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What you should understand about Part D
Medicare Part D is the portion of Medicare that provides coverage for prescription medications. These plans are offered by private insurance companies approved by Medicare and help reduce the cost of many commonly prescribed drugs. Individuals with Original Medicare can enroll in a standalone Part D prescription drug plan, while many Medicare Advantage plans include prescription drug coverage as part of the plan. Having Part D coverage can help protect against the high cost of medications and make prescription expenses more predictable.
Each Part D plan has its own list of covered medications, known as a formulary, along with its own premiums, deductibles, and copayment or coinsurance amounts. Plans may also organize medications into tiers, where lower-tier drugs typically cost less than higher-tier or specialty medications. Because coverage and costs can vary between plans, it is important for individuals to review their medication needs and choose a plan that best fits their prescriptions and budget.
Medicare Part D includes an annual maximum-out-of-pocket (MOOP) for prescription drugs, meaning once you reach the yearly spending limit on covered medications, your plan covers the remaining cost of your covered prescriptions for the rest of the year. In 2026 the MOOP is $2,100.
Key Details of Medicare Part D Plans
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Prescription drug coverage – Helps pay for many brand-name and generic prescription medications.
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Offered by private insurance companies – Plans are approved and regulated by Medicare but administered by private insurers.
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Available as standalone or bundled plans – Can be purchased as a standalone plan with Original Medicare or included in many Medicare Advantage plans (MAPD).
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Formulary (drug list) – Each plan has a list of covered medications called a formulary, which may vary by plan.
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Tiered drug pricing – Medications are usually placed into tiers, with lower-tier drugs typically costing less than higher-tier or specialty drugs.
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Monthly premium – Most plans require a monthly premium that varies by insurer and plan design.
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Annual deductible – Some plans require a deductible before prescription coverage begins.
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Copayments or coinsurance – Members pay a portion of the drug cost when filling prescriptions.
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Network pharmacies – Plans typically have preferred pharmacies where medications may cost less.
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Catastrophic coverage protection – After a beneficiary reaches a certain out-of-pocket spending threshold, their share of prescription costs is significantly reduced.
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Income-based premium adjustments (IRMAA) – Higher-income beneficiaries may pay an additional premium amount.
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Late enrollment penalty – Individuals who delay enrolling in Part D when first eligible may pay a permanent late enrollment penalty if they do not have other creditable drug coverage.
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