Medicare Part D.
Part D is Medicare’s prescription drug coverage. It’s optional, sold by private carriers, and structured around formularies (lists of covered drugs) and tiers (cost-sharing groups).
How Part D coverage works
Part D plans group covered drugs into tiers:
- Tier 1 — Preferred generics
- Tier 2 — Generics
- Tier 3 — Preferred brand-name
- Tier 4 — Non-preferred brand-name
- Tier 5 — Specialty (high-cost)
Each plan has its own formulary, so the same drug can be on different tiers in different plans — or not covered at all in some plans.
Coverage phases
Part D coverage moves through phases each calendar year:
- Annual deductible. You pay the full negotiated price until you meet the plan’s deductible (some plans have $0 deductible).
- Initial coverage. You pay your tier-based copay or coinsurance; the plan pays the rest.
- Coverage gap (closed under the Inflation Reduction Act). Historically a “donut hole.” Now closed for most beneficiaries.
- Catastrophic coverage. Once your out-of-pocket reaches the annual cap (set by CMS each year), you pay $0 for covered drugs for the rest of the calendar year.
Who needs Part D
Most Medicare beneficiaries who don’t have creditable drug coverage through another source (employer, VA, TRICARE) need Part D — either standalone (paired with Original Medicare or a Medigap plan) or built into a Medicare Advantage plan.
Late enrollment penalty
If you go more than 63 consecutive days without creditable drug coverage after becoming eligible for Part D, a late enrollment penalty is added to your premium for life.
How a licensed agent helps
The right Part D plan depends entirely on which medications you take. A licensed El-Mag agent runs your prescriptions through the plans available in your zip code and identifies which one covers your drugs at the lowest total annual cost. See Part D costs for the full cost breakdown.
Compare Part D plans.