Prescription Drug Plans
Medicare prescription drug coverage is an optional benefit offered to everyone who has Medicare.
To get Medicare drug coverage, you must join a Medicare plan that offers prescription drug coverage. Each plan can vary in cost and drugs covered.
2 ways to get prescription drug coverage
- Medicare Prescription Drug Plan (Part D) . These plans (sometimes called "PDPs") add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
- Medicare Advantage Plan (Part C) (like an HMO or PPO) or other Medicare health plan that offers Medicare prescription drug coverage. You get all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” You must have Part A and Part B to join a Medicare Advantage Plan.
2020 defined standard Medicare Part D prescription drug plan coverage
Initial Deductible: $435
Initial Coverage Limit (ICL): $4,020
Out-of-Pocket Threshold (or TrOOP): $6,350
Coverage Gap (Donut Hole): begins once you reach your Medicare Part D plan’s initial coverage limit ($4,020 in 2020) and ends when you spend a total of $6,350 out-of-pocket in 2020.
2020 Donut Hole Discount: Part D enrollees will receive a 75% Donut Hole discount on the total cost of their brand-name drugs purchased while in the Donut Hole. The discount includes, a 70% discount paid by the brand-name drug manufacturer and a 5% discount paid by your Medicare Part D plan. The 70% paid by the drug manufacturer combined with the 25% you pay, count toward your TrOOP or Donut Hole exit point.
If you decide not to get Medicare drug coverage when you're first eligible, you'll likely pay a late enrollment penalty if you join later, unless one of these applies:
- You have other Creditable prescription drug coverage
- You get Extra Help
Generally, you'll pay this penalty for as long as you have Medicare prescription drug coverage.
The Part D monthly Premium varies by plan (higher-income consumers may pay more).
Part D premiums by income
The chart below shows your estimated prescription drug plan monthly premium based on your income as reported on your IRS tax return. If your income is above a certain limit, you'll pay an income-related monthly adjustment amount in addition to your plan premium.