Medicare Part D Explained

What Medicare Part D covers

Medicare Part D is a coverage option that helps you pay for your prescriptions. It can be added to certain Medicare Advantage policies. Each Part D plan includes a list of covered medications — called a formulary — which includes brand-name and generic drugs. Plans group covered drugs into levels called tiers.

In general, medications in lower tiers cost less, while medications in higher tiers typically cost more. Knowing which tier your prescriptions fall into can help you better understand your costs.

• Tier 1: lowest cost — example: generic prescription drugs
• Tier 2: medium cost — example: preferred, brand-name prescription drugs
• Tier 3: high cost — example: non-preferred, brand-name prescription drugs
• Tier 4: highest cost — example: prescription drugs used to treat chronic or complex conditions

Helpful tip: Before you enroll in any Medicare prescription plan, check the formulary to make sure your medications are covered.

What Part D doesn’t cover

While Medicare Part D covers many prescription medications, some drug categories may be excluded from coverage. These drugs could include:

• Cosmetic and hair-growth medications
• Fertility medications
• Most vitamins and supplements
• Most weight-loss medications
• Over-the-counter drugs

Helpful tip: Check the plan’s formulary for coverage of any specific medications, even ones you assume might not be covered.

Getting your prescriptions filled

Medicare Part D works like many other healthcare plans when it comes to filling and picking up prescriptions. You have four main options:

• In-network pharmacies: Most Medicare plans have in-network pharmacies, which provide medications to members at a discounted rate. Some plans require you to use in-network pharmacies for all prescription fills.
• Preferred in-network pharmacies: Some plans let you save even more on your prescriptions when you use certain network pharmacies.
• Mail-order pharmacies: Mail-order programs provide up to a three-month supply of your medications mailed directly to your home. Many of these programs offer automatic refills and additional discounts, which make them ideal for any maintenance medications you may take regularly (such as for high cholesterol or high blood pressure).
• Specialty pharmacies: Pharmacies that specialize in providing medications used to treat chronic, complex, or rare conditions such as cancer, infertility, or rheumatoid arthritis.

While some Medicare plans may allow you to fill medications at an out-of-network pharmacy, you’ll usually pay a higher cost if you do.

Understanding prescription costs

While Medicare Part D covers a substantial portion of your prescription costs, there are some portions you might have to pay. Depending on your individual plan, you may be responsible for paying a deductible, copay, or coinsurance for your medications. Let’s explain what each of those are:

• Deductible: The amount you pay out-of-pocket for covered drugs before your plan begins to share costs. The amount varies depending on your plan, but some plans don’t have a deductible. For example, in 2026, the maximum deductible for all Medicare plans was $615. This rate is subject to change each year.
• Copayment: A predetermined cost you pay for a prescription medication. This keeps your drug costs predictable at a flat dollar amount for each prescription. For example, a $10 copay for a generic drug.
• Coinsurance: Though similar to a copayment, coinsurance is a set percentage — not a dollar amount — you pay for a prescription medication. Since this total amount varies based on the cost of the medication, it’s less predictable. For example, a 20% coinsurance payment toward a $100 brand-name prescription.
  

Keep in mind, what you spend on medications may count toward your plan’s maximum out-of-pocket limit (MOOP), depending on your coverage.

Medicare Prescription Payment Plan

The Medicare Prescription Payment Plan allows you to make payments throughout the year toward your out-of-pocket prescription costs. However, the program doesn’t reduce your total drug costs — it simply spreads your prescription costs into monthly payments throughout the plan year. 

This is especially helpful if you expect to reach your out-of-pocket maximum early in the year. The payment plan is voluntary with no additional costs to you. It’s a good idea to talk with a Licensed Medicare Advisor or with Member Service before enrolling to make sure it’s the right fit for you.

Get Extra Help with prescription costs

If your income is limited, you may qualify for a special Medicare program called Extra Help. This program can:

• Lower or eliminate your Part D premium.
• Reduce deductibles and copays.
• Remove late enrollment penalties.

Keep in mind, what you spend on medications may count toward your plan’s maximum out-of-pocket limit (MOOP), depending on your coverage.

Already receiving benefits?

Some people are automatically enrolled in Extra Help. You must be enrolled in Medicare Part D to qualify.

How to apply

To apply for Extra Help, visit the Social Security Administration website.

Additional prescription cost assistance

Depending on where you live, you may also qualify for other programs, including:

• PACE (Pennsylvania residents)
• EPIC (New York residents)

Next steps

Understanding your prescription coverage starts with knowing what medications you take and how they're covered. Some helpful next steps:

• Before enrolling in a Medicare plan, take a few minutes to review the plan's formulary. Confirming your medications are covered can help you avoid unexpected prescription costs later.
• Contact Member Service if you have questions about coverage or pharmacy options.
• Speak with a Licensed Medicare Advisor to review plans and compare prescription drug costs.