Medicare Part D: Prescription Drug Plans

Medicare Part D is an optional, standalone prescription drug plan offered by private insurers. It’s available to anyone who is entitled to Part A or enrolled in Part B. Premiums and out-of-pocket expenses for this plan can vary depending on the insurer you choose. You must also live within the plan’s service area to qualify.

Some insurers, like Medical Mutual, include Part D coverage in their Medicare Advantage plans. Learn more about Medical Mutual’s Medicare Advantage with prescription drug plans.

Part D Coverage Stages

With Medicare Part D, there are four coverage stages that affect the cost of your drug. While the four coverage stages are standard for all Part D plans, your actual costs will vary depending on:

  • The drugs you use
  • The plan you choose
  • Whether you go to a pharmacy in your plan's network
  • Whether the drugs you use are on your plan's formulary
  • Whether you get Extra Help paying your Medicare Part D costs

Here are some costs you can expect with Medicare Part D Plans:

Prescription Drug Deductible

If your plan has a deductible, you pay 100% of your prescription drug costs until it is met.

Initial Coverage Cost-sharing

After you meet your deductible, you pay a flat rate (called a copayment or copay) or a percentage (called coinsurance) of the total amount, usually when you pick up a prescription.

The Coverage Gap (The Donut Hole)

Once your total drug spend (what both you and your Part D plan pay) reaches a certain amount, you enter the coverage gap or donut hole. In the coverage gap, there's a temporary limit on the costs the drug plan will cover which means you might pay more out-of-pocket for your drugs. You remain in this stage until you reach your plan's out-of-pocket maximum. People who receive Extra Help  from Medicare won’t enter the coverage gap.

Catastrophic Coverage

After you reach your plan’s maximum out of pocket amount, you only pay a small copayment or coinsurance amount for prescription drugs. For the rest of that year, your Part D plan covers the remaining costs. 

To learn more about the Part D coverage stages and coverage gap, contact the Centers for Medicare & Medicaid Services at 1-800-633-4227 (TTY:1-877-486-2048 for hearing impaired).