What Is Medicare Part D?
Key Takeaways
- Medicare Part D plans are provided by private insurance carriers to cover prescription drugs.
- You can add a standalone plan to Original Medicare (Part A and Part B),Original Medicare is a fee-for-service health insurance program available to Americans aged 65 and older and some individuals with disabilities. Original Medicare is provided by the federal government and is made up of two parts: Part A (hospital insurance) and Part B (medical insurance). or you can enroll in a Medicare Advantage plan (Part C)Medicare Advantage (Medicare Part C) is health insurance for Americans aged 65 and older that blends Medicare benefits with private health insurance. This typically includes a bundle of Original Medicare (Parts A and B) and Medicare Prescription Drug Plan (Part D). . Medicare Advantage plans substitute for Medicare Parts A and B, and most include Part D prescription drug coverage.
- Anyone enrolled in Original Medicare (Part A and Part B) is eligible for Part D prescription drug coverage.
- Part D plans offer a wide range of coverage to fit your prescription needs.
A Medicare Part D plan covers prescription drugs and vaccines that Original Medicare doesn’t. Private insurance companies sell Part D plans as an optional add-on for people with Original Medicare. These plans differ from Medicare Advantage, but Medicare Advantage plans often include Part D benefits. This article explores Medicare Part D prices, coverage, and enrollment.
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Part D vs. Original Medicare
Medicare Part D is separate from Original Medicare, the public insurance program that includes Medicare Part A (hospital insurance) and Part B (outpatient services). Original Medicare typically only covers medicines that you wouldn’t take yourself. For example, Part A covers drugs that you receive during a hospital stay. Under Part B, your doctor could give you a vaccination or medication in their office or an outpatient hospital setting.
Part D helps pay for other prescription drugs and immunizations. Without insurance, out-of-pocket drug costs can add up quickly, especially if you need to take a prescription regularly.
If you have Medicare Advantage, you likely do not need to purchase a separate drug plan. Medicare Advantage plans from private insurance carriers substitute for Part A and Part B and often include Medicare Part D prescription drug coverage along with other additional benefits.
However, not all Part D plans are the same. They have different benefits, covered drugs, and networks.
Medicare Part D Coverage
Medicare Part D plans cover outpatient prescription drugs, ranging from treatments for depression, to cancer, to HIV/AIDs. They also cover vaccines to prevent illness, such as shingles or tetanus shots. They don’t cover over-the-counter medicine like allergy or cold meds.
Part D plans have to cover certain protected drugs, but insurance companies determine their own formularies and networks.
Formularies and Networks
Every prescription drug plan has a formulary, a list of covered medications. The formulary includes brand-name and generic medications sorted into different tiers that determine your cost. Generic drugs are the least expensive, while name-brand or highly specialized medications usually cost more.
Insurance companies must cover at least two drugs in the most commonly prescribed categories, but they can choose which ones they include. If your preferred drug isn’t covered, you can find an alternative or, in some cases, file an appeal. Companies can also change their formularies throughout the year, as long as they give you notice.
Most Part D plans have a preferred pharmacy network or pharmacy chain, which also affects your costs. You’ll pay less in coinsurance and copays if you fill your prescriptions at a preferred pharmacy.
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Cost of Medicare Part D
Before purchasing a prescription drug plan, consider all potential costs.
- Premiums: You’ll pay a monthly premium for Part D, separate from your Part B premium. Medicare Advantage Prescription Drug plans include this cost in your overall premium.
- Deductibles: You must reach your plan’s deductible before your insurance company starts to pay. In 2025, the maximum deductible is $590.
- Copays: Copays are a set price you pay for covered drugs, like $5 per prescription.
- Coinsurance: Some prescriptions require a coinsurance, or a percentage of the total price.
- Out-of-network fees: You might pay more for drugs from an out-of-network pharmacy.
- Out-of-pocket maximums: This is the most you’ll pay out of pocket per year. The out-of-pocket max is $2,000 in 2025.
What Is the Part D IRMAA?
People with higher incomes pay more for Part D coverage. This income-related monthly adjustment amount (IRMAA), is paid directly to Medicare. Usually, individuals have their IRMAA payment automatically deducted from their Social Security benefits.
As of 2025, individuals who make more than $106,000 must pay an IRMAA. For couples filing jointly, the income limit is $216,000. IRMAA payments increase based on your income, ranging from $13.70 to $85.80 per month. However, your IRMAA payment lowers if your income decreases.
2025 Medicare Part D IRMAA
| Filed Individually | Filed Jointly | Filed Married & Separate | Monthly Payment in 2025 |
| $106,000 or less | $212,000 or less | $106,000 or less | Premium only |
| $106,001 – $133,000 | $212,000 – $266,000 | — | $13.70 + premium |
| $133,001 – $167,000 | $266,001 – $334,000 | — | $35.30 + premium |
| $167,001 – $200,000 | $334,001 – $400,000 | — | $57.00 + premium |
| $200,001 – $499,999 | $400,001 – $749,999 | $106,001 – $393,999 | $78.60 + premium |
| $500,000 or more | $750,000 or more | $394,000 or more | $85.80 + premium |
2025 costs based on 2023 filing status and income.
What Is the Part D Donut Hole, and Is It Active?
Through 2024, most Part D plans had a coverage gap, also known as a “donut hole.” Once you and your plan spent a certain amount on prescription drugs, you paid a set percentage of the full cost for all prescriptions until your out-of-pocket expenses reached a level called the catastrophic phase.
The donut hole went away in 2025. All Part D plans now instead have a limit on out-of-pocket expenses for covered drugs ($2,000 in 2025).
Medicare Part D Enrollment
When choosing a Part D plan, consider every angle:
- Evaluate all of your costs, including the monthly premium and your out-of-pocket costs, like copays and coinsurance.
- Make a list of the prescription drugs you need covered, and compare it to each plan’s formulary.
- Confirm that the pharmacies in the plan’s preferred network are conveniently located.
Once you’ve chosen a plan, it’s time to enroll. You can enroll on the insurance carrier’s website or over the phone. You’ll need your Medicare number and the date that your Part A and Part B insurance started.
The easiest time to purchase Part D coverage is when you first become eligible for Medicare, during your Initial Enrollment Period. After this point, you can add, drop, or switch Part D plans during the Annual Enrollment Period from October 15 to December 7.
Avoid the Part D Late Enrollment Penalty
You may have to pay a penalty if you go more than 63 days without creditable prescription drug coverage after your Initial Enrollment Period. Coverage is considered creditable when it’s at least equivalent to what you’d receive from a Part D plan.
For each full month without adequate coverage, Medicare charges 1% of the national base Part D premium when you do enroll in a Part D plan. In 2025, the national base premium is $36.78. That means, if your coverage gap lasted for 24 months, you’d pay an extra $8.88 each month. The penalty is added to your monthly premium and lasts as long as you have Part D.
See Part D in Action
Let’s look at two scenarios to understand how Part D works. In the first example, we’ll consider the top-selling medication for Medicare beneficiaries in 2021: Eliquis, a blood thinner. Without insurance, a 30-day supply of Eliquis costs $594. Over a year, that totals $7,128.
If you have a Part D plan that covers Eliquis, though, you’ll only be responsible for part of the cost. And you won’t pay more than $2,000 out of pocket in 2025.
You can also use Part D to get vaccines. If you want to get vaccinated against shingles, you can get the two-dose Shingrix vaccine. Each dose costs $198, meaning you’d pay nearly $400 to get vaccinated without insurance. But Part D covers almost all vaccines at no cost to you, so you’d pay $0.
Keep in mind that these are just examples, and your actual costs depend on your specific plan.
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Putting It All Together
Medicare Part D covers prescription drugs and vaccines that Original Medicare doesn’t cover. You can purchase Part D coverage separately or opt for a Medicare Advantage Prescription Drug plan. Either way, be sure to consider the plan’s covered drugs and preferred network before enrolling. A licensed insurance agent or broker can help you find a plan that fits your needs and budget.
Sources
- Drug Coverage (Part D). Medicare.gov.
- A Small Number of Drugs Account for a Large Share of Medicare Part D Spending. KFF.
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