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Medicare Part D explained

Quick Links:  Part D Covers – Part D Costs – Part D Enrollment – Part D Eligibility – Part D Premiums

Last updated: October 8, 2026

Part D helps pay for covered prescription drugs through private plans approved by Medicare.

You can join a stand-alone drug plan with Original Medicare or get drug coverage through a Medicare Advantage plan that includes Part D.

What does Part D cover?

Each plan has a formulary, or list of covered drugs, and may group medications into cost-sharing tiers. Before choosing a plan, check your specific prescriptions, doses, pharmacy network, and rules such as prior authorization, quantity limits, or step therapy.

Covered adult vaccines recommended by the Advisory Committee on Immunization Practices have no Part D cost sharing. Each Part D-covered insulin product costs no more than $35 for a one-month supply, with no deductible for that insulin.

What are the 2027 drug costs?

  • Maximum yearly deductible: $700. Some plans charge less, have no deductible, or exclude certain drug tiers from it.
  • Annual out-of-pocket limit: $2,400 for covered Part D drugs. Once qualifying spending reaches this amount, you pay $0 for covered Part D drugs for the rest of the calendar year. Certain payments made on your behalf also count.
  • Costs outside the limit: Premiums, drugs your plan does not cover, and Part B drug costs do not count toward the Part D limit.
  • Copayments and coinsurance: Your share depends on your plan, covered medications, and pharmacy.

The former coverage gap, often called the donut hole, was eliminated starting January 1, 2025. Do not use older four-stage drug-cost charts to estimate 2027 costs.

Premiums and income-related charges

Premiums vary by plan. Higher-income beneficiaries may also pay Part D IRMAA, separately from their plan premium. Social Security determines your charge, generally using tax information from two years earlier. Separate filing rules can apply.

2027 income limits: As of October 8, 2026, Medicare’s income and drug premium fact sheet still showed 2026 income limits; final 2027 limits and amounts were not yet posted there. Confirm the year shown before relying on a figure.

The 2027 national base beneficiary premium is $41.33. This is used to calculate late enrollment penalties; it is not the premium every plan charges. A penalty may apply after 63 consecutive days without Part D or other creditable drug coverage following your Initial Enrollment Period. Extra Help recipients do not pay this penalty.

Can you spread out prescription costs?

The voluntary Medicare Prescription Payment Plan lets you pay covered out-of-pocket drug costs through monthly bills from your plan over the calendar year. It does not lower your total costs. If you already participate and stay in the same Part D plan, participation renews automatically for 2027. Contact your plan to review or change your participation. Extra Help may reduce costs for people who qualify.

Who can join?

For a stand-alone Part D plan, you must have Part A or Part B and live in the service area. Medicare Advantage drug plans require both Part A and Part B. Medicare’s citizenship, nationality, or immigration status requirements also apply; see page 9 of the 2027 handbook. Most Medicare Advantage HMO and PPO members must get drug coverage through their plan. Joining a separate drug plan can end that Medicare Advantage enrollment, so check before making changes.

When can you enroll?

You can generally enroll when first eligible or during a qualifying Special Enrollment Period. Fall Open Enrollment runs October 15-December 7, 2026 for changes effective January 1, 2027. Compare prescriptions, pharmacies, and total annual costs each year, even if your current plan worked well.

Compare drug plans or read Medicare & You 2027, pages 83-94. Contact our office for help comparing your coverage options.

Medicare Part D covers prescription drugs. A stand-alone Medicare prescription drug plan is required to get Medicare Part D coverage. It is also known as the Medicare Advantage prescription drug plan. Medicare-approved private insurance companies offer these plans.

Medicare Part D covers:

Each plan prescription drug coverage presented under Medicare part D offers a standard level of coverage set by Medicare. Each plan coverage varies according to the list of prescription drugs they cover and how they place drugs into different tiers on their formularies. Following there plans are covered in Medicare part D. Covered prescription drugs list Most Medicare Prescription Drug Plans or Medicare Advantage Plans with prescription drug coverage have their list specifying what drugs are covered. These plan lists also include the brand name and what a drug contains and helps people understand their requirements according to their different medical conditions. Expand Generic drugs According to the Food and Drug Administration (FDA), the list of the generic drugs contains the drugs that are copies of brand-name drugs such as:
  • Route of administration
  • Quality
  • Dosage form
  • Safety
  • Strength
  • Performance characteristics
  • Intended use
Made of the same ingredients as brand-name prescription drugs, pharmaceutical manufacturers need to get FDA certification before providing them commercially. Expanded  Tiers In Medicare Part D, few low-cost plans are also available and offer prescription drug coverage into different tiers. Each program has divided into levels. A drug present in the lower tier is less costly than the drug in the upper tier. Examples provided below:
  • Tier 1 – Lowest co-payment and with the most generic prescription drugs
  • Tier 2 – Medium co-payment includes preferred brand-name prescription drugs
  • Tier 3 – Higher co-payment includes non-preferred brand-name prescription drugs
  • Specialty tier – Highest co-payment includes the high-cost prescription drugs
If your prescriber gives you a drug in the higher tier with the high cost and at the same time, a similar drug is also present in the lower tier at a low price. You have the option to file an exception and ask your plan for a lower co-payment.

Medicare Part D Costs

Your Medicare Part D cost will vary from plan to plan based on the specific program you choose and the prescriptions you take. And you can make payment for your Medicare plan D in the following ways:
  • Co-payments
  • Coinsurance
  • Premium
  • Yearly deductible
  • Costs for late enrollment penalty
  • Fees for the coverage gap
  • Costs for extra services
Your drug plan cost will also vary depending on:
  • The drugs you use
  • The plan you choose
  • Whether you go to a pharmacy
  • Whether the drugs are in your plan
  • Whether you get extra services
As you might already know, you can get Medicare prescription drug coverage in different ways.
  • A stand-alone Medicare Part D prescription drug plan – works alongside your Medicare Part A and or Part B benefits
  • A Medicare Advantage prescription drug plan – delivers your Medicare Part A, Part B, and Part D benefits all in one program.

Medicare Part D Enrollment

You can get yourself enroll in Medicare plan D offered by private companies in two ways:
  • Medicare Part D
The prescription drug plans augment your traditional Medicare coverage plans and specific Medicare cost plans, Medicare savings account plans, and Medicare private fee-for-service plans.
  • Medicare Advantage Prescription Drug plan
Medicare D plan includes prescription drug coverage along with Medicare Part A and Part B coverage. You can only enroll in either of the plans mentioned above to have a Medicare Advantage plan that includes drug coverage and gets enrolled in a Medicare drug plan. In that case, you will automatically get disenrolled from the Medicare advantage plan and reverted to traditional Medicare. You can also choose not to enroll in Medicare Part D prescription when you already have creditable prescription drug coverage as it can be from your employer group plan. Any person enrolled in the traditional Medicare plan Part A, Part B, and Part C is eligible to enroll in Medicare Part D Prescription Drug Plan. You need to have:
  • Enrolment in Medicare Part A and or Part B.
  • Residing in the service area of the company that is providing prescribed drug coverage.

Medicare Part D Eligibility

An individual who is eligible for a traditional Medicare plan, Part A and Part B will also sign for Medicare Part D prescription drug plan. You must need to enroll in both Part A and part be to be part of a Medicare Advantage prescription drug plan. In either case, you need to reside within the plan’s service area.

Medicare Part D Premiums

According to the Centers for Medicare & Medicaid Services, the average Medicare Part D premium will be $30.50 in 2021. Medicare part D drug plan has monthly premiums. Their monthly premium range starts from $0 to hundreds of dollars. Along with Part D premium, you will also pay your Medicare Part B premium every month.