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Enrolling in a prescription drug coverage plan, whether it’s Medicare Part D or a Medicare Advantage plan with drug coverage built in, is essential to protecting your out-of-pocket health care costs.

Sept. 8, 2025

If you’re exploring your Medicare choices, you’re probably familiar with the fact that the various parts of Medicare offer different types of coverage. While Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) work together to offer coverage for most health care costs, Medicare Part D was designed specifically to help cover prescription drug costs.1

Even if right now you don’t take medicines or have prescriptions, it’s important to understand how Medicare Part D works, the costs linked to it, and how to become a member. Being a wise health care consumer is key to managing your health care costs effectively, and understanding your Medicare plans and choices is a very important first step.

Understanding Medicare Part D: the basics

Medicare is a federally funded health insurance program for Americans 65 years or older and others who meet certain eligibility requirements. There are a handful of Medicare plans, each offering different types of coverage.

Medicare Part D is a prescription drug coverage program that Medicare-approved private insurance companies offer. This part of Medicare helps enrollees pay for generic and brand-name prescription drugs.1

Generally, you qualify for a Medicare Part D plan if you have Original Medicare (Medicare Part A + Part B) or if you have Medicare Part C (Medicare Advantage Plan) that includes drug coverage.

Since Medicare-approved private health insurers offer these plans, each plan has rules to follow. But, there may be differences in exactly what medicines are covered (known as the plan formulary), network pharmacies, and cost-sharing rules. In other words, your out-of-pocket costs, where you can use your plan to get coverage, and how much money you may owe will vary based on your specific plan. As such, it’s important to carefully go over your health plan to best understand your coverage details.

What Medicare Part D covers

Medicare Part D provides coverage for a wide range of prescription drugs.2 While each plan varies, covered drugs typically include the following:

  • Medications to treat chronic medical problems, such as high cholesterol, high blood pressure or diabetes
  • Certain vaccines, including the Tdap, flu and shingles shot
  • Some specialty medicines may be covered after receiving prior authorization

It’s important to note that each plan will have its way of covering drugs, known as the plan formulary. It’s common for Medicare Part D plans to organize formularies into tiers that are separated by varying amounts of copays. Lower tiers often cover generic medicines at lower copays, whereas higher tiers usually include brand-name medicines or specialty drugs and have higher copays.

Before 2025, the Medicare “donut hole” helped protect beneficiaries from exorbitant out-of-pocket drug costs. As of Jan. 1, 2025, due to the Inflation Reduction Act, prescription drug coverage cost-sharing is simplified.

The Part D phases below determine how much you will pay in out-of-pocket costs throughout the year for 2025:3

  • Deductible period: During this phase, you’ll pay 100% of the cost of your prescription medicines until you reach your deductible, which is $590 in 2025 (for standard plans). Some Medicare Part D plans have a lower deductible but higher premiums, so be sure to go over your choices carefully. After you’ve hit the deductible, you will enter the initial coverage period.
  • Initial coverage period: Once you hit this phase, you will pay 25% of your prescription drug costs (typically as your copay or premium), up to $2,000 in 2025. Two thousand dollars is the out-of-pocket maximum for prescription drug costs in 2025. Once you’ve hit this limit, you’ll enter the catastrophic coverage period.
  • Catastrophic coverage: After you’ve hit the $2,000 OOPM, you are not responsible for any other covered prescription drug costs for the rest of the plan year.

Ask your care team about your medicines and cross-reference them with Medicare Part D formularies to better understand what your out-of-pocket health care costs may be if you have prescriptions.

Who qualifies for Medicare Part D?

To qualify for Medicare Part D, you’ll need to qualify for Medicare in general. Medicare qualification rules are as follows:2

  • You must be at least 65; or,
  • You must have a qualifying disability or certain health problems like Amyotrophic Lateral Sclerosis (ALS) or end-stage renal disease (ESRD) to qualify before you turn 65 years old.

Once you’ve figured out that you qualify for Medicare and you’re signed up for either the Original Medicare or Medicare Advantage plan, you can understand your ability to sign up for a Medicare Part D plan.

Those who have Original Medicare and want or need coverage for their prescription drugs will need to add a stand-alone Medicare Part D plan. Those who are enrolled in a Medicare Advantage Plan that has drug coverage (known as an MA-PD) are already covered under Part D.

When is the Medicare Part D enrollment period?

Usually, you’ll sign up for Medicare Part D when you sign up for Medicare. There are a few different timeframes you should be mindful of if you’re considering signing up for a Medicare Part D plan:3

  • Medicare Initial Enrollment Period: The Medicare IEP is the seven-month period that begins three months before you turn 65, your birthday month, and the three months after that. If you’ve qualified for Medicare enrollment due to an eligible disability, your seven-month Initial Enrollment Period begins three months before your 25th month of disability benefits and ends three months after that.
  • Annual Open Enrollment Period: You can enroll in Medicare annually between Oct. 15 and Dec. 7 for coverage for the following year. During the annual open period, you can join a Medicare Part D plan, switch plans, or drop your current coverage. Changes you make will take effect Jan. 1 of the following year.
  • Medicare Advantage Open Enrollment Period: If you have a Medicare Advantage Plan, you can make changes to your plan type, go back to Original Medicare, or add a Part D plan between Jan. 1 and March 31 each year.
  • Special Enrollment Period: Certain qualifying life events will let you make plan changes to your Medicare Part D or other Medicare plan selections outside the other windows.

Is Medicare Part D required?

Enrolling in Medicare Part D is not required. However, you may face a late enrollment penalty if you don’t have a separate, creditable prescription drug coverage plan when you’re first eligible for Medicare Part D.5

The late enrollment penalty (also called the “LEP” or “penalty”) generally applies if you don’t sign up for Medicare Part D during the initial enrollment period and go without creditable coverage for any period of 63 consecutive days or more. This LEP is added to your monthly premium, usually permanently, which means you’ll pay it for as long as you have Medicare, even if your other monthly premium is $0.

The late enrollment penalty amount changes each year and is also affected by how long you’ve gone without coverage.

The late enrollment penalty is calculated as 1% of the national base beneficiary premium multiplied by the number of months you went without coverage. It’s then rounded to the nearest tenth-of-a-dollar ($0.10) and added to your monthly premium.

How to sign up for Medicare Part D

Enrolling in Medicare Part D is generally straightforward. As always, you should visit the Medicare Plan Finder to go over your area’s plan choices before enrolling. Check for things like differences in copays, cost-sharing, premiums, and deductibles; while two plans may seem similar, these things can make a huge difference.

Choosing the right Part D plan isn’t just about picking the cheapest premium. Here are several factors to think about and questions to ask yourself while you’re comparing plans:

  • Formulary coverage: Are all of your prescriptions included in the coverage details? At what tier are they covered? Are you able to ask your doctor about generic choices to potentially lower your costs?
  • Pharmacy network: Is your preferred or local pharmacy considered an in-network provider under the plan? What in-network pharmacies are near you? Are they in lower-cost tiers?

After you’ve reviewed your plans to make sure they’re the best choice for you, it’s time to sign up. Here are some of the most common ways to sign up:4

  • Call the Medicare enrollment line: Call 1-800-MEDICARE (1-800-633-4227) to speak with someone who can help you get started.
  • Call the insurance company: If you’re enrolling in a Medicare Advantage plan or just a stand-alone Part D, you can call the number of the private insurer that is offering the plan to get started with enrollment. Check for this number on the Medicare Plan Finder.
  • Speak with a licensed insurance agent: There are insurance companies and agents who specialize in Medicare. Think about searching the internet for one that is near you so you can get personalized help.
  • Check for state assistance: Some states have a local State Health Insurance Assistance Program that can help provide you with free, personalized help.

What to have ready when signing up for Medicare Part D

To make the enrollment process smooth and efficient, gather this information ahead of time:

  • Any Medicare information if you’re already enrolled (Medicare card with Medicare number)
  • Name(s) and address(es) of your pharmacy(ies)
  • List of any current medicines
  • Monthly budget for premiums, deductibles and drug costs

This list of information will help you make the most informed, fiscally responsible choice for your prescription drug coverage under Medicare Part D.

Final thoughts: understanding Medicare Part D coverage and its importance

Enrolling in a prescription drug coverage plan, whether it’s Medicare Part D or a Medicare Advantage plan with drug coverage built in, is essential to protecting your out-of-pocket health care costs. The cost of prescription drugs keeps going up. The best way to protect yourself from unexpected drug costs is to have a health insurance plan.

Taking control of your coverage is essential to mitigating rising costs and protecting your future. Carefully reviewing your plan choices today and understanding how your choices will give coverage for current or future care needs can set you up for success.

Don’t wait until it’s too late — take control today and go over your Medicare Part D prescription drug coverage choices.

Disclaimer

For full information, visit www.medicare.gov or call 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week.

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