Introduced in 2006, Medicare Part D prescription drug plans are the most recent addition to the Medicare program.
There are two ways to get drug coverage: purchasing a Part D plan or enrolling in a MAPD plan.
There are two ways of getting Part D coverage. The first is through purchasing a stand-alone plan to pair with Original Medicare coverage. The second is to enroll in a Medicare Advantage plan with prescription drug benefits, often called an MAPD plan.
Part D plans are sold by private insurers and are available to anyone enrolled in Original Medicare. There is no required physical exam, and you cannot be denied for financial or health reasons.
Though Medicare Part D coverage is optional, you may pay a late-enrollment penalty if you don’t enroll as soon as you’re eligible. This makes it worth at least exploring your options, especially through a tool like the Medicareful Plan Finder, which allows you to directly compare Part D and MAPD plans (among other coverage options) in your area.
What Does Medicare Part D Cover?
Medicare Part D helps seniors afford necessary medications. Because of this, Part D plans are sometimes known as PDPs, or prescription drug plans. How Medicare Part D works is that each plan offers a formulary that breaks out drugs into tiers. Each tier will cost you a different amount out of pocket. You’ll also owe an annual Part D deductible before coverage will start each year. Your out-of-pocket costs are limited by the True Out-of-Pocket threshold, though. Once you’ve paid enough out-of-pocket, almost all of your costs are covered by your plan.
The government specifies basic cost limits. In 2023, the standard limits are:
- Initial Deductible: $505
- Initial Coverage Limit: $4,660
- Out-of-Pocket Threshold: $7,400
What Does Part D Cost?
The cost of a Part D plan varies from insurer to insurer. Each plan has a monthly premium, an annual deductible, and a share of the prescription costs, called a copay.
Through a combination of Medicare Parts A, B, and D, you can have a comprehensive health care plan.
What Is The Coverage Gap?
The coverage gap, sometimes called the donut hole, is the period after reaching your initial coverage limit when you’re responsible for a larger percentage of prescription costs.
Brand-name drug discounts and your yearly deductible, coinsurance, and copayments all tally into this coverage limit.
However, the coverage gap is only temporary (hence the donut hole), since the plan begins helping to pay for coverage drugs again once you reach the out-of-pocket threshold of your plan. This limit is different for each plan, so it’s worth investigating when choosing a Part D plan for yourself.
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The Medicareful Plan Finder shows all of the available prescription drug plans available in a given zip code, along with their monthly premiums and annual deductible.
Numbers up to date as of 10/7/2022
AARP — Part 1: How Medicare Part D Works
Medicare.gov — Drug coverage (Part D)
Medicare.gov — Costs in the coverage gap