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Medicare Part D – Prescription Drug

Prescription drug plans, also known as Part D, help to pay for prescription drugs since Original Medicare does not cover them. To be eligible, you must be entitled to Part A and/or enrolled in Part B. If you don’t enroll in Part D when you are first eligible, you may have to pay a penalty later.

You will pay a copay or coinsurance for your prescriptions. Some plans also have a deductible, which is a set amount you are required to pay out of pocket before the plan begins to pay for covered costs. After spending a government-set amount of money on medications, you will reach a coverage gap or may even go beyond the coverage gap in a year. Copays and coinsurances can change during these times.

Utilization Management

Prior Authorization

Some drugs need to be approved by the plan before they are covered. This is so the plan can best guide the appropriate use of these drugs. Your doctor can help you get approval.

Step Therapy

The plan can prefer you to start treatment with a less expensive but effective drug (for instance, a generic name drug) instead of starting with a more expensive one. If the first drug does not work for you, then the plan will cover the more expensive drug.

Quantity Limits

There can be limits on how much of a drug you’re allowed. The limit could be for how many pills you get with each prescription or how many times the prescription can be refilled. Generally, these limits are based on safety guidelines.

Drugs Are Placed into Tiers

In prescription drug plans, drugs are placed into tiers. The costs for drugs in each tier are different. Generally, drugs in lower-number tiers cost less. The tiers are:

  • Tier 1 — Preferred Generic Drugs
  • Tier 2 — Generic Drugs
  • Tier 3 — Preferred Brand Drugs
  • Tier 4 — Non-Preferred Drugs
  • Tier 5 — Specialty Drugs


Play this video to learn about signing up for Medicare Part D.

  • Read Transcript

    Part D (Prescription Drug Coverage)


    What is it?

    Medicare Part D is insurance that can help you pay for prescription medications. It is only offered by private insurance companies that are approved by Medicare.

    What are the details?

    To enroll in Medicare Part D, you must:

    • Be eligible for Medicare Part A and/or enrolled in Medicare Part B
    • Live within your insurance company's area of service
    • Enroll when you turn 65 or first become eligible for Medicare. If you do not enroll during this period, you may have to pay a late enrollment penalty.

    What else should I know?

    • If you have something called creditable coverage, you may not need to enroll in a Medicare Part D plan. Creditable coverage is prescription drug coverage that is equal to or better than the Medicare-designed plan.
    • If you have Medicare Part C, also known as a Medicare Advantage plan, check to see if you already have prescription drug coverage as part of that plan.
    • Every Part D plan has its own list of covered drugs. If you're on a medication, you should find out if the drugs you take are covered under the plan's drug list. You should also make sure you know your copays, deductibles and monthly premiums.

Help Me Choose a Plan

If you're not sure what plan you need, answer a few questions to help you decide.

Now that you’ve picked a plan, it’s time to enroll.

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Last Updated: Aug. 02, 2023