Medicare Part D provides prescription drug coverage. It is an addition to Original Medicare, which does not cover prescription drugs. All Medicare Part D plans are required to cover a wide range of prescription drugs that people with Medicare take, including most drugs in certain protected classes like drugs to treat cancer.
Most Medicare Part D plans use a tier system, placing drugs in different tiers in their formularies (list of covered drugs). Drug costs vary depending on their tier. Your plan’s tiers may be different, but the following is an example tier plan:
- 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
Generally, you’ll pay $1-3 for drugs in tier 1, $38-42 for drugs in tier 2, 45-50% of the drug cost for drugs in tier 3, and 25-33% of the drug cost for drugs in the specialty tier.
How Much Does Medicare Part D Cost?
Most Medicare Part D plans charge a monthly premium that varies according to your plan. You pay this premium in addition to your Medicare Part B premium and Medicare Part A premium if you are not eligible for premium-free Part A. If you have a Medicare Advantage Plan (or Medicare Part C), your monthly premium may already include an amount for prescription drug coverage.
If you don’t sign up for Medicare Part D when you’re first eligible, you may have to pay a Part D late enrollment penalty. Typically, penalties are paid for the entire length of the plan.
Is Medicare Part D Right For Me?
Medicare Part D is a good idea for many Medicare recipients. Prescription drugs can be incredibly expensive without support, and getting help paying for them with Medicare Part D can save you a significant amount of money.
Even if you use few or no prescription drugs now, it may still be a good idea to enroll in Medicare Part D. Like other kinds of insurance, Medicare Part D protects you from high costs in the future should you need it.