Prescription Drug Coverage

Medicare Part D prescription drug coverage is optional. You don’t get it automatically. If you want drug coverage, then you need to buy a plan.

You can get drug coverage through a stand-alone Medicare prescription drug plan or a Medicare Advantage (Part C) plan that includes Part D. You can’t have both. Plans are offered by private insurance companies contracted by Medicare.

It could be tempting to wait and buy Part D coverage later if you’re not taking many prescription drugs when you first enroll in Medicare. But Part D charges a late enrollment penalty if you don’t sign up when you’re first eligible—unless you qualify for an exception. The penalty is a fee set by Medicare that gets added to your premium, and you pay it for as long as you have Part D.

Medicare Prescription Drug Plans (Part D)

You don’t get prescription drug coverage with Medicare Parts A & B alone. Learn about Part D prescription drug plans and when you should enroll to avoid Medicare’s late enrollment penalty.

Drug Formularies and Pharmacy Networks

All prescription drug plans must meet the same basic guidelines created by the federal government. But not all plans are the same.

Every Part D plan has a drug list, or formulary, that shows all the brand-name and generic drugs it covers. Most formularies categorize drugs into tiers based on how much they cost. Covered drugs and costs vary from plan to plan.

Part D Formulary

Drugs may be added to or removed from a plan’s formulary at the beginning of every year. Certain changes may be made during the year under limited conditions, too, such as when a drug is no longer on the market. Your plan must notify you if you are affected by such changes.

Each prescription drug plan has a network of contracted pharmacies. You must use network pharmacies in order to get the discounted plan price for your drugs. Plans may define networks by geographic area, such as a state, or allow the use of network pharmacies nationwide.

Tips for Plan Shopping

You may need to look at several Part D plans to find one that might fit with your needs. Here are a few things to consider when shopping for Part D coverage, whether it’s through a stand-alone Part D plan or a Medicare Advantage plan:

  • First and foremost, review the plan formulary to make sure the drugs you need, or suitable substitutes, are covered.
  • Check the annual deductible, premium, co-pays and co-insurance to see how much you’ll likely pay. Costs between plans may vary widely, even for the same drugs.
  • Make sure your pharmacy is in the plan network. 
  • Look for additional savings, such as a mail-order pharmacy benefit that may let you get a 2- or 3-month refill for a single co-pay.

Some plans have additional terms you may want to look for. For example, plans may:

  • Require that certain prescriptions are approved before you can fill them. This is called “prior authorization.”
  • Cover a drug only after you try one or more similar, lower-cost drugs. This may be called “step therapy.”
  • Limit how much of a medication will be covered.

If your needs change or if you are not satisfied with your plan, you can switch plans once each year during open enrollment (Oct. 15 – Dec. 7), so you’re not locked in. You can find a list of plans in your area and some details about each one at Medicare.gov.