Medicare Part D is an optional prescription drug insurance program available to everyone who has Medicare, regardless of income or health status. Private companies provide insurance coverage, you choose the drug plan and pay a monthly premium.
To get Medicare drug coverage, you must join a Medicare-approved plan that offers drug coverage (this includes Medicare drug plans and Medicare Advantage Plans with drug coverage).
Plans must cover common drugs
All plans must cover a wide range of prescription drugs that people with Medicare take, including most drugs in certain protected classes,” like drugs to treat cancer or HIV/AIDS.
A plan’s list of covered drugs is called a “formulary,” and each plan has its own formulary. Many plans place drugs into different levels, called “tiers,” on their formularies. Drugs in each tier have a different cost. For example, a drug in a lower tier will generally cost you less than a drug in a higher tier.
Costs vary
Each plan can vary in cost and specific drugs covered but must give at least a standard level of coverage set by Medicare. Medicare drug coverage includes generic and brand-name drugs.
Plans have different monthly premiums. You’ll also have other costs throughout the year in a Medicare drug plan. How much you pay for each drug depends on which plan you choose.
There are penalties if you don’t enroll in a Part D plan
If you don’t enroll in a Medicare Part D prescription drug plan when you’re first eligible and you don’t have creditable drug coverage (coverage that’s at least as good as Medicare’s standard) you may have to pay a late enrollment penalty.
The penalty is calculated as 1% of the national base premium for each full month you were eligible but didn’t enroll. This amount is added to your monthly Part D premium and may continue for as long as you have Medicare drug coverage.
The penalty can only be waived if you can show proof of creditable coverage dating back to when your Medicare coverage began, or if you qualify for Extra Help (Low-Income Subsidy) paying for your prescription drug plan.
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