before buying the plan.

Insurers may also change the list of drugs they cover from year to year. If they drop a drug, they are required to replace it with a similar drug that treats the same condition. You should monitor annual changes in the formulary in case it affects a prescription drug you take.

Starting in 2023, copays for a 30-day supply of any insulin that your Medicare Part D plan covers are capped at $35 — even if you have not met your deductible for the year. This rule runs through 2025. Starting in 2026, insurers will be able to negotiate prices with insulin suppliers. At that point, the copay for a 30-day supply will be either $35 per month or 25% of the negotiated price — whichever is cheaper.

Learn why someone might change their Medicare Part D plan, courtesy of Tom Parkin, a Medicare expert who has more than a decade of experience in the insurance industry.

Medicare Part D ‘Donut Hole’ and Catastrophic Coverage

Most Medicare Part D prescription drug plans have a coverage gap known as the “donut hole.” It’s when your Part D plan will put a temporary limit on what it will pay for your drugs. This gap or hole closes when you hit your catastrophic coverage amount for the year.

In 2024, you hit the donut hole once you and your Part D plan have spent a combined total of $5,030 on drugs the plan covers. Catastrophic coverage kicks in at $8,000. The amount may change from year to year.

What Counts Toward the Donut Hole and Catastrophic Coverage?
  • Your deductible, coinsurance and copayments
  • Discounts you receive on brand-name drugs once you are in the donut hole
  • What you pay out-of-pocket while in the donut hole
What Does Not Count Toward the Donut Hole and Catastrophic Coverage?
  • Your Medicare Part D monthly premium
  • Your pharmacy’s dispensing fee
  • Any money you spend out-of-pocket for drugs not covered by your plan

If you believe a year’s supply of your drugs will cost more than $5,030, you may want to consider a Medicare Part D plan that will pay for generic and name-brand drugs through the coverage gap. There are a few of these plans available.

Getting Out of the Donut Hole

In 2024, you have to ride out $2,970 in prescription spending to get out of the coverage gap. Your share of the costs for drugs can change significantly during this time.

Once you’re in this donut hole, you have to pay up to 25 percent of the cost of any name brand drug your plan covers.

On the plus side, 95 percent of the cost of the drug — meaning a good portion of what your insurer pays — counts as your out-of-pocket costs toward getting out of this coverage gap.

What Happens When Catastrophic Coverage Kicks In?

In 2024, once you reach $8,000 in out-of-pocket costs for Part D covered drugs, catastrophic coverage takes effect. That means you will not have to pay a copay or coinsurance on covered drugs for the remainder of the year.

There’s no limit on the amount of covered medications you can receive after you’ve hit the catastrophic coverage amount.

Help Covering Medicare Part D Costs

If you have limited income and resources, a program called Extra Help may be able to help you with Medicare Part D prescription drug costs, including premiums, coinsurance and your deductible.

The U.S. Social Security Administration estimates that Extra Help is worth about $5,000 per year to those who receive it.

You can find out if you qualify and apply for Extra Help with Medicare Part D prescription drug costs at the Social Security website.

To qualify for the Extra Help program, you must be receiving Medicare, live in one of the 50 U.S. states or the District of Columbia and have limited resources and income.

Last Modified: October 20, 2023

15 Cited Research Articles

  1. National Council on Aging. (2023, October 13). What You'll Pay in Out-of-Pocket Medicare Costs in 2024. Retrieved from https://www.ncoa.org/article/what-you-will-pay-in-out-of-pocket-medicare-costs-in-2024
  2. U.S. Centers for U.S. Medicare & Medicaid Services. (2023, October 12). 2024 Medicare Parts A & B Premiums and Deductibles. Retrieved from https://www.cms.gov/newsroom/fact-sheets/2024-medicare-parts-b-premiums-and-deductibles
  3. U.S. Centers for Medicare & Medicaid Services. (2023, September 26). Medicare Advantage and Medicare Prescription Drug Programs to Remain Stable in 2024. Retrieved from https://www.cms.gov/newsroom/press-releases/medicare-advantage-and-medicare-prescription-drug-programs-remain-stable-2024?wpisrc=nl_health202
  4. U.S. Centers for Medicare & Medicaid Services. (2023, July 31). Center for Medicare. Retrieved from https://www.cms.gov/files/document/july-31-2023-parts-c-d-announcement-pdf.pdf
  5. U.S. Centers for Medicare & Medicaid Services. (2023, July 31). Yearly Deductible for Drug Plans. Retrieved from https://www.cms.gov/newsroom/fact-sheets/cms-releases-2024-projected-medicare-part-d-premium-and-bid-information
  6. Medicare.gov. (2023). Catastrophic coverage. Retrieved from https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/catastrophic-coverage
  7. Medicare.gov. (2023). Costs in the Coverage Gap. Retrieved from https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/costs-in-the-coverage-gap
  8. Medicare.gov. (2023). Costs of Medigap Policies. Retrieved from https://www.medicare.gov/costs-of-medigap-policies
  9. Medicare.gov. (2023). Monthly Premium for Drug Plans. https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/monthly-premium-for-drug-plans
  10. U.S. Centers for Medicare & Medicaid Services. (n.d.). Costs in the Coverage Gap. Retrieved from https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/costs-in-the-coverage-gap
  11. U.S. Centers for Medicare & Medicaid Services. (n.d.). Costs for Medicare Drug Coverage. Retrieved from https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage
  12. U.S. Centers for Medicare & Medicaid Services. (n.d.). Copayment/Coinsurance in Drug Plans. Retrieved from https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/copaymentcoinsurance-in-drug-plans
  13. U.S. Centers for Medicare & Medicaid Services. (n.d.). Costs in the Coverage Gap. Retrieved from https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/costs-in-the-coverage-gap
  14. U.S. Centers for Medicare & Medicaid Services. (n.d.). Find Your Level of Extra Help (Part D). Retrieved from https://www.medicare.gov/basics/costs/help/drug-costs
  15. U.S. Social Security Administration. (n.d.). Extra Help With Medicare Prescription Drug Plan Costs. Retrieved from https://www.ssa.gov/benefits/medicare/prescriptionhelp/