Medicare Part D

Medicare Part D is the prescription drug portion of Medicare. It's optional, but skipping it when you're first eligible carries a permanent cost, so most people enroll even if they take few medications.

You can get Part D two ways: as a standalone drug plan paired with Original Medicare, or bundled inside a Medicare Advantage plan that includes drug coverage.

Each Part D plan publishes its own formulary organized into cost tiers, and formularies differ substantially between plans. The same medication can sit on a low-cost tier with one insurer and a high-cost tier with another, which is why comparing plans against your actual prescription list matters more than comparing premiums.

The coverage gap is effectively closed. Under the Inflation Reduction Act, Part D enrollees have a hard annual cap on out-of-pocket prescription spending starting in 2025. Once you reach it, covered drugs cost you nothing for the rest of the year. This eliminated the old donut hole problem, where people taking expensive medications faced steep mid-year costs with no ceiling.

The late enrollment penalty. If you go 63 or more consecutive days without Part D or other creditable drug coverage after becoming eligible, a penalty is added to your Part D premium and it lasts for as long as you have Part D. This is the main reason to enroll on time even if you currently take no prescriptions.

If you have drug coverage through an employer or retiree plan, ask whether it counts as creditable. If it does, you can delay Part D without penalty.