What Is Medicare Part D? What It Costs and Covers

HealthCare Writer

Updated on September 28th, 2023

Reviewed by Diane Omdahl

We aim to help you make informed healthcare decisions. While this post may contain links to lead generation forms, this won’t influence our writing. We follow strict editorial standards to give you the most accurate and unbiased information.

As a Medicare beneficiary, you are eligible for Medicare Part C prescription drug insurance. This insurance covers a percentage of your medication costs. You can enroll in a Medicare Part D prescription drug plan with Original Medicare. Or you can sign up for a Medicare Advantage plan with additional benefits.. 

If you’re not taking expensive medications, Medicare Part D prescription drug insurance may not seem important. But it’s wise to enroll in at least an inexpensive prescription drug plan as soon as you enroll in a Medicare plan. If you delay and later on need to buy a policy to help pay for expensive drugs, you might be charged a penalty for late enrollment.1 Read more on approaching this decision, one among many you’ll make when getting covered by Medicare.

Drug Plan with Original Medicare

If you choose Original Medicare, you can purchase a stand-alone Medicare Part D prescription drug plan through a private insurance company. As of May 2023, 43% of Part D enrollees chose a stand-alone plan.

What Does Medicare Drug Insurance Cover?

Medicare Part D prescription drug policies vary by which medications they cover and how much you must pay. But even the least expensive prescription drug plans must cover most generic and brand name drugs and the insulin preparations that people on a Medicare plan generally need. It must cover all or most of the drugs in the following categories:

  • Anticancer drugs (unless covered by Medicare Part B),
  • Antidepressants,
  • Antipsychotic medications,
  • Anticonvulsive treatments for seizure disorders,
  • HIV/AIDS treatments,
  • Immunosuppressant medication4

Part D prescription drug plans must also cover vaccines, including shingles shots, which are not covered by Medicare Part B. (The annual flu shot, pneumococcal, and COVID-19 vaccines are covered by Medicare Part B.) In 2023, the Medicare Part D insulin savings program provides insulin medication for a $35 maximum copayment.

What does Medicare drug insurance not cover? 

In general, Part D plans are not allowed to cover medications for:

  • anorexia, weight loss or weight gain
  • cough and colds symptomatic relief
  • cosmetic purposes
  • fertility drugs
  • hair growth
  • over-the-counter drugs
  • sexual or erectile dysfunction
  • vitamins and minerals, except for prenatal vitamins, niacin (when used to treat a condition), and fluoride

Limitations on Coverage

It’s important to check the plan’s formulary, or list of covered drugs, to make sure your prescriptions are covered by Medicare Part D and find out about your out-of-pocket costs (deductible, coinsurance, copays). Whether stand-alone or part of a Medicare Advantage plan, prescription drug plans have different rules limiting medication coverage based on price.

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For example, a generic medication might be considered Tier 2 and cost you very little out-of-pocket. But the name-brand and specialty Tier 3-5 drugs may cost considerably more. The plan may also require prior authorization for prescriptions or require you to try a lower-priced drug first. 6

Who Is Eligible for Medicare Part D?

Those 65 or older who are entitled to or already enrolled in Medicare are eligible for Medicare Part D prescription drug insurance. Also eligible are people who have received Social Security Disability Insurance (SSDI) benefits for more than 24 months and those who have been diagnosed with end-stage renal disease.7

What Does Medicare Part D cost?


Monthly premium prices vary from plan to plan for Medicare Part D prescription drug coverage and depend on your income. Those with higher incomes will pay more. In 2023, single filers with income over $97,000 and couples over $194,000 will pay more. Adjustments ranging from $12.20 to $76.40 a month may be added to your premium.8


A deductible is the amount you have to spend before the plan starts paying its share. Some drug plans do not have deductibles. The maximum permitted deductible for 2023 is $505.9


A drug plan may have either copayments (a set amount you pay for medications in each tier) or coinsurance, a percentage you pay for the price of the drug.10  

What Is the Coverage Gap or Donut Hole?

Until your total Medicare Plan D prescription drug costs hit $4,660, you pay the cost-sharing designated in your policy in 2023. 

  • When you reach the initial coverage limit of $4,660 (increased from $4,430 in 2022), you enter the coverage gap, also known as the donut hole
  • You then pay 25% of costs for the costs of brand and generic drugs until your total out-of-pocket Part D spending reaches $7,400 
  • At that point, the catastrophic limit kicks in and beneficiaries pay the greater of 5% or $4.15 for generic medications and $10.35 for brand-name drugs for the rest of the year.11

What Is Extra Help and Who Is Eligible?

You may be eligible for lower premiums, deductibles and coinsurance through Medicare’s Part D Extra Help program. In 2023, those enrolled in the program pay $4.15 for each generic and $10.35 for each brand name drug.

In 2023, you may qualify if your income is up to $16,660 for an individual and $33,240 for a couple and you have limited resources such as savings, stocks and bonds. If your income or resources change, you can apply for Medicare Part D Extra Help anytime.12

When Can You Enroll in Medicare Part D?

Initial Enrollment Period

When you turn 65 and are newly eligible for a Medicare plan, you can add a stand-alone Medicare Part D prescription drug plan or join a Medicare Advantage plan with additional benefits e. Within the first 12-months after initial enrollment, you can switch from a Medicare Advantage plan to Original Medicare and purchase a stand-alone Part D prescription drug plan. Those who qualify for Medicare under 65 can sign up for Part D prescription drug coverage when first eligible.

Considering a Medicare Part D Plan?

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Considering a Medicare Part D Plan?

Review options now.

You can change your Medicare Part D prescription drug coverage during the Medicare Annual Enrollment Period, which is October 15-December 7 each year. Your new coverage will start on January 1. During this period, you can also switch to Medicare Advantage plans or switch to Original Medicare. 

A separate election period, called the Medicare Advantage Open Enrollment Period, from January 1-March 31 allows you to change Medicare Advantage plans (with or without drug coverage) or switch to Original Medicare and join a Medicare Part D prescription drug plan. 

Special Enrollment Period

Certain life events — such as moving to a new ZIP code, moving in or out of an institution (such as a skilled nursing facility or prison), and other special situations — can provide a special enrollment period for making changes to Medicare Advantage and Medicare Part D prescription drug coverage.13

Find a Medicare Drug Plan in Your Area

Use the online Medicare Plan Finder tool for a list of the stand-alone Medicare Part D prescription plans and Medicare Advantage plans with prescription drug coverage available in your ZIP code.14 

Here are some tips for finding a plan that meets your budget, needs and preferences.

  • Check the prices. The monthly premium is an important consideration but look at cost-sharing, such as deductibles, coinsurance and copays. A low premium may cost you more in the long run.
  • If you prefer “one-stop shopping” and are willing to choose a plan that limits you to a network of providers, you may have lower premium costs with a Medicare Advantage plan (Part C) with prescription drug coverage. 
  • If you take no or very few medications, you may want to opt for a low-premium Medicare Part D prescription drug plan. It will still cover most of the drugs that people on Medicare need.
  • If you are taking specific long-term medications, check their availability and costs in various plans. If the drugs you take are generics, look for plans that charge you little or nothing for these.
  • If you expect large medication expenses, it may pay to look for a plan that extends additional coverage if you reach high spending levels.
  • When selecting a plan, check to see if they have a convenient preferred pharmacy, where you can often get added savings on prescription drugs.

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  1. U.S. Government Website for Medicare. “Part D late enrollment penalty.” (accessed January 24, 2023).

  2. Juliette Cubanski and Anthony Damico.  “Medicare Part D: A First Look at Medicare Drug Plans in 2023.” KFF, November 10, 2022.

  3. Jeannie Fuglesten Biniek and Meredith Freed. “Medicare Advantage 2023 Spotlight: First Look.” KFF, November 10, 2022.

  4. An Overview of the Medicare Part D Prescription Drug Benefit.” KFF, October 19, 2022.

  5. U.S. Government Website for Medicare. “What Medicare Part D drug plans cover.” medicare.gov (accessed January 2023).

  6. Ibid.

  7. U.S. Government Website for Medicare. “End-Stage Renal Disease (ESRD).” (accessed January 24, 2023).

  8. NOTE TO: Medicare Advantage Organizations, Prescription Drug Plan Sponsors, and
    Other Interested Parties. cms.gov. Accessed January 24, 2023.

  9. U.S. Government Website for Medicare. “Yearly deductible for drug plans.” (accessed January 24, 2023).

  10. Kaiser Family Foundation. “Overview of Medicare Part D Prescription Drug Benefit.” kff.org, Nov 13, 2019 (accessed April 2020).

  11. Kaiser Family Foundation.“An Overview of the Medicare Part D Prescription Drug Benefit.” KFF, October 19, 2022.

  12. Social Security Administration. Understanding the Extra Help with Your Medicare Prescription Drug Plan. SSA, 2023. (accessed January 24, 2023).

  13. U.S. Government Website for Medicare. “Find a Medicare plan.” medicare.gov (accessed Apr, 2020).

  14. U.S. Government Website for Medicare. “6 tips for choosing Medicare drug coverage.” medicare.gov (Accessed Apr 2020).