Medicare Part D: a complete guide to drug coverage

How Part D works

Part D is optional drug coverage sold by private insurers under Medicare rules. Each plan has its own list of covered drugs, called a formulary, its own premium, its own pharmacy network and its own cost-sharing, within limits Medicare sets. You can get it as a stand-alone prescription drug plan added to Original Medicare, or as part of a Medicare Advantage plan that includes drug coverage. If you have other drug coverage at least as good as Part D, called creditable coverage, such as coverage from some employers or unions, you can keep it and delay joining Part D without a penalty; the plan has to tell you each year whether its coverage is creditable.

If you go without Part D or other creditable drug coverage for 63 days or more in a row after you first become eligible, a late enrollment penalty is added to your premium for as long as you have Part D. That is why it can make sense to join a plan when you first become eligible, even if you take few or no medicines now.

When you can join or switch

Your first chance is the initial enrollment period around your 65th birthday, or when you become eligible through disability. After that, the annual open enrollment period from October 15 to December 7 lets anyone join, switch or drop a drug plan, with changes starting January 1. If you have Medicare Advantage, a second window from January 1 to March 31 lets you switch to another Medicare Advantage plan or return to Original Medicare and add a stand-alone drug plan.

Special enrollment periods allow changes at other times in certain situations, such as moving out of your plan’s area, losing employer coverage, moving into or out of a nursing home, or qualifying for Extra Help or Medicaid. Each fall your plan sends an Annual Notice of Change describing next year’s premium, formulary and costs; read it before open enrollment, because a plan can change any of these from one year to the next.

What you pay in 2026 and 2027

The standard benefit has three stages. In the deductible stage you pay the full negotiated price of covered drugs until you meet the plan’s deductible, which can be no higher than 615 dollars in 2026 and 700 dollars in 2027, the standard amounts set by CMS; a plan can set a lower deductible or none, and can apply it to some tiers and not others. In the initial coverage stage you pay a copay or coinsurance set by the plan for each drug’s tier. Once your out-of-pocket spending on covered drugs reaches the annual cap, 2,100 dollars in 2026 and 2,400 dollars in 2027, you pay nothing more for covered drugs for the rest of the year. The old coverage gap, often called the donut hole, ended in 2025.

A few fixed protections sit on top of that. Covered insulin costs no more than 35 dollars for a month’s supply, recommended adult vaccines covered under Part D cost nothing, and the Medicare Prescription Payment Plan lets you spread your out-of-pocket costs across the year in monthly payments instead of paying large amounts at the pharmacy counter; from 2026 your participation renews automatically.

Medicare now negotiates prices for some of the drugs on which Part D spends the most. Negotiated prices for the first ten drugs, including Eliquis, Xarelto, Jardiance and Farxiga, took effect in January 2026, and prices for fifteen more, including Ozempic, Wegovy and Rybelsus, take effect in January 2027. Where your deductible or coinsurance is based on a drug’s price, the negotiated price is the price used, although what you pay at the counter still follows your plan’s tiers.

Extra Help and other assistance

Extra Help, also called the Low-Income Subsidy, pays most or all of the Part D premium and deductible and limits copays to set amounts for people with limited income and resources. People with full Medicaid coverage, Supplemental Security Income or a Medicare Savings Program get it automatically; others can apply through Social Security, online or by phone, and a State Health Insurance Assistance Program can help with the application for free. Some states run pharmaceutical assistance programs that add further help, and manufacturers’ patient assistance programs can provide brand drugs to people on Medicare who meet their criteria, although manufacturer copay cards cannot be used with Part D.

Formularies, restrictions and appeals

Plans sort covered drugs into tiers, each with its own cost-sharing, and may apply prior authorization, step therapy, which requires trying another drug first, or quantity limits. If a drug you need is not covered, or a restriction stands in the way, you or your prescriber can ask the plan for a coverage determination or an exception, with a statement from the prescriber explaining why the drug is medically necessary. Plans must decide within set time limits, faster when your health could be harmed by waiting, and if the plan says no you can appeal through several levels, including an independent review. A clear statement of the prescriber’s reasons gives the plan what it needs to decide.

How to choose a plan

The Medicare Plan Finder on Medicare.gov is Medicare’s own comparison tool: enter every drug you take, with strength and quantity, and the pharmacies you use, and it estimates your total yearly cost in each plan, combining premium, deductible and cost-sharing. That total is what matters; a low premium can hide a plan that covers your drugs poorly. Check that each of your drugs is on the formulary, note any restrictions, and look at whether your pharmacy has preferred cost-sharing, which can lower copays. State Health Insurance Assistance Programs, known as SHIPs, give free, unbiased counseling by phone or in person if you want help comparing.

• Read your Annual Notice of Change each fall.
• Enter all your drugs and pharmacies in the Plan Finder and compare total yearly cost.
• Check formulary coverage, tiers and restrictions for each drug.
• Check whether your pharmacy is preferred, standard or out of network.
• Apply for Extra Help if your income or savings are limited.
• Make any change between October 15 and December 7.

Where paying cash fits for Medicare patients

For some prescriptions a pharmacy’s cash price can be lower than your plan price, for example while you are in the deductible stage, and for others it is higher, so ask for both. Paying cash is allowed. Under CMS’s Part D rules, a cash purchase of a covered drug at a pharmacy’s lower cash price, made while you are in the deductible stage, counts toward your deductible and out-of-pocket cap once you send your plan the receipt; it is not counted automatically, and the rule does not apply once you pay only part of the cost. Medicare.gov notes that purchases made with discount cards instead of your plan do not count. For brand drugs you take all year, weigh the plan price, Extra Help and the out-of-pocket cap against any cash quote.

For weight management, Part D does not cover drugs used only for weight loss, but it covers GLP-1 medicines for diabetes and other approved medical uses, and from July 2026 to the end of 2027 the Medicare GLP-1 bridge program offers certain obesity GLP-1 medicines to eligible enrollees for a flat monthly copay.