Medicare Part D is an optional prescription drug benefit available to every U.S. resident enrolled in Medicare. These plans allow for additional coverage alongside Original Medicare (Medicare Part A and Part B), Original Medicare paired with a Medicare Supplement plan or a Medicare Advantage plan that doesn’t include drug coverage.
Offered by a host of private insurance providers, Part D plans make it easier to afford prescription drugs. Each Part D plan features a unique drug formulary, a list of drugs it covers and to what extent that coverage manages costs for the beneficiary. Monthly premiums for Part D plans vary based on the insurance provider and the geographic location in which the plan is offered.
How Does Medicare Part D Work?
Each Medicare Part D plan follows the stages listed below, per the federal government.
Stage 1: Deductible A beneficiary must first pay the full cost of their medications until they meet their plan’s deductible. Some plans offer coverage for certain medications during this stage.
Stage 2: Initial Coverage Once the deductible is reached, the plan’s initial coverage stage kicks in. Copayment and coinsurance rates vary per plan, but the plan covers remaining expenses.
Stage 3: Coverage Gap If the total amount a beneficiary and their plan pay for prescription drugs reaches $5,030 in 2024, they enter the coverage gap. Also known as the “donut hole,” the coverage gap occurs when there’s a temporary limit on what the plan covers for drugs, requiring the beneficiary to pay up to 25% of the retail cost of any brand-name medications covered in their plan.
Stage 4: Catastrophic If a beneficiary spends $8,000 out of pocket in 2024, they leave the coverage gap and access what’s called “catastrophic coverage.” For the remainder of the year, they’re only responsible for paying a small coinsurance percentage or copayment for their drugs.
Are All Medicare Part D Plans the Same?
While all Medicare Part D plans are provided by private insurance companies, the plans themselves vary significantly in terms of their costs and the drugs they cover. Each Part D plan features its own drug formulary, costs of drugs for which the beneficiary is ultimately responsible, monthly premium and annual deductible. For this reason, it’s important for anyone interested in Medicare Part D coverage to review each of their plan options very carefully to make sure they pick one that offers the drugs they need (or are likely to need in the future) at rates that work for their budget.
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Most people who are enrolled in a Part D plan (and not eligible for the Part D Low-Income Subsidey (LIS or "Extra Help")—are resposible for certain expenses. These may include: A monthly Part D plan premium (average estimated premium in 2024 is $55.50) An annual deductible (maximum $545 in 2024)
Aetna's SilverScript Medicare Part D plans have advantages and disadvantages. Low premiums: Aetna's premiums are among the lowest on the market, especially for the SilverScript SmartSaver and Choice plans. Retail/mail-order options: You can choose to get drugs in person or by mail without any cost implications.
Over these years, total gross Part D spending on Eliquis, the top selling drug in Medicare Part D in 2021, increased by 2.5 times from $5 billion in 2018 to $12.6 billion in 2021; gross spending for the diabetes drug Trulicity more than tripled from $1.4 billion to $4.7 billion; and gross spending on the diabetes drug ...
Most individuals that dislike a Medicare Advantage plan usually have had a bad experience with in-network providers, plan authorizations for medical care, or having to wait a long time to have an appointment scheduled. Some of these concerns can be attributed to the healthcare provider.
If you have a higher income, you might pay more for your Medicare drug coverage. If your income is above a certain limit ($103,000 if you file individually or $206,000 if you're married and file jointly), you'll pay an extra amount in addition to your plan premium (sometimes called “Part D-IRMAA”).
Medicare Part D plans cost an average of $55.50 per month in 2024, according to government data. Almost every state has at least one Part D plan with premiums below $1 per month in 2024.
A plan's list of covered drugs is called a “formulary,” and each plan has its own formulary. Medicare drug coverage typically places drugs into different levels, called “tiers,” on their formularies. Drugs in each tier have a different cost.
You may have heard or read that the Medicare donut hole ended or closed. The federal government made changes to the Medicare donut hole, shrinking the gap over several years. But there aren't any Medicare Part D plans without a donut hole. All Part D plans still include the coverage gap stage.
GoodRX is not a replacement for your Part D drug plan but it can be a useful tool to help save money on your medication costs. Although there is no guarantee you will save money there is simply no harm in trying since it is a free service!
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