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Prescription Drug Plans (Medicare Part D) đź’Š

Medicare Part D, also known as a Prescription Drug Plan (PDP), helps cover the cost of prescription medications. Unlike Original Medicare, Part D plans are offered by private insurance companies, not the federal government.

Part D coverage is purchased separately and is especially important for individuals enrolled in Original Medicare with a Medicare Supplement plan.

What Is a Prescription Drug Plan?

A Prescription Drug Plan is private insurance that helps pay for your prescription medications.

Every Part D Plan has its a formulary (simply a list of medications) which determines how medications are covered and what you pay out of pocket.

Formularies categorize medications into tiers:

  • Lower tiers include generic versions of common meds for a low copay

    • examples: Atorvastatin, Metroprolol, etc.

  • Higher tiers include brand-name / specialty medications with high costs

    • examples: Brand-name medications, Insulin Treatment, Stelara

How Prescription Drug Plans Work:

YOU ARE REQUIRED to enroll in a Prescription Drug Plan for your medications if you decide on a Medicare Supplement plan (Plan N, Plan G, etc.).

Medicare Advantage plans, however, bundle your medication coverage and do not require a separate Part D plan. 

With a Medicare Part D plan:

  • You pay a monthly premium (varies by plan)

  • You pay copays or coinsurance based on your medication’s tier

  • Costs may differ depending on whether you use a preferred pharmacy

Part D coverage is separate from Original Medicare. It must be chosen intentionally, unless you decide to enroll in a Medicare Advantage w/ Prescription Drug (MAPD) plan.

Understanding the Part D Late Enrollment Penalty

Medicare imposes a Part D late-enrollment penalty if you go 63 days or more without:

  • Medicare Part D coverage (through a PDP or MAPD), and/or

  • Other creditable prescription drug coverage (such as VA or TRICARE)

The penalty is calculated as 1% of the national base beneficiary premium for each month you were without coverage and is added to your monthly Part D premium (if imposed). The penalty will last for as long as you continue to have Part D medication coverage.

For example, going without creditable coverage for one year can result in a permanent 12% premium increase.

To avoid this penalty, enrollment timing is critical!

Choosing the Right Prescription Drug Plan

When evaluating Part D plans, it’s important to consider:

  • Whether your medications are included in the plan’s formulary

  • How drugs are tiered and priced

  • Which pharmacies are preferred or in-network

  • Your total annual drug costs—not just the monthly premium

For example:  plans with lower premiums may not be the most cost-effective option, especially if your medications fall into high tiers.

Review your Drug Coverage During Open Enrollment

The Medicare Annual Open Enrollment Period (October 15–December 7) allows individuals to review and change certain Medicare plans. If you aren’t happy with your Drug Plan, you have the opportunity to change it at the end of each year.

However, it’s important to note:

  • You are not required to change plans if you’re satisfied

  • Annual reviews help ensure your plan still fits your needs

  • Changes in medications, providers, or costs may prompt a need to change plans

Options after Original Medicare
Medicare Supplement Plans
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