Jane Dotson
Medicare Part D is a voluntary outpatient prescription drug benefit for people with Medicare. Unlike Parts A and B, which are administered by Medicare itself, Part D is provided through private plans. Medicare contracts with private companies that are authorized to sell Part D insurance coverage. These companies are both regulated and subsidized by Medicare. Part D prescription drug plans can help cover the costs of your medications. However, some medications may not be covered by your plan, depending on its formulary, which may limit coverage of some drugs based on medical necessity, cost, or safety.
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What You'll Learn
Medicare Part D is provided through private plans
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. Medicare does not administer Part D directly. Instead, it contracts with private companies that are approved to sell Part D insurance coverage. These companies are both regulated and subsidized by Medicare, pursuant to one-year, annually renewable contracts.
There are two main sources of Part D coverage: PDPs (Prescription Drug Plans) and Medicare Advantage plans. PDPs are stand-alone companies that sell prescription drug coverage only and do not offer hospital or medical coverage. In 2023, there were 801 prescription drug plans offered in the 24 PDP regions nationwide. Medicare Advantage plans, on the other hand, provide all Medicare-covered benefits, including prescription drugs (MA-PD).
The costs associated with Medicare Part D include a monthly premium, an annual deductible (sometimes waived by the plans), co-payments, and co-insurance for specific drugs. The exact amount of these costs may vary depending on the plan, the tier of the drug, and the pharmacy used. For many plans, beneficiaries may have to pay a certain amount each year for their prescription drugs before the Medicare drug plan kicks in to cover costs. This amount is known as the yearly deductible. In 2025, the Part D “donut hole,” or coverage gap, will be closed. This means that once members reach their deductible, they will pay no more than 25% of the cost for Part D drugs covered by their plan until they reach a maximum out-of-pocket drug cost of $2,000. After reaching this limit, they will pay nothing for covered Part D drugs for the rest of the year.
Medicare Part D prescription drug plans coordinate benefits with other prescription drug coverage. This means that for covered prescription drugs, the primary insurance typically pays first, and then the secondary insurance pays the remaining unpaid amount up to the plan’s limits. Whether Medicare Part D coverage pays first or second depends on the individual’s circumstances and the details of their other prescription plan.
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Medicare Part D prescription drug plans
There are two main sources of Part D coverage: PDPs (Prescription Drug Plans) – these are stand-alone companies that sell prescription drug coverage only. They do not offer hospital or medical coverage. In 2023, there were 801 prescription drug plans offered in the 24 PDP regions nationwide. The other source is Medicare Advantage plans, which are bundled with Part D plans.
Part D plans generally don't cover drugs prescribed for anorexia, weight loss, weight gain, fertility, erectile dysfunction, cosmetic purposes, or hair growth. Some medications may not be covered by your plan, depending on its formulary, which may limit coverage of some drugs based on medical necessity, cost, or safety. Some prescription drug plans may have restrictions on certain medications, such as prior authorization, step therapy, or quantity limits.
Your costs for Medicare Part D consist of several different payments, including a premium, an annual deductible, copays, and coinsurance. The exact amount of these costs may vary depending on your plan, what tier a drug is in, or what pharmacy you use. For many plans, you may have to pay a certain amount each year for your prescription drugs before the Medicare drug plan kicks in to cover costs. This amount is called the yearly deductible. After you meet your deductible, your plan may require you to pay for part of the cost of your prescriptions.
In 2025, the Part D “donut hole,” or coverage gap, will close. Once members reach their deductible, they will pay no more than 25% of the cost for Part D drugs covered by their plan until they reach a maximum out-of-pocket drug cost of $2,000. After this limit, they will pay nothing for covered Part D drugs for the rest of the year. Individuals with low incomes may qualify for Extra Help, which assists in paying for their Medicare prescription drug costs.
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Medicare Part D costs and benefits
Medicare Part D is a prescription drug plan offered by private health insurance companies. The costs and benefits of Medicare Part D vary depending on the specific plan chosen and the individual's income.
Costs
The average monthly cost of Medicare Part D plans in 2025 is $46.50, according to government data. The base national Medicare Part D premium in 2024 was $34.70. The deductible, copays, and coinsurance can also impact the overall cost of Medicare Part D. The deductible is the amount paid for covered drugs and items each year before the plan starts to pay. In 2025, the maximum deductible for Medicare drug plans is $590, with some plans having no deductible. Copayment refers to a fixed amount paid for a drug at the pharmacy, while coinsurance is a percentage of the drug's cost paid at the pharmacy.
There are also penalties for late enrollment, which are added to the monthly premium. Additionally, high-income earners may have to pay a surcharge called the Part D Income-Related Monthly Adjustment Amount (IRMAA) directly to Medicare.
Benefits
Medicare Part D provides coverage for prescription drug costs. After reaching the full deductible, individuals enter the initial coverage stage, where they pay 25% of the cost as coinsurance for generic and brand-name drugs until their out-of-pocket spending reaches a certain limit. At this point, they enter the catastrophic coverage stage, where they no longer have to pay out-of-pocket costs for covered Part D drugs for the rest of the calendar year.
There are also assistance programs available to help with drug plan costs. These include State Pharmaceutical Assistance Programs (SPAPs), which provide coverage from the state to help pay for premiums and cost-sharing, and Pharmaceutical Assistance Programs (also known as Patient Assistance Programs), offered by some pharmaceutical companies to help pay for medications for Medicare enrollees. Individuals with limited incomes and resources may also qualify for Extra Help from Medicare to pay for drug plan premiums and costs.
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Medicare Part D coverage gap
Medicare Part D is a federal health insurance program that helps cover the costs of prescription medications for people aged 65 and over, as well as some people under 65 with certain disabilities or conditions. Unlike Parts A and B, which are administered directly by Medicare, Part D is provided through private insurance plans. Medicare contracts with private companies that are authorized to sell Part D coverage. These companies are regulated and subsidized by Medicare through annually renewable contracts.
Medicare Part D plans can help cover the costs of prescription medications, but they don't always pay for everything. In the past, there was a coverage gap known as the "donut hole," which has now been eliminated as of 2025. Prior to 2025, the donut hole was a phase of coverage that temporarily limited the amount a Part D plan would pay for covered prescription drugs. Once an individual entered the donut hole, they would have to pay a higher percentage of their drug costs until they reached a certain threshold, known as the catastrophic coverage period.
For example, in 2024, individuals would enter the donut hole when they and their plan had paid a total of $5,030 for their medications. During this period, they would pay 25% of the cost of their drugs as coinsurance until their out-of-pocket spending on covered Part D drugs reached $2,000. At that point, they would enter the catastrophic coverage stage and pay nothing for covered medications for the rest of the calendar year.
The closing of the donut hole does not mean that individuals no longer pay anything for their drugs during this period. Instead, it means that plans and pharmaceutical companies cover a larger portion of the costs. Additionally, it's important to note that not all medications may be covered by Medicare Part D plans. Coverage can depend on the plan's formulary, which may limit coverage based on medical necessity, cost, or safety.
To summarize, while Medicare Part D provides valuable assistance with prescription drug costs, it's important to understand the different phases of coverage, including the now-closed donut hole. Individuals should carefully evaluate the available plans and choose one that best suits their needs in terms of medication coverage and out-of-pocket costs.
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Medicare Part D and other insurance
Medicare Part D is a prescription drug plan that helps cover the costs of medications. It is provided through private plans, meaning Medicare contracts with private companies that are authorized to sell Part D insurance coverage. These companies are both regulated and subsidized by Medicare, pursuant to one-year, annually renewable contracts.
Medicare Part D can be purchased in addition to other insurance. If you have Medicare and other health insurance, each type of coverage is called a "payer." The "primary payer" pays up to the limits of its coverage and then sends the rest of the balance to the "secondary payer." For example, if you are retired and have prescription drug coverage through your or your spouse's former employer's or union's retiree Group Health Plan and Medicare Part D coverage, your Medicare Part D coverage is primary and the Group Health Plan is secondary.
The costs of Medicare Part D include a monthly premium, an annual deductible (sometimes waived by the plans), co-payments, and co-insurance for specific drugs. The exact amount of these costs may vary depending on your plan, what tier a drug is in, or what pharmacy you use. For most prescription drug plans, you will pay a premium or a monthly fee. This premium is paid in addition to the one you pay for Medicare Part B.
Some medications may not be covered by your Medicare Part D plan. This could depend on your plan's formulary, which may limit coverage of some drugs based on medical necessity, cost, or safety. Some prescription drug plans may have restrictions on certain medications, including prior authorization, step therapy, and quantity limits.
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Frequently asked questions
Medicare Part D is a voluntary outpatient prescription drug benefit for people with Medicare. It helps cover the costs of medications.
Medicare Part D is provided through private plans that contract with the federal government. Medicare contracts with private companies that are approved to sell Part D insurance coverage.
Medicare Part D prescription drug plans coordinate benefits with other prescription drug coverage. Whether the Medicare Part D coverage pays first or second depends on your circumstances and the details of your other prescription plan.
