Medicare Part D
Medicare Prescription Drug Coverage (Part D)
Medicare Drug Coverage (Part D) helps cover the cost of outpatient prescription drugs.
To get Medicare drug coverage, you must sign up and pay for a plan with a private insurance company that offers Medicare drug coverage. Approved insurance companies must follow the rules set by Medicare. Each Part D plan can vary in cost and specific drugs covered on their formularies. Medicare drug coverage is available to anyone with Medicare. To join a plan, you must live in that plan’s service area and be a United States citizen or lawfully present in the United States.
Even if you don’t take many drugs now, or your current out-of-pocket drug costs are low, consider getting a drug plan with a low monthly premium so you can avoid the late enrollment penalty. All plans must cover a wide range of drugs.
Coverage basics
- Deductible: An amount you pay for covered drugs and items each year, before your plan starts to pay. Your deductible will depend on which plan you choose. No Medicare drug plan may have a deductible more than $590 in 2025, and some plans have no deductible.
- Copayment: A fixed amount you pay for a drug at the pharmacy.
- Coinsurance: A percentage you pay for a drug at the pharmacy.
Here is a link on the Medicare site where you can search and compare Part D drug plans with costs.
What are the premium penalties I have heard about?
There are two penalties to be aware of.
Late enrollment penalty
You may owe a Part D late enrollment penalty if at any time after your Initial Enrollment Period is over, there’s a period of 63 or more days in a row when you don’t have Medicare drug coverage or other creditable prescription drug coverage. Generally, if you had credible coverage with an employer’s plan and you have less than a 63 day gap in coverage before starting an individual part D drug plan, you will not have to pay any late enrollment penalties. But… if Medicare determines that you owe a penalty, you will have to pay that penalty for as long as you have Medicare drug coverage.
Income penalty
Note: You may also need to pay an extra amount for your Medicare drug coverage (Part D) premium if your modified adjusted gross income is above a certain amount. If your income is above a certain limit (in 2025, the income limits are $106,000 for individuals and $212,000 if you’re married and file jointly), you’ll pay an extra amount in addition to your plan premium (sometimes called “Part D IRMAA”).
Here is the link to the Irma page at the Medicare site: Medicare
