Medicare Part D helps cover prescription drug costs. There are various plans to choose from depending on your needs. Prices for prescription drugs will depend on the Part D plan you choose and what tier your medications fall under.
Even if you do not currently need Medicare Part D, it may be a good idea to enroll in a low-cost plan anyway, since there is a late enrollment penalty if you wait.
There are four types of plans offered under Medicare Part D:
- HMO (Health Maintenance Organization).
- PPO (Preferred Provider Organizations).
- PFFS (Private Fee for Service Plan).
- SNP (Special Needs Plan).
Additionally, there are four “tiers” you can choose from, each with a different overall cost:
- Tier 1 has the lowest copayment for most generic prescriptions,
- Tier 2 has a slightly higher copayment than Tier 1 for preferred, brand-name drugs,
- Tier 3 has even higher copayment for non-preferred, brand-name drugs,
- Specialty tier has the highest copayment for the very high-cost prescriptions.
Part D has a monthly premium that depends on the plan you select. However, there may be an additional charge if you fall into the high earner category.
The Medicare program will look at your tax return from two years ago to determine how much more you will need to pay for the Part D premium. As of 2023, additional monthly fees may range from $12.20 to $76.40.
Deductible amounts also vary depending on the specific plan you pick. As of 2023, a prescription drug deductible cannot be higher than $505. Also, some drug plans do not have deductibles.
Like Medicare Part A and B, there are in-network pharmacies you can work with in Part D. However, some plans offer a prescription mail-order program that delivers your prescription drugs to your home.
Find out how you can combine Medicare Parts A, B and D into one combined plan next.