What is a Medicare Part D?
Medicare Part D offers prescription drug coverage to everyone with either Medicare Part A and/or Part B. Like the Part C plans the Part D plans are purchased from private insurance companies that are contracted with Medicare.
There are 2 ways to get prescription drug coverage:
Standalone Medicare Prescription Drug Plans
These are plans specifically designed to cover prescriptions only. If you are on Original Medicare (A & B) and want to add prescription coverage, this is what you would need.
Medicare Advantage Plans
Most Medicare Advantage Plans (but not all) include Part D coverage. These plans are referred to as MAPD (Medicare Advantage Prescription Drug plans).
Costs of Medicare Part D
This question can't be answered the same for everybody. There are many different Medicare Part D plans to choose from and they all have different cost. Premiums, deductibles, co-pays, network pharmacies and formularies (covered drugs) vary from plan to plan. It is important to review all available plans to determine which will cover your drugs the best.
If you have a higher income you might pay more for Part D coverage. Click here to view more information and the income levels chart.
Also, some individuals get extra help with their Medicare Part D cost. This is known as Low Income Subsidy (LIS). In order to find out qualify for extra help you should contact Social Security.
Coverage Gap / Donut Hole
The Part D Donut Hole is a gap in prescription coverage that occurs after your total drug costs exceed $4,660 (in 2023).
This amount includes all drug costs that you have paid in addition to all costs your Rx insurance has paid.
The threshold to enter the donut hole ($4,660) and the member responsibility, while in the coverage gap and catastrophic stages, is identical across almost every plan. Some plans might offer additional coverage for generic drugs while in the donut hole, but the generic drugs are, most likely, not what caused you to reach the donut hole to begin with.
Here is an breakdown of the different payment stages under the Part D plans:
ANNUAL DEDUCTIBLE STAGE (if applicable)
During this stage you pay 100% of your drug cost until you have satisfied the plan's yearly deductible.
If your plan does not have a deductible then you automatically skip this stage.
INITIAL COVERAGE STAGE
During this stage you pay a co-pay (dollar amount) or co-insurance (percentage) for each covered drug. The plan pays the remaining portion of the drug.
You remain in this stage until your total drug costs (you + plan) reach $4,660 (in 2023).
COVERAGE GAP STAGE ("Donut Hole")
The Coverage Gap, often called the "donut hole", begins when your total drug costs reach $4,660 (in 2023).
During this stage you are responsible for 25% of the cost of any covered prescription.
Once your total out-of-pocket reaches $7,400 (in 2023) you will enter the Catastrophic Stage.
During this stage you are responsible for $10.35 for brand-name drugs or $4.15 for generic drugs (or 5% - whichever is higher).