Medicare Part D covers prescription drugs. A stand-alone Medicare prescription drug plan is required when you enroll into Medicare. If you do not enroll when you are first eligible penalties may be levied. Medicare Part D is available as a stand-alone prescription drug plan through a private insurance company. Part D is also available through some Medicare Advantage Prescription Drug plans (MAPD).
What are your Medicare Part D Costs?
Your Medicare Part D cost will vary from plan to plan based on the specific program you choose and the prescriptions you take. You will have costs associated with your Medicare Part D Drug plan in the following ways:
- Co-payments
- Coinsurance
- Premium
- Yearly deductible
- Costs for late enrollment penalty
Your drug plan premium will vary depending on:
- The drugs you use
- The plan you choose
- Whether you go to a pharmacy or utilize mail order
- Whether the drugs are in your plan formulary
- The county you live in
What is considered Creditable Prescription Drug Coverage?
You can delay enrolling into a Medicare Part D plan if you have what is deemed Creditable Drug Coverage without penalty. The types of creditable drug coverage are:
- Employer or Union Coverage
- VA (Veterans Affairs) Drug Benefits
- TRICARE
- Federal Employees Health Benefits (FEHB)
- Some Retiree Health Plans
- Indian Health Service drug programs
What’s Not Creditable? (make these X, red X’s if you can)
- Discount drug cards
- Plans that only cover generics or have very limited formularies
- Coverage that doesn’t pay at least what Medicare’s standard plan would cover
Medicare Part D Eligibility
Who is eligible for Medicare Prescription Drug Coverage?
If you are an individual with Medicare Parts A and/or B and you do not already have prescription drug coverage you may enroll in Medicare Part D. If you do not have creditable prescription drug coverage and you do not enroll in Medicare Part D coverage when you are first eligible, you may have to pay a late enrollment penalty once you do decide to participate in a prescription drug plan.
Medicare Part D Enrollment
Who Can Enroll in a Part D Drug Plan?
- If you have Original Medicare (Part A and/or Part B), you’re eligible to enroll in a Part D drug plan.
- You must live in the plan’s service area (your ZIP code must be within the plan’s coverage region).
- Don’t wait until you need prescriptions — enrolling when first eligible helps avoid lifetime late penalties.
- Most people qualify at age 65, but those with certain disabilities or medical conditions (like ALS or ESRD) may be eligible earlier
You may enroll in Medicare plan D offered by private companies in two ways:
- Stand-alone Part D Drug Plan (PDP)
- Medicare Advantage Prescription Drug plan (MAPD)
Medicare Part D covers prescription drugs and works alongside your Medicare Parts A and B to help ensure you have hospital, medical, and medication coverage.
You can also choose not to enroll in Medicare Part D if you already have creditable prescription drug coverage, such as through an employer group plan or another source listed below.
Medicare Part D covers:
Each prescription drug plan under Medicare part D offers a standard level of coverage set by Medicare. Each plan will vary according to the list of prescription drugs (formulary) and how they place drugs into different tiers on their formularies. Each drug plan has it’s list of medications divided into levels or tiers. The lower the tier the less costly than the drug in the higher tier.
What’s a Drug Formulary?
Most Medicare Prescription Drug Plans or Medicare Advantage Plans with prescription drug coverage (MAPD) have a drug list specifying what drugs are covered. The formulary (drug list) details whether it is brand or generic and what is contained in the medication.
If your medication is not listed on any formulary, you have the right to file an exception and ask your plan to cover your medication with substantiating medical support provided by your physician.
Medicare and Generic drugs?
According to the Food and Drug Administration (FDA), the list of the generic drugs includes copies of brand-name drugs and are continuing to expand. Medicare favors having generic medications in the formulary due to their lower cost and proven effectiveness, which helps keep premiums and out-of-pocket expenses more affordable for beneficiaries.
Medicare Part D Premiums and Drug Costs
According to the Centers for Medicare & Medicaid Services (CMS), the average monthly premium for Medicare Part D in 2025 is $55.98. However, premiums can vary widely — some plans start as low as $0, while others can be over $100 per month, depending on the coverage and the medications included.
Keep in mind: Your Part D premium is in addition to your monthly Medicare Part B premium, which most people also pay. You’ll also need to factor in the cost of any Medicare Supplement (Medigap) plan or Medicare Advantage plan you choose to enroll in.
So, when budgeting for your Medicare coverage, make sure to consider all monthly premiums together — Part A (if any) Part B, Part D, and any supplemental or Advantage plan premiums.
What’s the Most I’ll Have to Pay for My Prescriptions (drug costs)?
- In 2025, the most you’ll pay out of pocket for prescriptions under a Medicare Part D plan is $2,000.
- In 2026, that cap will increase slightly to $2,100.
This cap is part of the Inflation Reduction Act, which helps lower drug costs and protect Medicare beneficiaries from high out-of-pocket expenses.
👉 Important: This limit does not include your monthly Part D premium — it’s only for what you spend on medications at the pharmacy.
What’s the Most I’ll Have to Pay for My Overall Medicare Coverage?
It is important to note, when budgeting for your Medicare coverage: Your Part D premium is in addition to your monthly Medicare Part B premium, which most people pay. Plus, you will need to factor in the cost of any Medicare Supplement (Medigap) plan or Medicare Advantage plan you choose to enroll in.