Since 2006, Medicare Part D has helped beneficiaries cover the cost of prescription drugs, which are not insured through Original Medicare. Part D is offered via private companies as a stand-alone plan (PDP) for Original Medicare enrollees, or as a set of benefits included in a Medicare Advantage Plan. Each plan covers an extensive list of prescription drugs, called a formulary.
Many plans organize the prescription drugs they cover, both brand name and generic, into “tiers” to help lower costs. Each tier costs a different amount, with those in the lower tiers generally costing less. Each plan establishes its own premiums annually, so there is no standard monthly premium for Part D coverage, so it's important to review your prescription costs each year.
In most cases, even if you don’t currently take medications, enrolling in a plan could save you from paying a penalty for prescriptions later on. If you don’t sign up for a Part D plan when you’re first eligible for Medicare you may have to pay a “late enrollment penalty”. This amount increases every month that you don’t have Part D and can get expensive quickly. The good news is that low-cost plans are available. If you have Medicare Part A and/or Part B and lack other drug coverage, the increasing costs of prescription drugs makes it advisable to enroll in a Part D plan as soon as possible.
Prescription drug costs can add up quickly. Enrolling in a Part D plan helps relieve the financial burden of out-of-pocket prescription drug expenses. This is particularly true for those who need specialty prescriptions or require multiple brand-name medicines (you may also be charged a late penalty if you have no creditable drug coverage).
With many different Medicare Part D plans available, you can pick one that fits your budget and needs
Many plans have a network of preferred pharmacies where you can get your medication at a lower cost
These plans are designed to be flexible so you can change plans or make adjustments during Medicare enrollment periods as your needs change.
All Part D plans must cover a wide range of prescription drugs, including those in certain “protected classes,” such as drugs that treat cancer or HIV/AIDS. Both brand-name and generic drugs are covered under Medicare Part D plans, though generics must include the same active ingredient as their brand-name versions and meet the same standards for quality, purity, and strength.
All Medicare drug plans must cover at least two drugs per drug category, though each plan can choose which Part D-covered drugs they’ll cover. While a plan’s formulary may not include an exact medication you need, a similar alternative option is available in most cases. You can request an exception if you or your prescriber believe that none of the drugs on your plan’s formulary will work for you.
Below is a sample of the kind of tier levels that prescription drug plans use to establish cost levels:
Each Medicare Part D prescription drug plan decides which drugs not to include in its formulary, though most exclude prescription drugs for things like weight loss or gain, fertility, sexual dysfunction, hair growth and over-the-counter medications.
Medicare pays a fixed amount to companies that offer Medicare Advantage Plans. Medicare Advantage Drug Plans (MA-PDs), which help cover drugs as well as medical services, are generally utilized by people who receive Medicare benefits in a combined package via a PPO or HMO. A Medicare Advantage Plan may also provide coverage for things like basic vision, routine dental, and hearing services, as well as fitness-based activities*.
*There may not be a plan in your area that has these benefits in one plan
Medigap policies purchased after 2006 do not include prescription drug coverage. If you have a Medigap plan that includes prescription coverage your insurer must remove that coverage if you enroll in a Part D plan. It’s important to bear in mind that most Medigap drug coverage is not considered creditable, so it may benefit you to join a Part D plan.
Due to the inherent variability of drug coverage costs, SmartMatch is unable to provide specific costs. Numerous factors account for the variety of drug coverage costs, including:
The cost of drug plans differ, as do the specific prescription drugs they cover. Checking a plan’s formulary will help you avoid selecting a plan that doesn’t cover the drugs you need.
You can expect to make the following payments for a Medicare drug plan (per Medicare.gov):
Pharmaceutical companies take into consideration a drug’s effectiveness and uniqueness, as well as competition from other manufacturers when it comes to pricing. Research and development costs, which play a role in bringing new drugs to market, also factor into pricing.
The donut hole, also known as the coverage gap, was a temporary limit on what a prescription drug plan will cover for drugs. However, beginning in 2025, the donut hole is officially eliminated as there is a new $2,000 cap on out-of-pocket expenses.
A licensed insurance agent can help you comparison shop drug coverage plans and costs and identify the option that best fits your situation. SmartMatch Insurance Agency serves as a partner, analyzing a range of coverage options to help you find the one that most closely suits your needs.
You can choose a Part D plan as soon as you become eligible to enroll in Part D coverage. Bear in mind that it’s best to enroll in a plan when you first become eligible. If not, you will most likely pay higher premiums later on. Medicare levies a 1% increase on premium costs for each month you delay enrollment, though there’s a 62-day grace period. Contact a SmartMatch licensed insurance agent for assistance in finding the best plan for you, or visit our Comparison Shopping tool to start the process.
If you wish to change drug coverage plans, you can do so during the Open Enrollment Period (Oct. 15 - Dec. 7), or during the Medicare Advantage Enrollment Period (Jan. 1 - March 31).
Initial Enrollment Period
The Initial Enrollment Period (IEP) for Medicare Part D is usually the same as the IEP for Medicare Part B. The IEP for Medicare Part D is typically a seven-month window starting three months before you're eligible for Medicare (typically three months before your 65th birthday month). During this time you can sign up for a Medicare prescription drug plan.
Open Enrollment Period
You can join, switch, or drop a plan during the Open Enrollment, which runs from Oct. 15 - Dec. 7. This is also referred to as the Annual Enrollment Period or the Annual Election Period. Your coverage will begin on Jan. 1 as long as your request is received by the Dec. 7 deadline.
Medicare Advantage Open Enrollment Period
If you are enrolled in a Medicare Advantage Plan, you’re eligible to switch to a different Medicare Advantage Plan or enroll in a separate plan through Original Medicare from Jan. 1 - March 31 each year. Remember that you can only switch plans once during this three-month period.
Special Enrollment Periods
Special Enrollment Periods (SEP) allow you to make changes to your prescription drug coverage when circumstances, such as loss of other coverage or relocation, occur.
Open Enrollment Period
In most cases, you may only make changes to Medicare Part D prescription drug coverage during the fall Open Enrollment or Annual Enrollment Period (Oct. 15 - Dec. 7). You can change plans as many times as you need during Open Enrollment. It’s generally advisable to make as few changes as possible to avoid enrollment complications.
Medicare Advantage Open Enrollment Period
Part D coverage can be changed during Medicare Advantage Open Enrollment from Jan. 1 - March 31 annually. To do so, you must dis-enroll from your Medicare Advantage Plan and enroll in a different MA Plan with prescription drug coverage or Original Medicare with a stand-alone Part D plan.
Special Enrollment Periods
You may be eligible to make changes to your Part D coverage during a Special Enrollment Period under certain circumstances, which may include:
You can choose a Part D plan as soon as you become eligible to enroll in Part D coverage. Bear in mind that it’s best to enroll in a plan when you first become eligible. If not, you will most likely pay higher premiums later on. Medicare levies a 1% increase on premium costs for each month you delay enrollment, though there’s a 62-day grace period. Contact a SmartMatch licensed insurance agent for assistance in finding the best plan for you, or visit our Comparison Shopping tool to start the process.
If you wish to change drug coverage plans, you can do so during the Open Enrollment Period (Oct. 15 - Dec. 7), or during the Medicare Advantage Enrollment Period (Jan. 1 - March 31).
The three prescription drug coverage stages are transitional phases during which your drug plan costs may change depending on which stage you are in. They include:
Many prescription drug plans determine patient costs by assigning drugs to one of four tiers, based on:
Federal law typically precludes Medicare from covering certain kinds of drugs, including:
NOTE: Drugs used for the reasons given above may be covered by Part D if prescribed to treat other conditions.
You may join, switch, or drop a plan during the OEP from Oct. 15 - Dec. 7 each year. As long as your new plan receives your request by Dec. 7, this new coverage will commence Jan. 1. You can join a plan during your IEP upon becoming eligible for Medicare. If enrolled in Medicare Advantage, you may change to a different Medicare Advantage Plan or switch to Original Medicare during the Medicare Advantage Open Enrollment Period from Jan. 1 - March 31 each year.
According to Medicare.gov, there are three ways to avoid paying the Part D late enrollment penalty. You can:
One option is to determine whether the medication you need is covered by Medicare under a different Part A or B. If not, you may request a formulary exception from a doctor and/or your plan. If it’s determined the drug is necessary to your health, you’ll need a written statement to that effect from a doctor or other healthcare provider.
If you are unhappy with your Medicare Part D or Medicare Advantage prescription drug plan, you can file a grievance, a formal complaint submitted to your plan. Such a complaint may be filed due to a coverage denial, customer service problem, or difficulty understanding written instructional materials.
An enrollee can file a grievance orally or in writing to your plan. Each must be filed no later than 60 days after the incident/event that caused the complaint.
Understanding Medicare coverage can be an overwhelming process, with an often confusing array of carriers, networks, and definitions to work through. Partnering with a licensed insurance agent makes it easier to streamline this process. An agent can help you understand and prioritize your needs, and deliver a variety of options for you to compare and make the best plan decision.
