What Is Medicare Part D?
Medicare Part D is voluntary prescription drug coverage available to everyone enrolled in Medicare. It is offered through private insurance companies approved by Medicare. You can get Part D either as a standalone Prescription Drug Plan (PDP) added to Original Medicare, or as part of a Medicare Advantage plan that includes drug coverage (called an MAPD plan).
How Part D Works in 2025
| Phase | What Happens | Your Cost |
|---|---|---|
| Deductible Phase | You pay full cost of drugs until deductible is met | Up to $590 (2025 maximum) |
| Initial Coverage | You and plan share drug costs | Copays or coinsurance per your plan's formulary |
| Catastrophic Coverage | Once you hit $2,000 OOP cap | $0 — Medicare pays 100% for rest of year |
Understanding Formularies
Every Part D plan has a formulary — a list of covered drugs organized into tiers. Your out-of-pocket cost depends on which tier your drug falls into:
| Tier | Drug Type | Typical Cost |
|---|---|---|
| Tier 1 | Preferred generic drugs | $0–$5 copay |
| Tier 2 | Non-preferred generics | $5–$15 copay |
| Tier 3 | Preferred brand drugs | $30–$50 copay |
| Tier 4 | Non-preferred brand drugs | 40–50% coinsurance |
| Tier 5 | Specialty drugs (biologics, etc.) | 25–33% coinsurance |
The Part D Late Enrollment Penalty
If you don't enroll in Part D when you are first eligible and you go without "creditable" drug coverage for 63 or more consecutive days, you'll face a permanent late enrollment penalty. The penalty equals 1% of the national base beneficiary premium × the number of full months you went without creditable coverage.
In 2025, the base premium is approximately $36.78/month. If you went 24 months without coverage, your penalty would be 24% × $36.78 = approximately $8.83/month — added to your premium every month for life.
Extra Help (Low Income Subsidy)
If your income and resources are limited, you may qualify for Extra Help — a federal program that pays most of your Part D premiums, deductibles, and copays. In 2025, individuals with incomes up to approximately 150% of the federal poverty level ($21,870 for a single person) may qualify. Apply through SSA at SSA.gov or call 1-800-772-1213.