Medicare Part D Prescription Drug Coverage

Last Updated : 08/01/20196 min read

Medicare Part D is prescription drug coverage. Medicare Part D is optional, and it’s available only through private insurance companies that contract with Medicare.

What is Medicare Part D? A history

Medicare Part D prescription drug coverage was created by the Medicare Modernization Act (MMA) of 2003 and implemented in 2006.

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The goal of Medicare Part D is to help make prescription drugs available and affordable for Medicare beneficiaries.

Who can get a Medicare prescription drug plan?

Anyone with Medicare coverage—either Medicare Part A (hospital insurance) or Part B (medical insurance) or both parts—may be eligible for a stand-alone Medicare Part D prescription drug coverage. You can’t be turned down because of your health status or income.

More than 45 million people are enrolled in Medicare prescription drug plans, according to the Centers for Medicare & Medicaid Services (CMS). That 2019 figure includes people enrolled in both types of Medicare prescription drug plans, described below.

Medicare Part D: types of Medicare prescription drug plans

You can get your Medicare Part D coverage from either of these types of plans:

  • A Medicare Advantage prescription drug plan, which covers both medical services and prescription drugs. You may find a Medicare Advantage plan particularly attractive if you prefer to receive all your Medicare benefits from one plan, like a health maintenance organization (HMO) or a preferred provider organization (PPO). Not every Medicare Advantage plan includes prescription drug coverage, so make sure the plan has this coverage before you sign up.
  • A stand-alone Medicare Part D prescription drug plan, which provides only prescription drug coverage. This kind of plan can work alongside your Medicare Part A and/or Part B coverage.

If you enroll in a Medicare Advantage plan, note that you continue to pay your monthly Medicare Part B premium. You also pay any premium the plan might charge.

What Medicare Part D covers

Medicare prescription drug plans generally cover a range of medications, but not every plan covers the same prescriptions. But there are certain types of medications they have to cover.

At a minimum, Medicare Part D prescription drug plans are required to cover at least two medications in each therapeutic drug class. For six of those classes—antidepressants, antipsychotics, chemotherapy agents, HIV/AIDS drugs, immunosuppressants, and seizure medications—nearly all medications are covered.

How Medicare Part D plans may differ from one plan to the next

Beyond the basic prescription drug benefits, Medicare Part D prescription drug plans can differ from one another in significant ways. Each Medicare prescription drug plan:

  • Has its own formulary—that is, a list of covered medications. It typically includes brand-name and generic prescription drugs. Medicare Advantage prescription drug plans may also include certain over-the-counter items that are not included in the standard Medicare Part D benefits.

Under Medicare Part D, each Medicare prescription drug plan places the covered prescription drugs it pays in different levels, called tier, in its formulary. A medication on a lower tier will cost less than one on a higher tier.

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  • Sets its annual deductible— and if it will have a deductible. This is the amount you must pay before the plan pays anything for the covered medication.
  • Determines what portion it pays for covered Medicare Part D medications and what portion you pay (copayments or coinsurance).
  • Might have its own network of contracted retail pharmacies which you usually must use to receive benefits
  • Sets its own premium (if any) for Medicare Part D coverage.

When to sign up under Medicare Part D

If you’re signing up for a Medicae prescription drug plan for the first time, you may do so in any of these enrollment periods:

Initial Enrollment Period (IEP): You can enroll in a Medicare prescription drug plan at any time during your seven-month initial Medicare initial enrollment period. For most people, the IEP runs from three months before to three months after the month you turn 65, and includes the month you turn 65. If you’re younger than 65 but qualify for Medicare because of a disability, in most cases you can sign up for a Medicare prescription drug plan between your 22nd and 28th month of receiving Social Security disability payments.

Annual Election Period (AEP): This enrollment period runs from Oct. 15 to Dec. 7 each year, with coverage beginning January 1. You can also change from one Medicare prescription drug plan to another, or make some other coverage changes, during the AEP.

Medicare Advantage Open Enrollment Period: During this timeframe (January 1 – March 31 every year), you can generally switch from one Medicare Advantage plan to another. If your current plan doesn’t cover your prescription drugs, for example, you may be able to switch to a plan that does. Or, you can drop your Medicare Advantage plan and return to Original Medicare. In that case, you can enroll in a stand-alone Medicare Part D prescription drug plan during this period. 

Special Enrollment Period (SEP): You may be entitled to an SEP in certain circumstances — for example, if you lose creditable prescription drug coverage from an employer or union. You generally also qualify for an SEP if you enrolled in a Medicare prescription drug plan and then moved outside the plan’s service area or moved into or out of a nursing facility. These are just examples of situations that might qualify you for an SEP. 

You might want to enroll in a Medicare prescription drug plan when you are first eligible for coverage, or when you will soon lose creditable prescription drug coverage from another source, such as an employer-sponsored plan. This is true whether you currently take prescription drugs or not. If you wait, you risk not having coverage when you need it. If you delay enrollment, you might have to pay a Medicare Part D late enrollment penalty when you decide to sign up.

You can compare plans right on this page, anytime it’s convenient for you. Enter your zip code to get started. You can even enter your prescription drugs to see which plans may cover them, and how much they’ll cost.

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