Part D
The plan that decides what you pay at the counter.
Two people on the same medication, in the same town, on different Part D plans, can pay wildly different amounts. The difference is never luck — it is the formulary, and it is checkable in advance.
What it is
Two ways to get it. One thing to check.
Part D is prescription drug coverage, and it arrives in one of two shapes: a standalone plan you buy alongside Original Medicare or a Medicare Supplement, or coverage built into a Medicare Advantage plan. Either way it is run by a private insurer under contract to CMS, and either way the thing that matters is the formulary — the list of drugs the plan covers and what tier it puts each one on.
Every plan sets its own formulary, its own tiers, its own pharmacy network and its own rules about prior authorisation, step therapy and quantity limits. Two plans from the same insurer in the same county will not treat your prescriptions the same way.
How a year runs
Three phases. The middle one no longer has a hole in it.
The coverage gap that people still call the donut hole has been removed. What remains is simpler, and it ends with a genuine ceiling.
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Deductible
You pay the full negotiated price of your drugs until the plan’s deductible is met. Many plans set it at zero on the lower tiers; no plan may set it above the maximum CMS publishes each year.
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Initial coverage
You pay a copay or a percentage set by the drug’s tier, and the plan pays the rest. This is where most people spend the whole year.
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Catastrophic coverage
Once your out-of-pocket spending on covered drugs reaches the annual cap, you pay nothing more for covered Part D drugs for the rest of the calendar year. The cap is reset by CMS annually and the old coverage gap no longer exists.
The late enrollment penalty
It is not a fine. It is a subscription.
If you go 63 days or more without creditable prescription drug coverage after your Initial Enrollment Period ends, Medicare adds 1% of the national base beneficiary premium for every full month you went without. The result is rounded to the nearest ten cents and added to your Part D premium — for as long as you have Part D.
The base premium is reset by CMS each year, so the penalty is not a fixed dollar amount. It is a percentage that follows you, and it grows when the base grows.
Months without creditable coverage
24 months without coverage 24% added to your Part D premium, every month, permanently
Calculated as 1% of the national base beneficiary premium per full uncovered month. We do not print a dollar figure here because CMS resets the base every year and any number we printed would be wrong by January.
Reading a formulary
Five columns, in this order.
- Is the drug on the list at all? If it is not, the plan pays nothing for it, and an exception request is a process rather than a formality.
- Which tier? Preferred generic, generic, preferred brand, non-preferred brand, speciality. The tier, not the drug, sets your share.
- Prior authorisation? Your doctor must get approval before the plan will pay. Worth knowing before, not at the counter.
- Step therapy? The plan requires you to try a cheaper drug first. If you have already failed on it, that history needs documenting.
- Quantity limits? A cap on how much is covered in a period, which matters for anything taken more than once a day.
Asked often
- I take no medication. Do I still need Part D?
- Almost certainly yes. If you go 63 days or more without creditable drug coverage after your Initial Enrollment Period ends, Medicare adds a late enrollment penalty of 1% of the national base beneficiary premium for every full month you went without — and that penalty stays on your premium for as long as you have Part D. The cheapest plan in your county is usually far less than the permanent penalty.
- What happened to the donut hole?
- It no longer exists as a separate phase. Part D now runs deductible, then initial coverage, then catastrophic coverage — with a single annual cap on what you pay out of pocket for covered drugs, reset by CMS each year. Once you reach the cap, covered drugs cost you nothing for the rest of the calendar year.
- Is my employer or VA drug coverage creditable?
- VA drug coverage is creditable. Employer and union plans usually are, and the plan is required to tell you in writing each year — keep that notice. TRICARE and most FEHB plans are creditable too. If you are not certain, ask the plan administrator directly before you decline Part D, because the penalty is calculated on the assumption you had nothing.
- Can I change my Part D plan mid-year?
- Generally no. Part D changes happen during the Annual Enrollment Period from 15 October to 7 December, effective 1 January, unless a Special Enrollment Period applies — a move, a change in Medicaid or Extra Help status, your plan leaving the area, or the 5-star plan window between 8 December and 30 November.
Extra Help
If money is tight, this changes everything.
Extra Help — formally the Low-Income Subsidy — is a federal programme that cuts or eliminates the Part D premium and deductible and caps what you pay for covered drugs. If you qualify for full Extra Help, the arithmetic on this whole page changes, and the late enrollment penalty is removed.
You may qualify automatically if you have Medicaid, receive Supplemental Security Income, or are in a Medicare Savings Program. Otherwise you apply through the Social Security Administration, and the income and resource limits move each year. People who qualify also get a Special Enrollment Period to change plans, which most people are never told about.
Ask us to check whether you qualify — it takes about ten minutes and it costs nothing either way.
Send us the list on the kitchen counter.
Every prescription, every dose. We run it against every Part D plan available in your county and tell you what each one would actually cost you over a year — including the ones we do not sell.