Medicare Prescription Drug Plans

Medicare drug coverage helps pay for prescription drugs you need. Even if you don’t take prescription drugs now, you should consider getting Medicare drug coverage. Medicare drug coverage is optional and is offered to everyone with Medicare. If you decide not to get it when you’re eligible, and you don’t have other creditable prescription drug coverage (like drug coverage from an employer or union) or get Extra Help, you’ll likely pay a late enrollment penalty if you join a plan later. Generally, you’ll pay this penalty for as long as you have Medicare drug coverage. To get Medicare drug coverage, you must join a Medicare-approved plan that offers drug coverage. Each plan can vary in cost and specific drugs covered.

There are 2 ways to get Medicare Drug Coverage:

Medicare Drug Plans. These plans add drug coverage to Original Medicare, some Medicare Cost Plans, some Private Fee-for-Service plans, and Medicare Savings Account plans. You must have Medicare Part A (Hospital Insurance) and/or Medicare Part B (Medical Insurance) to join a separate Medicare drug plan.


Medicare Advantage Plan (Part C) or other Medicare health plan with drug coverage. You get all of your Part A, Part B, and drug coverage, through these plans. Remember, you must have Part A and Part B to join a Medicare Advantage Plan, and not all of these plans offer drug coverage.

Monthly premium for Drug Plans

Most drug plans charge a monthly fee that varies by plan. You pay this in addition to the Part B Premium. If you’re in a Medicare Advantage Plan (Part C) or Medicare Cost plan with drug coverage, the monthly premium may include an amount for drug coverage.

Note: The same insurance company may offer Medigap policies and Medicare Drug Plans

If you join a Medigap policy and a Medicare drug plan offered by the same company, you may need to make 2 separate premium payments for your coverage.

What Medicare Part D drug plans cover

All plans must cover a wide range of prescription drugs that people with Medicare take, including most drugs in certain protected classes, “like drugs to treat cancer or HIV/Aids. A plan’s list of covered drugs is call a “formulary,” and each plan has its own formulary. May plans place drugs into different levels, called “tiers,” on their formularies. Drugs in each tier have a different cost. For example, a drug in a lower tier will generally cost you less than a drug in a higher tier.

Medicare part d stages and donut hole

Yearly Deductible

This is the amount you must pay each year for your prescriptions before your Medicare drug plan pays its share.

Deductibles vary between Medicare drug plans. No Medicare drug plan may have a deductible more than $445.00 in 2021. Some Medicare drug plans don’t have a deductible.

Initial Coverage

These are the amounts you pay for your covered drugs after the deductible (if your plan has one). You pay your share and your plan pays its share for covered drugs. If you pay coinsurance, these amounts may vary throughout the year due to changes in drug’s total cost. The amount you pay will also depend on the tiers assigned to your drug.

Coverage Gap (Donut Hole)

Once you and your plan spend $4,130 combined on drugs (including deductible), you’ll pay no more than 25% of the cost for prescription drugs until your out-of-pocket spending is $6,550 under the standard drug benefit.

Catastrophic Coverage

Once you’ve spend $6,550 out-of-pocket in 2021, you’re out of the coverage gap or donut hole. Once you get out of the coverage gap (Medicare prescription drug coverage), you automatically get “catastrophic coverage.” It assures you only pay a small coinsurance amount or copayment for covered drugs for the rest of the year.

Get help paying the cost (Extra Help Part D)

Extra Help is a program to help people with limited income and resources pay Medicare Prescription drug program costs, like premiums, deductibles, and coinsurance. Check here to see if your state has a State Pharmaceutical Assistance Program (SPAP).

Information obtained from

Things to Consider When Choosing a Medicare Prescription Drug Plan

  • Are my prescriptions on the plans formulary
  • What tier level are my prescriptions
  • Is my pharmacy Preferred or Standard cost sharing
  • What is the annual cost of my prescriptions (premiums, deductible, and coinsurance

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