Medicare Part D
For more than 40 years, Medicare recipients covered most of their prescription drug expenses out of pocket. In 2006, the federal government introduced Medicare Part D, a new program designed to assist beneficiaries in handling their prescription drug expenses.
Medicare Part D is provided by private insurance companies, giving you the option to compare and select a plan that aligns with your requirements.
Medicare Part D is voluntary, allowing you the freedom to decide whether or not to participate in a plan. Opting for Part D provides access to reduced prices on prescription drugs and safeguards you against high expenses if you require costly medication. However, if you choose not to enroll in Part D initially, there may be penalties if you later decide to join.
How much does Medicare Part D cost?
Monthly premiums for Part D coverage differ depending on the plan. Costs can range from as low as $10 in certain states to $170 or more in other regions. The formulary, which is the list of prescription drugs covered by the plan, plays a significant role in determining these premiums.
Medicare does impose an adjusted premium for those with higher incomes. For 2025, if you earn more than $106,000 annually (for individuals) or $212,000 (married filing jointly) then you will owe the Income Monthly Adjusted Amount (IRMAA).
When you buy prescriptions from the pharmacy with Part D coverage, you will benefit from a cost-effective co-pay for the medication negotiated by your plan administrator. Medications are categorized into various pricing tiers, where generic drugs are usually the most economical option.
You may also encounter an annual deductible. This is the initial amount you need to cover for your prescription medications before your insurance starts covering the remaining costs (excluding co-pays). Medicare establishes a yearly threshold for deductibles, and insurance providers cannot exceed that limit (though they can charge less). In 2025, the highest deductible permitted for Part D coverage is $590.
Additional noteworthy cost details:
The initial coverage limit for 2025 is $2,000.
Once you have met your full deductible (if applicable to your plan), you will be responsible for 25% of the cost as coinsurance for both generic and brand-name medications until your out-of-pocket expenses for covered Part D drugs total $2,000 in 2025. This amount includes certain payments made on your behalf, such as those from the Extra Help program. After reaching this threshold, you will automatically qualify for “catastrophic coverage.
Enrolling in Medicare Part D
You are eligible for Medicare Part D when you first become eligible for Medicare (at age 65). You can consult with one of our licensed insurance agents, who will be happy to explain your plan options, or you can enroll in a Part D plan directly through Medicare. Call 1-800-MEDICARE or visit Medicare’s website for enrollment information.
Choosing a Medicare Part C (Advantage) plan may include Part D coverage as part of the plan.
Given that Part D coverage is provided by different private insurance companies with varying plans, it is important to review each plan’s formulary closely to confirm that your prescribed medications are covered by the plan.
If you miss enrolling in Medicare Part D when you are initially eligible for Medicare, you have the option to choose a plan later. Every year, from October 15 to December 7, during Medicare’s Annual Election Period, you can adjust your plan by adding, dropping, or changing selections. Keep in mind that if you delay enrolling in Part D at first, there might be penalties if you decide to join later.
For additional information, please visit Medicare.gov.
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