Understanding Prescription Drug Coverage (Part D) in Medicare

Introduction

For many Medicare beneficiaries, prescription drug costs can become one of the biggest financial burdens—and understanding how Medicare Part D works is critical. Part D isn’t just “another plan”; it’s what helps cover the cost of outpatient prescription drugs when you have Medicare. This article walks you through what Part D covers, how it works, how much it might cost you, and how to choose wisely with your medications in mind.

What Is Medicare Part D?

Medicare Part D is the prescription-drug coverage portion for people with Medicare. The good news: even if you don’t take any medications today, enrolling in Part D or a plan that includes drug coverage is smart—because if you wait until you need it, you may face a lifetime penalty.

There are two main ways to get it:

• As a stand-alone Prescription Drug Plan (PDP) added to Original Medicare (Parts A & B)

• Or through a Medicare Advantage plan (Part C) that already includes drug coverage (MA-PD)

How Part D Plans Work

Formulary & Drug Tiers

Each Part D plan has a formulary—a list of covered drugs. Plans divide these drugs into tiers (generic, preferred brand, non-preferred, specialty), and your out-of-pocket cost depends on what tier your medication falls into.

Costs You Should Know

• Premiums: You’ll pay a monthly premium for the drug plan.

• Deductibles / Copays / Coinsurance: After the deductible (if any), you’ll pay copays or coinsurance based on the tier your drug is in.

• Coverage phases: Different plans may have phases (initial coverage, gap, catastrophic) though the “donut-hole” is much reduced under recent changes.

What Plans Must Cover

By law, all Part D plans must cover a broad range of drugs including “protected classes” like cancer, HIV/AIDS, depression, etc.

What to Compare & Ask Before You Enroll

When choosing a Part D plan (or evaluating your current one), make sure you review:

• Are all your current medications listed in the plan’s formulary?

• What tier are they in? What will you pay?

• Is your preferred pharmacy in-network or included in the plan’s network?

• Compare total cost (premium + projected drug cost) — not just the lowest premium.

• Check how the plan may change next year (formularies and costs can change).

• If you currently have a Medicare Advantage plan that does not include drug coverage, you’ll need to add a separate Part D plan—or you may face penalties.

Common Mistakes & How to Avoid Them

• Mistake: Assuming the lowest-premium plan is always best. Instead, factor in the actual medications you take.

• Mistake: Overlooking the pharmacy network. If your local pharmacy is out-of-network, cost can escalate.

• Mistake: Waiting until you need the medications to enroll. Late enrollment can bring permanent surcharges.

• Mistake: Not revisiting your drug plan every year—many plans change benefits and formularies.

How I Help with Your Part D Decision

At Gray Owl Health Insurance Agency, I will:

• Review your current medications and check how they’re covered under plans in your area

• Estimate your total yearly drug cost (premium + copays + coinsurance)

• Identify which pharmacy(s) you use are included in the plan’s network

• Alert you to upcoming changes in drug formularies and plan rules

• Help you enroll (or switch) during the correct window without cost to you

If you’d like a personalized prescription-drug plan review, schedule a free consultation. Let’s make sure your medications and budget are protected.

Want help comparing drug plans in your ZIP code and medication list?