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Prescription coverage

Medicare Part D: more than the premium.

The right drug coverage depends on your actual prescriptions, formulary rules, pharmacies and total annual cost—not simply which plan has the lowest premium.

What Part D does

Medicare Part D helps pay for covered brand-name and generic prescription drugs. It is offered by Medicare-approved private insurers. You may receive it through a stand-alone prescription drug plan with Original Medicare or through most Medicare Advantage plans.

Five things to compare

1. Formulary

Each plan has a list of covered drugs. The same medication may be covered differently from one plan to another.

2. Drug tiers

Plans group drugs into cost tiers. Your copayment or coinsurance can depend on the tier assigned to your medication.

3. Pharmacies

Preferred and in-network pharmacy arrangements can materially affect what you pay.

4. Utilization rules

Prior authorization, step therapy or quantity limits may apply to certain prescriptions.

5. Total annual cost

Premiums matter, but so do deductibles and what you may pay for your specific medications throughout the year.

Mail order & specialty drugs

Check how the plan handles mail order, specialty pharmacies and higher-cost drugs you currently take.

Creditable prescription drug coverage

Creditable drug coverage is coverage expected to pay, on average, at least as much as standard Medicare drug coverage. Examples may include certain employer or union plans, TRICARE, VA coverage, or other qualifying coverage. Your current plan should tell you whether its drug coverage is creditable.

63-day rule: if you go 63 days or more in a row without Medicare drug coverage or other creditable drug coverage after your Medicare enrollment opportunity, you may owe a Part D late-enrollment penalty when you join later.

How the Part D late-enrollment penalty works

The penalty is generally calculated as 1% of the national base beneficiary premium for each full uncovered month you were eligible for Part D but did not have Part D or other creditable prescription coverage. The national base amount changes, so the dollar penalty can change over time.

Review drug coverage every year

A plan's formulary, pharmacy network, premium and cost sharing can change from year to year. Even if your prescriptions stay the same, the plan that was the best fit last year may not be the best fit next year.

For a drug-plan review, bring: exact medication names, dosages, how often you take them, your preferred pharmacy, and any notice that your current employer/retiree drug coverage is creditable.

Official Medicare resources

Medicare rules can change. These pages were written from current Medicare.gov guidance and should be reviewed periodically.

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