When it comes to Medicare, Part D — prescription drug coverage — can be one of the most important but most confusing pieces of the puzzle. With tons of plans, varying costs, and differing coverage, it can be overwhelming to understand your options, let alone know which will work for your needs.
That’s where this guide comes in. Read on to find out what you should know about Medicare Part D, how to find and compare plans, and tips on how to choose Medicare Part D coverage that fits your unique situation.
Do I need Medicare Part D?
Most Medicare beneficiaries who are enrolled in Part A and/or Part B (or those without creditable prescription coverage) would benefit from enrolling in a Part D plan. With a prescription drug plan, you’ll have access to negotiated drug prices and in-network pharmacies, which helps you avoid paying full price for your prescriptions.
If you do have creditable drug coverage, meaning coverage that’s as good or better than Medicare Part D, then you may not need to enroll right away. Keep in mind, however, that if you don’t enroll when you’re first eligible and don’t have creditable drug coverage, you’ll face a permanent late enrollment penalty.
How to find and compare Part D plans
When you’re ready to start looking for a Part D plan, tools like the Medicare Plan Finder or our e-shopping experience can make the process much easier. Here’s how you can get started:
- Provide your basic information
At the least, you’ll need to input your zip code or county. Other information may be required, like if you get help with your Medicare health or drug costs from another program. If you have an account on Medicare.gov, you can save time by logging in, or create an account to save your information.
- Add your prescriptions and preferred pharmacies
Use the search tool to find any prescriptions you’re currently using and any you may be considering. You can also select which pharmacies you’d like to use. Many Part D plans have preferred pharmacies within their network that charge less than other in-network pharmacies that aren’t preferred.
- Review plan results
Once you’ve entered all the relevant information, you’ll be presented with a list of plans that may work for you. You can sort plans by criteria such as lowest drug and premium cost, lowest yearly drug deductible, and lowest monthly premium.
You’ll also see the star rating assigned to each plan. You can think of these like a report card that Medicare gives Part D plans. Ratings range from 1 to 5, with 5 stars being the best. Plans are evaluated on criteria like:
- Customer service: How easy is it to get help from the plan?
- Member complaints/experience: Do people have problems getting service? Are people generally happy with the plan?
- Drug prices: How accurate are the prices?
- Drug safety: Does the plan help people avoid medication errors?
Remember, star rating is just one piece of the Part D puzzle. You should also consider the plan’s costs, coverage, and network.
Enrolling in or changing your Medicare Part D plan
Enrolling in or making changes to your Medicare Part D plan isn’t limited to when you first become eligible. Medicare offers specific times when you can adjust your coverage to better suit your needs.
Annual Enrollment Period
Medicare’s Annual Enrollment period happens yearly from October 15th to December 7th. This is the main opportunity for you to enroll in a Part D plan, switch Part D plans, or drop your Part D plan entirely.
Special Enrollment Periods
Special Enrollment Periods let you make changes to your Part D plan outside of AEP if you experience certain qualifying life events. These events include moving to a new area, losing other creditable prescription drug coverage, gaining or losing eligibility for Extra Help, or changing residence to or from a nursing home or long-term care facility.
Tips for choosing your Part D plan
Since choosing a Medicare Part D plan isn’t one-size-fits-all, you’ll need to carefully think through your own budget and medical needs before making a decision.
Here’s how you can evaluate your options and better understand what each plan’s details mean.
1. Review each plan’s medication list and prices
If you put all your prescriptions into the Medicare Plan Finder, the results for each plan should include whether it’s covered, how much, and how often. If you have a chronic condition or anticipate that you might have prescription changes in the future, try to factor that into your decision. Additionally, check the recently negotiated drug prices to see if any of your medications are on the list.
Each Medicare Part D plan sorts drugs into tiers based on their cost and how necessary they are. The lower the tier, the lower the price — and what’s included can vary depending on the plan you pick.
- Tier 1: Usually has the lowest copay (what you pay for the drug). This is where you find many generic drugs.
- Tier 2: A little more expensive, often with a higher copay. You might find some preferred brand-name drugs here.
- Tier 3: Pricier, with a higher copay. This might include non-preferred brand-name drugs.
- Tier 4: This tier often has the highest copay and includes specialty drugs for complex conditions.
Formularies, or the list of drugs your insurer covers, change annually. It’s a good idea to review your formulary each year to make sure your drugs are still covered.
2. Consider your budget and don’t focus solely on premiums
Affordability goes beyond the monthly premium of a plan. Take a look at deductibles, copayments, and coinsurance costs. You should also estimate how much you might pay if you reach the coverage gap phase, which happens when your drug expenses reach a certain amount. You may pay a higher percentage of costs until you hit the catastrophic coverage phase, which takes care of out-of-pocket costs for the rest of the calendar year. In 2024, that phase started once beneficiaries had paid $8,000 out-of-pocket.
If your income is below a certain threshold, you may qualify for Medicare’s Extra Help, which can provide financial assistance for Part D. Keep in mind that if you enroll late for Part D, you’ll also need to factor a penalty into your monthly payments.
3. Read plan materials carefully and understand any restrictions
Every Medicare Part D plan has specific rules and limitations. Taking the time to read and understand these details can save you money and stress later on.
Many Part D plans have restrictions designed to mitigate costs. These might include:
- Prior authorization: Your doctor must get approval from the plan before a mediation is covered.
- Step therapy: You may be required to try a lower-cost drug before the plan approves a higher-cost alternative.
- Quantity limits: Some plans restrict the amount of medication you can get at once.
You can also review the plan’s Evidence of Coverage, which outlines details like eligibility, important contact information and resources, costs, handling complaints, and more.
4. Contact a licensed insurance agent
Medicare is complicated, but licensed insurance agents are trained to know the ins and outs of how the system works. A good agent can simplify the process, help you compare plans based on your medications and budget, and save you hours of research.
