Medicare Part D provides coverage for prescription drugs, helping millions of beneficiaries manage their medication costs. In 2025, you can choose a standalone Part D plan or enroll in a Medicare Advantage plan that includes drug benefits.
What Is Medicare Part D?
Medicare Part D, also known as prescription drug coverage, is optional and offered by private insurance companies. It’s important to note that Medigap Plan D is a completely different product and does not cover prescription drugs.
Ways to Get Prescription Drug Coverage
- Standalone Part D plan (PDP) – Works with Original Medicare (Part A and Part B), with or without a Medigap plan.
- Medicare Advantage Prescription Drug Plan (MAPD) – Bundles medical and drug coverage together.
Drug Formularies and Tiers
Every Part D plan has a formulary (list of covered medications) arranged into cost tiers:
- Tier 1 – Low-cost generics with small copayments.
- Higher tiers – Brand-name or specialty drugs with higher copayments or coinsurance.
Plans may also offer preferred pharmacies with discounted pricing.
Costs in 2025
- Premiums – The average monthly premium is $46.50, but costs vary by carrier and coverage.
- Deductibles – Up to $590, though some plans have $0 deductibles.
- Copayments & Coinsurance – Based on the drug tier and pharmacy choice.
High-income beneficiaries may also pay an IRMAA surcharge. Learn more about IRMAA.
Enrollment Periods
- Initial Enrollment Period (IEP) – The 7-month window around your 65th birthday.
- Annual Enrollment Period (AEP) – October 15 to December 7 each year; join, drop, or switch plans.
- Special Enrollment Periods (SEP) – Available if you lose creditable coverage or move outside your plan’s service area.
If you go without creditable prescription coverage for 63+ days, you may face a permanent Part D late enrollment penalty.
New for 2025: $2,000 Out-of-Pocket Cap
Starting in 2025, once your out-of-pocket drug costs reach $2,000, you will not pay anything more for covered prescriptions that year. This replaces the old “donut hole” coverage gap, making drug costs more predictable.
Bottom line: Medicare Part D can protect you from high prescription drug costs, but plans vary in coverage and price. Compare formularies, premiums, and pharmacy networks to find the plan that works best for your needs. Compare Medicare drug plans today.