Medicare Part D prescription drug plans, sometimes called PDPs, are insurance plans that cover prescribed take-home medications. Out-of-pocket costs usually apply.
Private insurance companies administer prescription drug plans, also known as Medicare Part D, on Medicare’s behalf. Medicare rules dictate specific drug types that the plans must cover.
Glossary of Medicare terms
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this is 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare Part D prescription drug plans provide coverage for take-home prescription medications.
They are available through private health insurance companies, either as part of Medicare Advantage plans or as stand-alone policies that work alongside Original Medicare.
Each Part D plan must offer a standard level of coverage that Medicare sets. However, the lists of specific covered drugs can vary by plan and plan provider.
Some Medicare plans automatically provide the option of prescription drug coverage, including:
Most Part D plans cover the costs of generic and brand-name prescription drugs included in the plan’s formulary, which is a list of medications the plans cover.
Each plan must cover at least two of the most commonly prescribed drugs, which the insurer can choose. Additionally, plans must also cover most drugs in certain protected classes, including:
- cancer drugs
- HIV drugs and AIDS drugs
- immunosuppressants for organ transplants
- antidepressants
- antipsychotics
- anticonvulsants
The drugs have tier classifications, and a more expensive drug usually features in a higher tier. If a copayment applies, the overall cost may increase according to the drug’s tier.
| Drug plan tier | Definition |
|---|---|
| Tier 1 | • lowest copayment • most generic prescription drugs |
| Tier 2 | • medium copayment • preferred brand-name prescription drugs |
| Tier 3 | • higher copayment • non-preferred, brand-name prescription drugs |
| Specialty Tier | • highest copayment • very high cost prescription drugs |
If a healthcare professional feels an individual requires a drug in a higher tier instead of one in a lower tier, they can ask Medicare for an exemption. This allows the person to pay a lower coinsurance or copayment.
Part D plans can change their formularies at any time, although the CMS must approve the changes. Plan providers will typically notify individuals if these changes affect any medications they are taking.
Certain prescription drugs are excluded from Part D prescription drug plans, including:
- drugs for weight loss or gain
- over-the-counter medications
- drugs with cosmetic uses
- fertility drugs
- drugs that treat erectile dysfunction
Prescribed vitamins and minerals are also excluded from coverage, except for prenatal or fluoride preparations.
There are many Part D prescription drug plan options, each with various benefits. A person can compare the plans available in their area with the Medicare Plan Finder.
A healthcare professional can offer guidance about specific plans, coverage, and ways to save on costs.
If a prescribing doctor concludes that a plan’s formulary cannot meet a person’s health needs, it is possible to ask the insurer for an exception. In this case, the prescribing doctor needs to submit a statement to the insurer to support the request, which the insurer may deny.
When to enroll
The best time for a person to enroll in a Part D plan is when they first become eligible for Medicare. Any delay may result in a gap in coverage, and penalty charges may apply.
To avoid these charges, a person needs to have creditable prescription drug coverage, such as through an employer, or receive additional help with costs.
Late enrollment penalties
The late enrollment penalty is a dollar amount that plan providers add to a monthly premium. The amount may vary, depending on how long the person went without a Part D prescription drug coverage or another type of Medicare-approved coverage.
A person with a Part D plan must pay certain costs, which can vary depending on the plan they choose.
Monthly premiums
Most plans charge a monthly premium, with costs depending on the chosen policy.
| Individual income | Married couple income | Married filing separately | 2025 monthly payment |
|---|---|---|---|
| $106,000 or less | $212,000 or less | $106,000 or less | plan premium |
| $106,000 to $133,000 | $212,000 to $266,000 | not applicable | $13.70 plus the plan premium |
| $133,000 to $167,000 | $266,000 to $334,000 | not applicable | $35.30 plus the plan premium |
| $167,000 to $200,000 | $334,000 to $400,000 | not applicable | $57 plus the plan premium |
| $200,000 but less than $500,000 | $400,000 but less than $750,000 | $106,000 to $394,000 | $78.60 plus the plan premium |
| $500,000 and above | $750,000 and above | $394 and above | $85.80 plus the plan premium |
In addition, the person pays the monthly premium for Original Medicare Part B and, if applicable, Part A.
Alternatively, a person may have a Medicare Advantage plan that includes prescription drug coverage. In this case, the cost of prescription drugs is typically included in the total policy amount because Medicare Advantage plans usually combine all different Medicare parts.
Out-of-pocket costs
As of 2025, a person may have to pay a deductible, which can vary by plan but cannot exceed $590.
Some plans have no deductibles, but their monthly premiums may be higher.
After a person pays their annual deductible, they will pay a 25% coinsurance toward their drug costs, and the plan will cover the remaining 75%.
Once a person has spent a maximum of $2,000 in out-of-pocket expenses, they will pay no more for their drugs for the remainder of the year, and the plan will cover 100% of eligible costs.
Medicare Part D 2026 costs
In 2026, the maximum deductible a Part D plan can charge will increase to $615.
The out-of-pocket maximum will increase to $2,100.
Extra Help is a Medicare program that helps people with limited resources pay their Part D prescription drug costs, including premiums, deductibles, and coinsurance.
Once a person becomes eligible for Extra Help, in 2025, they should pay no more than $4.90 for approved generic drugs and $12.15 for approved brand-name drugs.
Medicare Extra Help 2026 drug costs
In 2026, the Extra Help drug costs will be no more than $5.10 for eligible generic medications and $12.65 for eligible brand-name drugs.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
Medicare Part D prescription drug plans provide coverage for prescribed take-home medications.
Private insurance companies administer the plans that are available to people with Original Medicare parts A and B.
When choosing a Part D plan, a person can check its formulary to ensure that it includes the prescription drugs they need.
Costs relating to Part D plans include monthly premiums, deductibles, copayments, and coinsurance charges.
People with limited resources may be eligible for additional financial support from a Medicare program called Extra Help.