Medicare Part D Explained
Prescription Drug Coverage Made Simple
Medicare Part D is Medicare prescription drug coverage. It helps pay for many brand-name and generic prescription medications you may need. Part D is optional, and it is offered through private insurance companies and other private companies approved by Medicare.
Part D can be confusing because each plan can have different costs, covered drugs, pharmacy networks, and plan rules. The important thing to understand first is simple:
Medicare Part D helps cover prescription medications.
Our goal is to help you understand what Part D does, how it works, how people get drug coverage, what costs may apply, and what questions to ask before choosing coverage.
This page is educational only. We do not recommend any specific plan, carrier, premium, drug list, pharmacy, or plan benefit.
What Is Medicare Part D?
Medicare Part D is prescription drug coverage for people with Medicare.
Unlike Medicare Part A and Part B, which are part of Original Medicare, Part D is provided through Medicare-approved private plans. Private insurance companies that contract with Medicare offer drug coverage and must follow rules set by Medicare. Each plan can vary in cost and in the specific drugs it covers.
A simple way to remember it:
Part D helps cover many prescription medications you pick up from a pharmacy or receive through a drug plan.
Part D is not the same as Part B. Part B covers a limited number of outpatient prescription drugs under certain conditions, often drugs you would not typically give yourself. Part D generally covers many outpatient prescription drugs that Part B does not cover.
Is Medicare Part D Required?
Medicare Part D is optional, but going without drug coverage can create problems later.
If you do not take prescription drugs now, you should consider getting Medicare drug coverage to avoid a late enrollment penalty if you join a plan later.
This does not mean every person must choose the same type of drug coverage. Some people get Part D through a stand-alone drug plan. Others get drug coverage through a Medicare Advantage plan that includes prescription drug coverage.
The key is to understand whether you have Medicare drug coverage or other creditable prescription drug coverage.
How Do You Get Medicare Part D?
There are two main ways to get Medicare drug coverage.
Option 1: A Stand-Alone Medicare Drug Plan
A stand-alone Medicare Part D plan adds prescription drug coverage to Original Medicare. These plans can be added to Original Medicare, some Medicare Cost Plans, some Private Fee-for-Service plans, and Medicare Medical Savings Account plans. To join a separate Medicare drug plan, you must have Medicare Part A and/or Part B.
This is the route many people use when they choose Original Medicare.
Option 2: A Medicare Advantage Plan With Drug Coverage
Some people receive drug coverage through a Medicare Advantage plan, also called Part C. These plans include Part A, Part B, and usually Part D.
If you join a Medicare Advantage plan that includes drug coverage, you generally get your hospital, medical, and prescription drug coverage through one plan.
One important caution: If you are in certain types of Medicare Advantage plans and join a separate drug plan, you may be disenrolled from your Medicare Advantage plan and returned to Original Medicare.
Part D and Original Medicare
If you choose Original Medicare, you have Medicare Part A and Part B.
Original Medicare does not automatically include most outpatient prescription drug coverage. Many people with Original Medicare choose to add a stand-alone Part D prescription drug plan.
Some people with Original Medicare may also choose to buy Medicare Supplement Insurance, also called Medigap, to help with some out-of-pocket costs related to Part A and Part B. Medigap is different from Part D and does not replace prescription drug coverage.
A simple way to think about it:
Original Medicare covers hospital and medical services. Part D helps cover prescription drugs. Medigap may help with some Original Medicare out-of-pocket costs.
Part D and Medicare Advantage
Many Medicare Advantage plans include prescription drug coverage.
Most Medicare Advantage plans include Part D, and people in those plans usually do not need to join a separate Medicare drug plan.
This is one reason it is important to understand how your Medicare coverage is structured. If your Medicare Advantage plan includes drug coverage, your prescription drug benefits are usually part of that plan.
Before enrolling, it is important to review whether your prescriptions are covered, what they may cost, and whether your preferred pharmacy is in the plan’s network.
What Does Medicare Part D Cover?
Medicare Part D plans cover prescription drugs, but each plan has its own list of covered medications.
That list is called a formulary. Each drug plan has its own formulary, and all plans must cover a wide range of prescription drugs people with Medicare take, including most drugs in certain protected classes.
A formulary may include:
Generic drugs
Brand-name drugs
Biological products
Biosimilars
Specialty drugs
Part D plans must include at least two drugs in the most commonly prescribed categories and classes. Plans must also include most drugs in certain protected classes, such as drugs used to treat cancer, HIV/AIDS, depression, psychosis, seizures, and immunosuppression for organ transplants.
What Is a Formulary?
A formulary is the list of drugs covered by a Medicare drug plan.
This is one of the most important words to understand with Part D because every plan has its own formulary. A drug covered by one plan may not be covered the same way by another plan.
A formulary can also change. A Medicare drug plan can make changes to its drug list during the year under guidelines set by Medicare, such as when drug therapies change, new drugs are released, or new medical information becomes available.
Before choosing a drug plan, it is important to check whether your prescriptions are on the plan’s formulary.
What Are Drug Tiers?
Many Part D plans place covered drugs into different tiers, or levels.
Generally, drugs in lower tiers cost less than drugs in higher tiers. Examples of possible tiers include lower-cost generic drugs, preferred brand-name drugs, non-preferred brand-name drugs, and specialty-tier drugs.
A simple way to remember it:
The tier your drug is placed in can affect what you pay.
This is why two plans can both cover the same medication but still have different costs
Generic Drugs, Brand-Name Drugs, and Biosimilars
Part D plans may cover generic drugs, brand-name drugs, biological products, and biosimilars.
Generic drugs use the same active ingredients as brand-name drugs and must prove to the FDA that they work the same way as the brand-name drug. Biosimilars must be highly similar to and have no clinically meaningful differences from the original biological product in terms of safety and effectiveness.
In many cases, using a generic drug or biosimilar may lower your costs, but you should always talk with your healthcare provider or pharmacist before changing medications.
Part D and Vaccines
Part D can also cover certain vaccines.
Medicare Part B covers certain vaccines, such as COVID-19, flu, hepatitis B, and pneumococcal vaccines. Medicare drug coverage must cover all commercially available vaccines, such as shingles, RSV, tetanus, diphtheria, and pertussis vaccines, when medically necessary to prevent illness. You pay nothing out of pocket for Part D adult vaccines recommended by the Advisory Committee on Immunization Practices.
This is another reason it is helpful to understand whether a vaccine falls under Part B or Part D.
What Does Medicare Part D Not Cover?
Part D does not cover every medication in every situation.
Some drugs may not be on a plan’s formulary. Some medications may be covered under Part B instead of Part D. Other drugs may require approval or meet certain plan rules before they are covered.
Part B covers a limited number of outpatient prescription drugs under certain conditions, usually drugs you would not typically give yourself, such as drugs received in a doctor’s office or hospital outpatient setting. Part D generally covers drugs Part B does not cover.
If a drug is not covered the way you need, you or your prescriber may be able to request an exception.
What Are Part D Plan Rules?
Part D plans may have rules for certain medications.
Medicare.gov explains that Medicare drug plans may use rules such as:
Prior authorization
Step therapy
Quantity limits
Medication safety checks
Drug management programs
Medication Therapy Management programs
These rules are used by plans to manage coverage, safety, and costs.
Prior Authorization
Prior authorization means your plan requires approval before it will cover certain drugs.
Medicare.gov explains that prior authorization is approval based on a plan’s specific requirements, and your prescriber may need to show that the drug is medically necessary and that you meet certain requirements for the plan to cover it.
This is important because a drug may be on a plan’s formulary but still require approval before it is covered.
Step Therapy
Step therapy means your plan may require you to try a certain lower-cost drug first before it covers a more expensive drug.
Medicare.gov explains that step therapy is a type of prior authorization and may require you to first try a drug on the plan’s drug list that has been proven effective for most people with your condition.
If your prescriber believes the step therapy requirement is not appropriate for your medical situation, you or your prescriber may be able to ask for an exception.
Quantity Limits
A quantity limit means the plan limits how much of a drug it will cover over a certain period of time.
Medicare.gov gives the example that a plan may cover only a certain number of tablets per month. If your prescriber believes a quantity limit is not medically appropriate, you or your prescriber may be able to ask the plan for an exception.
Quantity limits are another reason it is important to review plan rules, not just whether a drug appears on the formulary.
What Pharmacies Can You Use?
Your pharmacy can affect your Part D costs.
Medicare.gov explains that Medicare plans have contracts with in-network pharmacies, and these pharmacies have agreed to offer discounted prices for members of certain Medicare plans. Some plans may only cover your drugs if you fill them at in-network pharmacies.
Some plans also have preferred in-network pharmacies, which may offer lower out-of-pocket costs than other pharmacies in the plan’s network.
Plans may also offer mail-order pharmacy options, sometimes allowing up to a three-month supply of covered drugs to be sent to your home.
Before choosing a drug plan, it is smart to ask:
Is my pharmacy in the plan’s network?
Is my pharmacy preferred or standard?
Can I use mail order?
What happens if I use an out-of-network pharmacy?
Medicare Part D Costs
Medicare Part D costs vary by plan.
Depending on the plan, you may pay:
A monthly premium
A deductible
Copayments
Coinsurance
Different costs at different pharmacies
Different costs for different drug tiers
Medicare.gov explains that your total costs for Medicare drug coverage depend on the plan you choose. A premium is a monthly amount you pay for coverage, and a deductible is the amount you pay for covered drugs before the plan starts to pay. In 2026, no Medicare drug plan may have a deductible higher than $615, and some plans have no deductible.
You may also pay more for Part D depending on your income. Medicare.gov notes that some people may pay a higher Part D premium because of income.
Medicare Drug Coverage Stages
Medicare drug coverage generally has stages.
For 2026, Medicare.gov explains that Medicare drug plans and Medicare Advantage plans with drug coverage generally have three stages:
Deductible stage
Initial coverage stage
Catastrophic coverage stage
If your plan has a deductible, you pay out-of-pocket costs until you reach the deductible. After that, in the initial coverage stage, you generally pay 25% of the cost as coinsurance for covered generic and brand-name drugs until your out-of-pocket spending on covered Part D drugs reaches $2,100 in 2026. After that, you automatically get catastrophic coverage and pay nothing out of pocket for covered Part D drugs for the rest of the calendar year.
This is one of the most important current Part D cost rules to understand.
What Is the Medicare Prescription Payment Plan?
The Medicare Prescription Payment Plan is a payment option that can help spread your out-of-pocket drug costs across the calendar year.
Medicare.gov explains that this payment option works with your current Medicare drug coverage to help manage out-of-pocket costs for drugs covered by your plan by spreading them across the year. It may help manage monthly expenses, but it does not save money or lower your total drug costs.
This can be helpful to understand if you take medications that create higher costs early in the year.
What Is Creditable Drug Coverage?
Creditable prescription drug coverage means drug coverage that is expected to pay, on average, at least as much as Medicare drug coverage.
Medicare.gov says this could include drug coverage from a current or former employer or union, TRICARE, the Indian Health Service, or the Department of Veterans Affairs. Your current plan must tell you whether your drug coverage is creditable.
This matters because if you go without Medicare drug coverage or other creditable prescription drug coverage for too long after becoming eligible, you may owe a Part D late enrollment penalty later.
Part D Late Enrollment Penalty
The Part D late enrollment penalty can be costly because it may last as long as you have Medicare drug coverage.
Medicare.gov explains that you may owe a Part D late enrollment penalty if, after your Initial Enrollment Period ends, you go 63 or more days in a row without Medicare drug coverage or other creditable prescription drug coverage. The penalty is permanently added to your Medicare drug coverage premium in most cases.
The penalty is calculated using 1% of the national base beneficiary premium for each full uncovered month you were eligible for drug coverage but did not have Medicare drug coverage or other creditable coverage. In 2026, the national base beneficiary premium is $38.99.
A simple way to remember it:
If you delay Part D and do not have other creditable drug coverage, you may pay more later.
Extra Help With Part D Costs
Some people qualify for help paying Part D costs.
Medicare.gov explains that Extra Help is a Medicare program that helps pay drug costs. You automatically qualify for Extra Help if you qualify for Medicaid, one of the Medicare Savings Programs, or Supplemental Security Income benefits from Social Security. If you do not automatically qualify, you can apply.
Other programs may also help with drug costs, including Medicaid, State Pharmaceutical Assistance Programs, and Pharmaceutical Assistance Programs. Eligibility depends on each program’s rules.
How to Compare Medicare Part D Plans
Because Part D plans can vary, comparing plans is not just about finding a low premium.
Before choosing a Part D plan, consider asking:
Are my prescriptions on the formulary?
What tier is each medication on?
What will each medication cost?
Is my preferred pharmacy in-network?
Is my pharmacy preferred or standard?
Does the plan offer mail order?
Are there prior authorization rules?
Are there step therapy requirements?
Are there quantity limits?
What is the deductible?
What is the monthly premium?
What are my estimated yearly drug costs?
Medicare.gov explains that each plan can vary in cost and in the specific drugs it covers, so reviewing your own medications and pharmacy preferences is important.
Part D and Medigap
Medicare Supplement Insurance, also called Medigap, is not the same as Part D.
Medigap works with Original Medicare to help pay some out-of-pocket costs related to Medicare Part A and Part B. It does not replace Medicare prescription drug coverage.
If you choose Original Medicare, you may consider a stand-alone Part D plan for prescription drug coverage and a Medigap policy for certain Original Medicare out-of-pocket costs. These are separate types of coverage.
A simple way to remember it:
Medigap helps with some Original Medicare costs. Part D helps with prescription drugs.
Part D and Medicare Advantage
If you choose Medicare Advantage, your prescription drug coverage may already be included in the plan.
Medicare.gov explains that many Medicare Advantage plans include drug coverage, and if you are in certain Medicare Advantage plans, joining a separate drug plan can cause you to be disenrolled from your Medicare Advantage plan and returned to Original Medicare.
That is why you should understand how your current or future Medicare Advantage plan handles prescription drug coverage before adding or changing drug coverage.
Misunderstandings About Medicare Part D
“Original Medicare automatically covers my prescriptions.”
Not usually. Original Medicare includes Part A and Part B. Most outpatient prescription drug coverage is handled through a separate Part D plan or through Medicare Advantage coverage that includes drug coverage.
“All Part D plans cover the same drugs.”
No. Each Part D plan has its own formulary, and each plan can vary in cost and specific drugs covered.
“If my drug is covered, it will cost the same on every plan.”
No. Plans may place drugs in different tiers, use different pharmacies, and apply different copayments or coinsurance. Medicare.gov explains that tiers can affect what you pay, and generally drugs in lower tiers cost less than drugs in higher tiers.
“I can wait until I need prescriptions to sign up.”
Maybe, but waiting can create a late enrollment penalty if you go 63 or more days without Medicare drug coverage or other creditable prescription drug coverage after your Initial Enrollment Period.
“My pharmacy does not matter.”
Your pharmacy can matter. Some plans use in-network and preferred in-network pharmacies, and using certain pharmacies may save you money.
Common Questions About Medicare Part D
What does Medicare Part D cover?
Medicare Part D helps cover prescription drugs. Each plan has its own formulary, which is the list of covered drugs. Plans must cover a wide range of drugs people with Medicare take, including most drugs in certain protected classes.
Do I need Part D if I do not take prescriptions?
Even if you do not take many prescriptions now, Medicare.gov suggests considering Medicare drug coverage to avoid a late enrollment penalty if you join later.
Can I get Part D with Original Medicare?
Yes. A stand-alone Medicare drug plan can add drug coverage to Original Medicare. To join a separate Medicare drug plan, you must have Medicare Part A and/or Part B.
Can I get Part D through Medicare Advantage?
Yes. Many Medicare Advantage plans include drug coverage. Medicare.gov explains that these bundled plans include Part A, Part B, and usually Part D.
What is the maximum Part D deductible in 2026?
In 2026, no Medicare drug plan may have a deductible more than $615, and some plans have no deductible.
What happens after I spend $2,100 out of pocket on covered Part D drugs in 2026?
In 2026, after out-of-pocket spending on covered Part D drugs reaches $2,100, you automatically get catastrophic coverage and pay nothing out of pocket for covered Part D drugs for the rest of the calendar year.
What is the Part D late enrollment penalty?
The Part D late enrollment penalty is an amount added to your Medicare drug coverage premium if you go too long without Medicare drug coverage or other creditable prescription drug coverage after becoming eligible. In most cases, you pay the penalty as long as you have Medicare drug coverage.
The Simple Takeaway
Medicare Part D helps cover prescription medications.
You can get Part D through a stand-alone Medicare drug plan with Original Medicare, or you may get drug coverage through a Medicare Advantage plan that includes prescription drug coverage.
Part D plans can vary by premium, deductible, formulary, drug tiers, pharmacy network, and plan rules. That is why it is important to review your prescriptions and pharmacies before choosing coverage.
Part D is not just about whether you take prescriptions today. It is also about protecting yourself from future drug costs and avoiding potential late enrollment penalties.
Need Help Understanding Medicare Part D?
Medicare Part D can be confusing because drug lists, pharmacy networks, costs, and plan rules vary.
If you are trying to understand how Part D works with Original Medicare, Medicare Advantage, or Medigap, we can help connect you with a licensed Medicare professional who can answer questions based on your situation.
Get Medicare help when you’re ready.