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

  1. 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.
  2. 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.

Monthly premium:
 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.