Medicare Part D
Prescription Coverage.
The Plan That Needs
Annual Attention.
Part D is the prescription drug side of Medicare. It runs through private plans with formularies and tier structures that change every year. The difference between the right plan and the wrong one is often hundreds of dollars annually.
How Part D Works
Standalone PDPs: If you have Original Medicare (Parts A and B), whether with or without a Medicare Supplement, you add drug coverage through a standalone Prescription Drug Plan (PDP). These are sold by private insurers, approved by Medicare, and cover drugs dispensed at retail pharmacies.
Bundled in Medicare Advantage: Most Medicare Advantage plans are MA-PD plans, they include Part D coverage. You don’t need a separate PDP if your MA plan already includes drug coverage.
What it doesn’t cover: Part D covers drugs dispensed at retail pharmacies. Drugs administered in a hospital or physician’s office (infusions, injections) are typically covered under Part B, not Part D.
What determines your cost: The deductible, your drug’s tier placement, your preferred pharmacy network, and whether your drugs are brand-name or generic all affect what you pay. Two people on the same medications can pay very different amounts depending on which plan they’re in.
The Terms That Actually Matter
Medicare Part D comes with its own vocabulary. Understanding these terms is the difference between choosing a plan that works and one that surprises you at the pharmacy.
Formulary
The plan's list of covered drugs. Every Part D plan has its own formulary. If your medication isn't on a plan's formulary, the plan won't cover it, and alternatives may not be therapeutically equivalent. Formularies change January 1 each year.
Tiers
Drugs are organized into cost tiers, typically Tier 1 (preferred generics, lowest cost) through Tier 5 (specialty drugs, highest cost). The tier your medication falls on determines your copay or coinsurance. The same drug can be on different tiers in different plans.
Deductible
Many Part D plans have an annual deductible (up to $590 in 2025) that you pay before the plan begins contributing. Some plans waive the deductible for lower-tier drugs. Knowing your deductible helps estimate true annual drug cost.
Out-of-Pocket Cap
Starting in 2025, Medicare beneficiaries have a $2,000 annual out-of-pocket cap on covered Part D drugs, a major change from prior years. Once reached, the plan covers 100% of covered drug costs for the rest of the calendar year.
Medicare Prescription Payment Plan (M3P)
New in 2025: beneficiaries can choose to spread their Part D out-of-pocket costs across equal monthly payments throughout the year rather than paying large amounts at the pharmacy when high-cost medications are filled.
Extra Help / Low Income Subsidy (LIS)
A federal program that substantially subsidizes Part D premiums, deductibles, and co-pays for qualifying beneficiaries with limited income and resources. If you might qualify, this is one of the most important things we check during your review.
The Late Enrollment Penalty
If you don’t enroll in Part D when you first become eligible and don’t have other creditable drug coverage, you’ll face a permanent penalty when you do enroll.
The penalty is 1% of the national base beneficiary premium (set by Medicare each year) multiplied by the number of full months you went without coverage. This amount is added to your monthly premium permanently.
Creditable coverage means your existing drug coverage (employer plan, VA, TRICARE) is at least as good as the Medicare standard. Your coverage provider is required to send you a letter each year confirming whether it’s creditable.
Even if you take few prescriptions today, enrolling during your IEP is typically the right call. The cost of a low-premium PDP is almost always less than the lifetime penalty you’ll pay for delaying.
Example
If you delay Part D for 24 months without creditable coverage, your penalty is 24% of the national base premium, added to your monthly plan premium every month you have Part D, for the rest of your life. In 2025, the national base premium is $36.78. A 24-month delay creates a permanent $8.83/month surcharge.
Why Part D Requires Annual Review
Part D plans are not static. Every October, plans submit their upcoming year’s formulary, tier structure, premium, and pharmacy network to Medicare. Every January 1, those changes take effect for enrolled members.
A drug that was Tier 2 on your plan this year may be Tier 4 next year. A pharmacy that was preferred (lower cost) may lose that status. A medication your plan covered may be removed from the formulary entirely. You receive an Annual Notice of Change (ANOC) letter each fall, and most people file it away without reading it.
We read it for you. Every fall, during the Annual Enrollment Period (October 15 – December 7), we compare your current plan against available alternatives for the coming year, based on your specific medications and preferred pharmacy. You stay on the right plan. Not just the plan you enrolled in four years ago.
Let Us Review Your Specific Medications
Bring your drug list. We run a real comparison across available plans in your area, including which preferred pharmacy gives you the best pricing on your specific medications. No guessing.