What is Part D?

Part D is a private Medicare insurance plan that covers your prescription drugs. 

Original Medicare does not come with this kind of coverage. You’ll have to purchase a standalone plan or receive it through a Medicare Advantage plan. 

Each Part D plan is required to provide a standard level of coverage set by Medicare. 

The list of drugs covered on your plan is called a formulary. 


Plans also typically place the drugs covered into different “tiers” on the formulary. 

Both brand-name prescription drugs and generic drugs are included and that’s normally how the tiers are decided. The formulary includes at least 2 drugs in the most commonly prescribed categories and classes.

How to pick a Part D plan

If you take specific drugs that you need to continue to be on, be sure to check the Part D plans available to you to be sure they are on there. 

Prefer generic medications as opposed to “name brands?” You might be able to find a plan with tiers that charge you nothing or low copayments for generic prescriptions.

Are you not on any or very few prescriptions but are wanting a plan to avoid the late enrollment penalty just in case you need a plan in the future? Find a plan with a low monthly premium. If you need prescription drugs in the future, all plans still must cover most drugs used by people with Medicare. You could always switch to another plan in the future.

How to switch to a different plan

During open enrollment from October 15 through December 7 each year, you can switch to a different Part D plan. You can also: 

  • Join a Medicare Advantage Plan
  • Leave a Medicare Advantage Plan and go back to Original Medicare
  • Switch from one Medicare Advantage Plan to another
  • Drop your Medicare prescription drug coverage completely

Part D’s late penalty

If you do not have “creditable” coverage for prescription drugs and do not sign up for a Part D plan when you are first eligible, there is a late penalty if you enroll later. 

Part D’s penalty is 1% per consecutive month that you went without coverage and then rounded to the nearest 10 cents. The national base premium is $32.74 per month in 2020. That’s an additional $3.90 per month if you went without coverage for one year.

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