Medicare Part D

What is Medicare Part D

Medicare Part D provides prescription drug coverage to help lower the cost of medications. It is optional, but highly recommended because late enrollment can result in lifetime penalties if you go without “creditable” drug coverage.

Part D is administered by private insurance companies that contract with the Centers for Medicare & Medicaid Services (CMS).

You can get Part D in one of two ways:

Stand-alone Prescription Drug Plan (PDP): Works with Original Medicare (Parts A & B).
Medicare Advantage Prescription Drug Plan (MAPD): Combines Part C + Part D benefits in one plan.

Table of Contents:

Medicare Part D Coverage

Part D Covered Drugs

All Part D plans must include coverage in each of the following categories and classes:

Antidepressants.
Antipsychotics.
Anticonvulsants.
Antiretrovirals (HIV/AIDS).
Immunosuppressants.
Anticancer drugs not covered by Part B.

Part D Covered Drugs Formularies and Tiers

Part D formularies are each plan’s approved drug lists, organized into tiers that determine your cost. Lower tiers (usually Tier 1–2 generics) have the lowest copays; higher tiers (e.g., non-preferred brands and specialty drugs) use higher copays/coinsurance. Plans can require prior authorization, step therapy, or quantity limits. You can ask for a formulary or tiering exception if your doctor says a different drug or tier is medically necessary. Costs also vary by pharmacy type (preferred vs. standard vs. mail order)

Tier	Type of Drug	What You Pay
Tier 1	Preferred Generics	Lowest copay
Tier 2	Non-preferred Generics	Slightly higher copay
Tier 3	Preferred Brand	Moderate copay
Tier 4	Non-preferred Brand	Higher copay
Tier 5	Specialty Drugs	Percentage coinsurance (usually 25–33%)

Non-Covered Drugs under Medicare Part D

Part D generally does not cover:

Over-the-counter medications and vitamins.
Drugs for weight loss or gain.
Fertility or cosmetic purposes.
Erectile dysfunction drugs.
Hair-growth treatments.
Drugs covered under Part A or B (e.g., hospital or office-administered medications).

Medicare Part D Eligibility

Cost-Share for Home Health Care

You are eligible if:

You are entitled to Medicare Part A or enrolled in Part B.
You live within the plan’s service area.
You are a U.S. citizen or lawful resident.

Enrollment is voluntary, but you should enroll when first eligible to avoid penalties.

Medicare Part D Premium Cost

Part D premiums vary by plan and location.

The national base premium for 2025 is approximately $36.00/month, but actual plan premiums may range from $0 to $100+ depending on benefits and carrier.

Additional Premium Cost due to Part D IRMAA

If your income exceeds certain limits, you’ll pay an additional IRMAA surcharge (in addition to your plan’s premium).

This extra amount is paid directly to Medicare, not your plan.

Individual Income in Year 2023	Joint Income in Year 2023	Extra Part D Amount (2025)
$0 – $106,000	$0 – $212,000	$0.00
$106,001 – $133,000	$212,001–$266,000	$13.70
$133,001 – $167,000	$266,001–$344,000	$35.30
$167,001 – $200,000	$344,001–$400,000	$57.00
$200,001 – $500,000	$400,001–$750,000	$78.60
$500,000 or more	$750,001 or more	$85.80

Additional Premium Cost due to Part D Late Enrollment Penalties

If you go 63 days or longer without creditable drug coverage after your Initial Enrollment Period, you’ll owe a lifetime penalty added to your premium.

Penalty Formula:

👉 1% × (number of months without creditable coverage) × national base premium ($36 in 2025)

Example:
If you delay for 20 months without coverage → 1% × 20 × $36 = $7.20 added monthly for life.

Medicare Part D Drugs Cost-Share

Prescription Drugs Cost-Sharing

The tier of your medication.
Whether your pharmacy is preferred or standard.
Whether you use mail-order or retail pickup.
Whether you’ve reached the deductible or coverage gap.

Typical cost structure:

$0 – $10 copay for Tier 1 generics.
$30 – $45 for Tier 3 preferred brand drugs.
25% coinsurance for specialty drugs.

Part D Coverage Stages

MAPD prescription benefits follow the four standard Part D coverage phases, which reset each year.

💊 Medicare Part D Coverage Stages – 2025

Coverage Stage	What It Means	What You Pay (2025)	Ends When...
1️⃣ Deductible Stage	You pay the full cost of your prescriptions until you meet your plan’s annual deductible.	You pay 100% of drug costs until deductible is met (max $590).	When you’ve paid your deductible amount.
2️⃣ Initial Coverage Stage	After meeting your deductible, your plan helps pay for your drugs	You typically pay 25% of covered drug costs (copay or coinsurance), and the plan pays the rest.	When your true out-of-pocket (TrOOP) spending reaches $2,000.
3️⃣ Catastrophic (Out-of-Pocket Cap) Stage	New for 2025: Once you reach $2,000 in out-of-pocket spending, you pay nothing more for covered drugs.	$0 for all covered prescriptions for the rest of the year.	Continues until December 31 of the plan year.

🧾 Key 2025 Updates
- The “Donut Hole” (Coverage Gap) is eliminated starting in 2025.
- The out-of-pocket cap is now $2,000 — after that, you pay $0 for covered prescriptions.
- Plans can still set a deductible (up to $590) before cost sharing begins.

Pharmacy Network

You must fill prescriptions at a plan-approved pharmacy network to get full coverage.
Some pharmacies are “preferred” and offer lower copays, while others are “standard” network pharmacies.
Many plans also include mail-order pharmacies for a 90-day supply at a discount.

Drug Formulary (Drug List)

Each plan has its own formulary, or list of covered medications.
Formularies are organized by drug tier, which determines how much you pay.
Plans must include at least two drugs in each therapeutic category, ensuring access to common treatments.

Your Plan and Pharmacy Choices Matters!

Formulary tier: Generics (lower tiers) usually cost less than brand/specialty (higher tiers).
Preferred vs. standard pharmacy: Preferred in-network pharmacies often have lower copays; out-of-network usually not covered.
- Retail vs. mail order: Many plans discount 90-day mail fills for maintenance meds.
Plan deductible & copays: Plans can set a deductible (up to the annual CMS max) and their own copay/coinsurance by tier.

Medicare Prescription Payment Plan Program

What it is Medicare Prescription Payment Plan Program?
A voluntary payment option that lets you spread your Part D out-of-pocket costs into monthly bills from your drug plan instead of paying at the pharmacy counter. All Part D and MAPD plans must offer it starting 2025. It doesn’t lower your drug costs—it just smooths them out.

Who can use it?
Anyone with a Medicare drug plan (stand-alone Part D or Medicare Advantage with drug coverage) may opt in. Plans must offer it.

Tip: People who already get Extra Help, a Medicare Savings Program, or a state pharmaceutical program often won’t benefit from this option.

How it works (at a glance)?

At the pharmacy: you pay $0 at pickup for covered Part D drugs.
Each month: your plan bills you for a capped amount that includes what you would have paid at the counter, plus any unpaid balance, divided by the months left in the year; the amount can change as you add/refill prescriptions. No enrollment fee.
Keep paying your plan premium separately (if you have one).

Dollar caps that still apply
In 2025, your annual out-of-pocket for covered Part D drugs is capped at $2,000. Hitting the cap means $0 cost for covered drugs for the rest of the year (whether or not you use the payment plan).

Enrolling (how to opt in)
Call your plan (number on your ID card) or use your plan’s website to enroll; plans confirm your start date after reviewing your request. Many plans use a short participation request form. You can enroll any time during the year (earlier is usually better so costs spread over more months).

Billing & leaving the program:

You’ll get a monthly bill showing the amount due and how to pay. If you miss a payment, the plan will send a reminder; if you still don’t pay by the date on the reminder, you’ll be removed from the Payment Plan—but no interest or late fees apply, and you still owe the balance (you can pay it all at once or continue monthly billing of the balance).
Medicare
You can leave any time by contacting your plan. Changing plans (e.g., switching Part D or MAPD) ends your participation; contact the new plan if you want to opt in again.
Medicare

When this option helps most:

You have high drug costs early in the year and want predictable monthly bills.
You prefer budgeting over point-of-sale payments. (It’s not ideal if your yearly costs are low, your costs are steady each month, you enroll late in the year, or you already get financial help like Extra Help/MSP/SPAP.)

Medicare Part D Assistance Programs

Need help paying for prescriptions? Medicare Part D Assistance Programs can lower or smooth your drug costs through several options. The big ones are Extra Help (LIS) for low-income subsidies, Medicare Savings Programs (which can auto-qualify you for Extra Help), State Pharmaceutical Assistance Programs (SPAPs), and manufacturer/charity Prescription Assistance Programs (PAPs).

Medicare Assistance Programs (2025)

Program	Helps Pay For	Who Qualifies	Where to Apply
Extra Help (LIS)	Premiums, deductibles, copays	Low-income beneficiaries	Social Security
Medicare Savings Programs (MSPs)	Part A & B premiums	Low-income seniors	State Medicaid office
SPAP (State Programs)	Drug copays or discounts	Varies by state	State program office
Pharmaceutical Assistance (PAPs)	Specific brand-name or specialty drugs	Based on income and need	Manufacturer or nonprofit
IRA Drug/Vaccine Caps	Limits cost of insulin & vaccines	All Part D enrollees	Automatically applied

Medicare Part D Enrollment

You can enroll in a Prescription Drugs Plan (Part D) plan when you first get Medicare during your 7-month Initial Enrollment Period (IEP) around your 65th birthday—once Parts A and B are active; you can also change or join a Part D plan each year during the Annual Election Period (AEP), Oct 15–Dec 7, with changes effective Jan 1. If you’re already in a Medicare Advantage plan on Jan 1, you get one additional change during the Medicare Advantage Open Enrollment Period (MA OEP), Jan 1–Mar 31, with coverage starting the first of the next month. Special Enrollment Periods (SEPs) let you join, switch, or drop a plan outside these windows after certain events (e.g., moving, losing other coverage, gaining/losing Medicaid or Extra Help); those changes typically begin the first day of the month after the plan receives your request. In every case, you must have Parts A and B, live in the plan’s service area, and apply within a valid window.

Who qualifies:
Your Initial Enrollment Period (IEP) is your first chance to sign up for Medicare when you become eligible — usually when you turn 65 (or after 24 months of disability benefits).

When You Can Enroll:
Your IEP is a 7-month window that includes:

3 months before your 65th birthday month.
Your birthday month.
3 months after your birthday month.

During this period, you can enroll in:

Enroll in Medicare Part A and/or Part B.
Join a Medicare Advantage Plan (Part C).
Join a stand-alone Prescription Drugs Plan (Part D).

When Coverage Begins:

- Enroll before 65: Plan effective 1st day of 65th birth month.
- Enroll on 65th birth month or after: Effective 1st of month after enrollment.

Example:
If your 65th birthday is July 20:

Enroll in April, May, or June → coverage begins July 1.
Enroll in July → coverage begins August 1.
Enroll in August → coverage begins September 1.
Enroll in September → coverage begins October 1.

Annual Enrollment Period (AEP)

When does it occur?
Oct 15 – Dec 7 every year. Changes take effect Jan 1 if the plan gets your request by Dec 7.
Centers for Medicare & Medicaid Services.

What you can do:

Switch Original Medicare → Medicare Advantage Plan (Part C).
Switch Medicare Advantage Plan (Part C) → Original Medicare.
Change Medicare Advantage Plans (Part C).
Add, switch, or drop Prescription Drug Plan (Part D).

Your last application submitted by Dec 7 is the one that takes effect Jan 1.

Coverage Begins:
January 1 of the following year.

Related window (for context):
Medicare Advantage OEP: Jan 1 – Mar 31 (for people already in MA): one change to another MA plan or drop MA to return to Original Medicare (and you can add a PDP). Coverage starts the 1st of the month after the plan gets your request.

When does it occur?
Jan 1 – Mar 31 each year. Only for people who are already enrolled in a Medicare Advantage plan as of Jan 1 (there’s also a special MA OEP for newly eligible folks—see below).

What you can do (one change only)?

Switch to another Medicare Advantage plan (with or without drug coverage), or
Drop Medicare Advantage and return to Original Medicare (and you may join a stand-alone Part D plan).

Coverage starts the 1st day of the month after the plan gets your request.

What you can’t do in MA OEP?

You cannot switch from Original Medicare to a Medicare Advantage plan.
You generally cannot enroll in or switch stand-alone Part D plans unless you’re leaving MA and going back to Original Medicare.

MA OEP for Newly Eligible Beneficiaries:
If you just got Medicare and chose a Medicare Advantage plan during your IEP, you have an additional MA OEP during the first 3 months you have Medicare to make one MA change or drop MA and return to Original Medicare (and you may add a PDP).

You may qualify for a Special Enrollment Period (SEP) if::

You move out of your current plan’s service area or gain access to new plans.
You gain or lose Medicaid, Extra Help (LIS), or eligibility for a Special Needs Plan (SNP).
You enter, live in, or leave a nursing home or long-term care facility.
Your plan terminates its Medicare contract or you qualify for another CMS-approved special situation.

What you can do:

Disenroll from/Enroll in Medicare Advantage Plan (Part C)
Disenroll from/Enroll in stand-alone Prescription Drugs Plan (Part D).
Leave Medicare Advantage Plan (Part C) and return back to Original Medicare.
Leave Prescription Drugs Plan (Part D) and return back to Original Medicare.

When Coverage Begins:

In most cases, coverage starts the first day of the month after the plan receives your enrollment request.
Some SEPs (such as loss of coverage or a permanent move) allow you to choose whether coverage starts:

The first day of the month after the event, or
The first day of the month after your plan receives your enrollment (depending on timing).

If your plan ends or is terminated by Medicare, your new coverage generally begins the first day of the month after your old plan ends.

Typical Prescription Drug Plan (Part D) Tiers Table

Medicare Part D Premium Cost

💊 Medicare Part D Coverage Stages – 2025

Medicare Prescription Payment Plan Program

Medicare Part D Assistance Programs

Medicare Assistance Programs (2025)

Medicare Part D Enrollment

Need Help or Quote?

Vision Insurance Group, LLC.

Clients

Services