Part D: Drug Coverage
Medicare Part D includes all prescription drug plans available to people with Original Medicare (Parts A and B). Understanding the costs can be tricky.
Besides the monthly premium, you’ll also need to think about deductibles, coinsurance, and different coverage phases.
YOU CAN ONLY BUY DRUG COVERAGE FROM PRIVATE INSURANCE
Medicare Advantage Plans include Prescription Drug (MAPD) with $0 Premium
Part D Late Enrollment Penalties
Another thing that can make your Part D premium higher is the late enrollment penalty. This is one of the most common Medicare penalties.
If you don’t sign up for Part D when you’re first eligible, you’ll have to pay this penalty—even if you don’t take any medications!
The penalty is 1% of the national base premium ($38.99 in 2026) for every month you went without Part D. That amount is then added to your monthly premium.
A 1% penalty on $38.99 equals approximately ($0.39) per month for each month of delay
For example, if you waited 24 months to enroll, your penalty would be $9.36 per month. This fee stays with you for life or as long as you have a Part D plan.
Part D Deductibles
The deductible is an important part of Medicare Part D. It’s the amount you pay for your prescriptions before your plan starts covering the cost.
Each year, Medicare sets a standard deductible. In 2026, the maximum deductible is $615, but some plans may offer a lower amount.
A plan with a low deductible might sound good, but it could have higher monthly premiums or other costs. Also, many plans don’t apply the deductible to lower-tier drugs, so common generic medications may not count toward it.
If you qualify for Extra Help, a program for people with limited income, your deductible may be lower or even waived.
Part D Deductibles
The deductible is an important part of Medicare Part D. It’s the amount you pay for your prescriptions before your plan starts covering the cost.
Each year, Medicare sets a standard deductible. In 2026, the maximum deductible is $615, but some plans may offer a lower amount.
A plan with a low deductible might sound good, but it could have higher monthly premiums or other costs. Also, many plans don’t apply the deductible to lower-tier drugs, so common generic medications may not count toward it.
If you qualify for Extra Help, a program for people with limited income, your deductible may be lower or even waived.
Part D Coinsurance Costs
Once you’ve paid your deductible, your Part D plan will start sharing the cost of your prescriptions. This is called the initial coverage phase.
During this phase, you’ll pay a coinsurance or copay for each medication. The amount depends on your plan and where the drug falls on the formulary (the list of covered drugs).
Lower-tier drugs, like common generics, usually cost less. Higher-tier drugs, including name-brand and specialty medications, are more expensive
Starting in 2026, there will be a $2,100 out-of-pocket cap on covered prescription drugs. Here’s how the process works:
Saving Money on Prescription Medications
Medicare Part D helps lower prescription drug costs, but there are other ways to save even more. Here are some simple tips:
Choose Generic Medications: Generic drugs are usually much cheaper than name brands and are often placed in lower-cost tiers. Ask your doctor if a generic option is available.
Review Your Plan Every Year: Medicare plans change yearly, so check your options during the Annual Election Period (Oct. 15 – Dec. 7) to make sure you’re still getting the best deal.
Apply for Extra Help: If you have a limited income, you may qualify for a program that helps cover medication costs. Contact your state’s Medicaid office to see if you’re eligible.
Check for Manufacturer Discounts: Some drug companies offer financial assistance for their medications. Visit the manufacturer’s website or ask your doctor.
Look Into State Assistance Programs: Some states offer programs to help with drug costs. See if your state has one.
Consider Mail-Order Pharmacies: Many Part D plans offer a mail-order option, which can save money and time compared to picking up prescriptions at a pharmacy.
Use Prescription Discount Programs: Programs like GoodRx, SingleCare, or Cost Plus Drugs can sometimes offer lower prices than your insurance. Some pharmacies, like Walmart and Kroger, also have their own discount programs.
Low Income Subsidy (LIS)
“Extra Help," also known as Low Income Subsidy (LIS), is a federally run program through Supplemental Security Income (SSI) that helps members with Medicare pay for Part D prescription drug costs.
It reduces:
●Monthly Part D premiums
●Annual Part D deductibles
●Prescription copays
It also:
Waives the late enrollment penalty (LEP) for those who did not enroll in Part D when they first became eligible.
● Eligibility is based on income and asset limits, with automatic qualification for some
(e.g. dual-eligible, SSI recipients). Full LIS is now available to individuals up to 150% of the FPL.
●Note: A member can have LIS and not be on Medicaid
while many Medicaid recipients automatically qualify for LIS, QDWI members are not automatically eligible for LIS.
It is important to always verify LIS status.
Who qualifies for LIS?
Income requirements:
●As of 2026, the income limit is $23,475 for an individual and $31,725 for a married couple.
●There is no requirement to meet other criteria, such as disability, family status, etc.
