Jane Dotson
Medicare Part D is prescription drug insurance. It is worth considering having Part D insurance to avoid a late enrollment penalty, which is permanently added to your Medicare drug coverage premium. While some people may find that they are paying for cheap prescriptions that they do not need, it is important to think about the future and the possibility of needing costly medications. There are two ways to get Medicare prescription drug coverage. If you have Original Medicare (Part A and/or Part B), you buy a stand-alone Medicare Part D plan from a private health insurance company to get prescription drug coverage. You can shop for your choice of stand-alone plans, which vary in terms of cost and coverage.
| Characteristics | Values |
|---|---|
| What is Part D Insurance? | Medicare Part D is prescription drug insurance. |
| Who is it for? | People with Original Medicare (Part A and/or Part B). |
| How to get it? | If you have Original Medicare, you buy a stand-alone Medicare Part D plan from a private health insurance company. |
| Cost | Average premiums of $46.50 in 2025, plus copays, coinsurance and/or deductibles — all vary by plan. The monthly premium varies by the base beneficiary premium, and enrollees may see their premium increase by more or less than 6% or even decrease if they stay with the same plan for 2025. |
| Late enrollment penalty | If you don't enroll during the initial enrollment period and you don't have "creditable prescription drug coverage", you'll likely pay a late enrollment penalty. The Part D late enrollment penalty is calculated by multiplying 1% times the "national base beneficiary premium" ($36.78 in 2025) times the number of full, uncovered months you were eligible but didn't enroll. |
| Benefits | If you take costly medications, Medicare Part D coverage is almost certainly worth it. Even if not, enrolling in a low-cost plan can help you avoid late enrollment penalties, and nearly every state has at least one plan with $0 premiums in 2025. It's good to be covered in case your health changes or your prescription drugs become more expensive. |
| Special enrollment period | If you lose your current coverage, you might qualify for a special enrollment period, which generally lasts for two months. If you sign up during this period, you can avoid owing late enrollment penalties. |
| Plan changes | Formularies change frequently. Your insurer should send you a Notice of Plan Change when the formulary changes. Check the pharmacy network to see if your pharmacy is in the plan's network. |
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What You'll Learn
Cost of Medicare Part D insurance
Medicare Part D is prescription drug insurance. The costs associated with Medicare Part D insurance vary depending on the plan chosen and the user's income. In 2025, the average monthly premium for Medicare Part D plans is expected to be $46.50, with a maximum deductible of $590. However, the costs of Medicare Part D insurance are not limited to premiums and deductibles. Out-of-pocket expenses, such as copays and coinsurance, can also add to the overall cost of the insurance.
The monthly premium is the amount users must pay for the drug plan, while the deductible is the amount they must pay out of pocket before the insurance plan covers the cost of prescription drugs. Copays and coinsurance are additional out-of-pocket expenses incurred when filling a prescription. It is important to understand the costs associated with each plan to make an informed decision.
Some individuals may qualify for Extra Help, a Medicare program that assists with drug costs. Those who receive Medicaid, participate in Medicare Savings Programs, or receive Supplemental Security Income (SSI) benefits are automatically eligible for Extra Help. Additionally, Medicare Prescription Payment Plans can assist in managing out-of-pocket expenses by spreading them across the calendar year. Pharmaceutical Assistance Programs (PAPs) offered by pharmaceutical companies may also help lower prescription costs for those enrolled in Medicare Part D.
For high-income earners, a surcharge called the Part D income-related monthly adjustment amount (IRMAA) may apply. This surcharge is separate from the Part D premium and is paid directly to Medicare rather than the insurance company.
Late enrollment can also impact the cost of Medicare Part D insurance. If individuals delay enrolling in Medicare Part D when eligible and do not have other creditable prescription drug coverage, they may be subject to a late enrollment penalty. This penalty is calculated by multiplying 1% of the national base beneficiary premium by the number of full months of eligibility before enrollment. The penalty amount is then added to the monthly premium for as long as the individual has Medicare drug coverage.
Considering the potential for high prescription drug costs and the availability of assistance programs, Medicare Part D insurance can be a valuable investment for the future, even for those who may not currently require extensive prescription drug coverage.
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![Drug coverage under national health insurance : Proceedings of the national conference, October 5-7, 1977 Editors : Milton Silverman and Mia Lydecker. 1978 [Leather Bound]](https://m.media-amazon.com/images/I/61IX47b4r9L._AC_UY218_.jpg)
Late enrollment penalties
In the context of Medicare Part D, which is prescription drug insurance, late enrollment penalties are added to an individual's Medicare drug coverage premium. Specifically, if there is a period of 63 or more consecutive days after an individual's Initial Enrollment Period ends, during which they do not have Medicare drug coverage or other creditable prescription drug coverage, they may be subject to a late enrollment penalty.
The late enrollment penalty for Medicare Part D is calculated by multiplying 1% of the national base beneficiary premium ($36.78 in 2025) by the number of full months the individual was eligible for Medicare drug coverage but did not have it or other creditable prescription drug coverage. For example, if an individual waited 14 months after becoming eligible for Medicare to join a Medicare drug plan and did not have creditable drug coverage during that time, they would have to pay a 14% late enrollment penalty on top of their monthly plan premium.
It is important to note that if an individual qualifies for a Special Enrollment Period, they may be able to avoid late enrollment penalties. A Special Enrollment Period typically lasts for two months and can be triggered by events such as losing employer-provided insurance. Additionally, if an individual has creditable drug coverage that is similar in value to Medicare Part D, they may not be subject to late enrollment penalties.
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Drug coverage and pharmacy networks
Medicare Part D is prescription drug insurance. If you take costly medications, Medicare Part D coverage is almost certainly worth it. Even if you don't, enrolling in a low-cost plan can help you avoid late enrollment penalties, and nearly every state has at least one plan with $0 premiums in 2025. If you don't use Medicare Part D coverage much initially, it's good to be covered in case your health changes or your prescription drugs become more expensive later on.
There are two ways to get this Medicare prescription drug coverage. If you have Original Medicare (Part A and/or Part B), you buy a stand-alone Medicare Part D plan from a private health insurance company to get prescription drug coverage. You can shop for your choice of stand-alone plans, which vary in terms of cost and coverage. You’ll pay a separate premium for the Part D plan. Costs include average premiums of $46.50 in 2025, plus copays, coinsurance and/or deductibles — all of which vary by plan.
Specific drug coverage and pharmacy networks vary by plan. Most Medicare Part D plans negotiate with a network of pharmacies for the lowest cost. Check to see if your pharmacy or an equally convenient one is in the plan’s network. Also, compare prices for using mail order. Formularies change frequently, so it's important to stay updated. Your insurer should send you a Notice of Plan Change when the formulary changes.
Financing for Part D comes from general revenues (75%), beneficiary premiums (15%), and state contributions (13%). The monthly premium paid by Part D enrollees was initially set to cover 25.5% of the cost of standard drug coverage, but with the Inflation Reduction Act’s 6% premium stabilization provision and the new Part D premium stabilization program in effect, enrollees are paying less. In 2025, the base beneficiary premium is $36.78, a 6% increase from 2024. Annual growth in the base beneficiary premium is capped at 6% due to a provision in the Inflation Reduction Act.
The Part D defined standard benefit is changing for 2025 and will include a new $2,000 cap on out-of-pocket drug spending. For 2025, under the standard benefit, Part D enrollees will pay a deductible of $590 (up from $545 in 2024), and will then pay 25% of their drug costs in the initial coverage phase until their out-of-pocket spending totals $2,000.
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Medicare Advantage open enrollment
During Medicare Advantage Open Enrollment, you can switch from one Medicare Advantage plan to another or switch to Original Medicare (Parts A and B) with the option to buy a stand-alone Medicare Part D plan. Medicare Part D is prescription drug insurance, which you can buy from a private health insurance company.
If you have Original Medicare (Parts A and/or B), you can buy a stand-alone Medicare Part D plan from a private health insurance company to get prescription drug coverage. Costs include average premiums of $46.50 in 2025, plus copays, coinsurance and/or deductibles, which vary by plan.
If you take costly medications, Medicare Part D coverage is likely worth it. Even if you don't, enrolling in a low-cost plan can help you avoid late enrollment penalties, and nearly every state has at least one plan with $0 premiums in 2025. You can use the interactive tool on Medicare.gov to help you find a Medicare Part D plan that covers your prescriptions.
If you joined a Medicare Advantage Plan during your Initial Enrollment Period, you can change to another Medicare Advantage Plan (with or without drug coverage) or go back to Original Medicare (with or without a drug plan) within the first 3 months of having Medicare Part A and Part B.
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Part D plan availability
Medicare Part D is a voluntary outpatient prescription drug benefit for people with Medicare. It is provided through private plans that contract with the federal government. There are two ways to get Medicare prescription drug coverage. If you have Original Medicare (Part A and/or Part B), you buy a stand-alone Medicare Part D plan from a private health insurance company to get prescription drug coverage. You can shop for your choice of stand-alone plans, which vary in terms of cost and coverage. You’ll pay a separate premium for the Part D plan.
In 2025, 464 PDPs will be offered across the 34 PDP regions nationwide (excluding the territories), a 35% decrease from 2024. Despite the overall reduction, beneficiaries in each state will have a choice of at least a dozen stand-alone plans, plus many Medicare Advantage drug plans. The average Medicare beneficiary has a choice of 48 Medicare plans with Part D drug coverage in 2025, including 14 Medicare stand-alone prescription drug plans (7 fewer than in 2024) and 34 Medicare Advantage drug plans (2 fewer than in 2024).
During the Medicare open enrollment period from October 15 to December 7 each year, people with Medicare can enroll in a plan that provides Part D prescription drug coverage. If you have a Medicare Advantage plan, there’s another opportunity during Medicare Advantage open enrollment, which runs from January 1 to March 31 each year. During this period, you can switch plans or switch to Original Medicare with the option to buy a stand-alone Medicare Part D plan.
A special enrollment period is your chance to sign up for Medicare coverage even though it’s not your initial enrollment period or an open enrollment period. Special enrollment periods generally last for two months. If you sign up during the special enrollment period, you can avoid owing late enrollment penalties.
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Frequently asked questions
Medicare Part D is prescription drug insurance. If you have Original Medicare (Part A and/or Part B), you can buy a stand-alone Medicare Part D plan from a private health insurance company to get prescription drug coverage.
This depends on your circumstances. If you take costly medications, Medicare Part D coverage is likely worth it. Even if you don't, enrolling in a low-cost plan can help you avoid late enrollment penalties, and nearly every state has at least one plan with $0 premiums in 2025. Additionally, it's good to be covered in case your health changes or your prescription drugs become more expensive in the future.
The monthly premium for Medicare Part D varies depending on the plan and your income. The 2025 Part D base beneficiary premium is $36.78, a 6% increase from 2024, but the monthly amount that Part D enrollees pay for individual plans may differ. The Part D late enrollment penalty is calculated by multiplying 1% of the national base beneficiary premium by the number of full, uncovered months you were eligible but didn't join, and this amount is added to your monthly premium.
