Question 1

What is Medicare Part D?

Accepted Answer

Medicare part D is a federal program offered through private insurance carriers to provide drug coverage to consumers on Medicare.

2 ways to get drug coverage:

• Medicare Prescription Drug Plan (Part D): These plans (sometimes called “PDPs”) add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
 • Medicare Advantage Plan (Part C):  An HMO or PPO or other Medicare health plans that offer prescription drug coverage. You get all of your Medicare Part A (Hospital Insurance)and Medicare Part B (Medical Insurance) coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” You must have Part A and Part B to join a Medicare Advantage Plan.​

Question 2

How Does It Work?

Accepted Answer

Medicare Part D is often the most confusing part of Medicare. It is important to understand how it works so you know what to expect. Medicare sets a standard model for the insurance carriers to follow and that is why most plans look very similar.

One of the first things to understand is that every company has a drug formulary, a list of drugs that they cover. Each drug on the list is assigned to a tier level. Tiers are typically divided into Generic (Preferred-Tier 1 and Non-Preferred-Tier 2) and Name Brand (Preferred-Tier 3 and Non-Preferred-Tier 4). Each tier represents a different cost sharing, so which tier your drug is on will determine how much it costs. Most plans have 4-5 tiers. The higher the tier, the more expensive the drug. One thing to find out about is if there are any Quantity limits on any of the prescription drugs in the plan. Also, some companies have Step Therapy, requiring you to try one or more similar, lower cost drugs before the plan will cover the prescribed drug. This can be appealed by your doctor if necessary.

The next thing to have clear is the different phases of Prescription Drug Coverage.

Phase One - Deductible
Many Part D plans have a deductible phase. This is the annual dollar amount set by the insurance company (up to $615 2026) that you must pay first before the plan starts to pay. Once you have met your plan’s deductible amount you may have copays or coinsurance to pay for each covered prescription. The majority of plans, however, will normally apply the deductible only to drugs labeled tier 3 or higher. Tier 1 and 2 drugs are usually generic so you should be able to get them without paying any deductible, and sometimes without a copay. Also, there are plans that have a $0 deductible for all prescriptions. The premium may be higher on these plans, but sometimes it may make sense considering the cost of your particular prescription drugs.

Phase Two - Initial
The Initial Coverage Phase is when your plan starts sharing prescription costs with you either in the form of a copayment or coinsurance. The coverage phase extends to a point where the overall retail cost of medication reaches $2,100.00 (2026). Once you meet this amount you start the next phase of coverage known as the Catastrophic Phase.  No more donut hole!

Phase Three - Catastrophic
In the Catastrophic Phase there are no cost shares for 2026. This phase lasts until the end of the calendar year.  To keep your prescription drug costs as low as possible, speak with your doctors about taking generic options when possible. Some drug manufacturers offer prescription assistance for their expensive drugs and there are a few states that have state pharmaceutical assistance programs that can help with costs if you qualify.

Question 3

Costs of Medicare Part D

Accepted Answer

Individual Medicare Part D Plans have a monthly premium. Each company charges differently for the types of drugs covered and how. They can be very different as far as their plan deductible, the tiers of different drugs, the formulary and the cost of the drugs in different pharmacies. Some offer more than one plan. This needs to be researched. These plans can be tricky because some of the plans with a less expensive premium may cost more for the prescriptions than a plan with a higher premium cost. Do your homework.

In some of the Medicare Advantage Plans, however, the cost of the drug card is oftentimes included in the premium of the Plan. In addition, some of the Medicare Advantage Plans have better prescription drug coverage than some of the Individual Plans.
There are two occasions where you may pay extra for your Part D premium. The first is if you are assessed a Part D penalty. Medicare calculates 1% penalty for each month you do not have prior creditable coverage. This is prescription drug coverage through an employer or union, that has at least as much as Medicare’s standard coverage. This penalty gets added on to your plan premium, for the duration, whether it’s an Individual Plan or a Medicare Advantage Plan.

If you have a higher income, you might also pay more for your Medicare drug coverage. If your income (based on your tax return two year’s prior) is above a certain limit ($109,000 (2026) if you file individually or $218,000 (2026) if you’re married and file jointly), you’ll pay an extra amount in addition to your plan premium called “Part D-IRMAA”, (Income Related Monthly Adjustment Amount). You’ll also have to pay this extra amount if you’re in a Medicare Advantage Plan that includes drug coverage. This doesn’t affect everyone, so most people won’t have to pay an extra amount.

Social Security will contact you if you have to pay Part D IRMAA, based on your income. If Social Security notifies you, you’re required by law to pay the extra amount. If you don’t pay the Part D IRMAA, you’ll lose your Part D coverage. The extra amount isn’t part of your plan premium in this case. Most people have the extra amount taken from their Social Security check. If not, then you’ll get a bill.

The amount you pay can change each year. As your income decreases, you will be re-evaluated and the IRMAA can be reduced. If you have to pay a higher amount for your Part D premium and you disagree (for example, if your income goes down), you can fill out an SSA 44 form to dispute it.

Medicare Supplements

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Medicare Part D