What is Medicare Part D?
Medicare Part D is prescription drug coverage for people with Medicare. Original Medicare (Parts A & B) doesn't cover most prescription medications—that's where Part D comes in. These plans are offered by private insurance companies approved by Medicare.
If you have Original Medicare, you'll need a stand-alone Part D plan to cover your prescriptions. If you have Medicare Advantage, drug coverage is usually included in your plan (but not always—check your plan details).
Who Needs Part D?
- ✓ Anyone with Original Medicare who takes prescription medications
- ✓ Anyone with Original Medicare who wants to avoid late enrollment penalties (even if not taking meds now)
- ✓ People with Medicare Supplement (Medigap) plans—Medigap doesn't include drug coverage
- ✗ NOT needed if you have Medicare Advantage with drug coverage (MAPD)
- ✗ NOT needed if you have other creditable drug coverage (VA, TRICARE, employer coverage)
How Part D Works
Part D plans work differently than other types of insurance. Understanding the stages of coverage helps you anticipate your costs throughout the year:
Deductible
You pay the full cost of your medications until you reach your plan's deductible. Many plans have $0 deductibles, while others have deductibles up to $545 (2024 maximum).
Initial Coverage
After meeting your deductible, you enter initial coverage. You and your plan share the costs of your medications. This continues until your total drug costs reach $5,030 (2024).
Coverage Gap ("Donut Hole")
Once your total drug costs reach $5,030, you enter the coverage gap. You'll pay 25% of the price for covered brand-name and generic drugs. This continues until your out-of-pocket costs reach $8,000 (2024).
Catastrophic Coverage
After spending $8,000 out-of-pocket (2024), you enter catastrophic coverage. You'll pay very little for your medications for the rest of the year.
Understanding Part D Costs
Part D plans have several types of costs. Knowing what you'll pay helps you choose the right plan:
| Cost Type | What It Is | Typical Amount |
|---|---|---|
| Monthly Premium | What you pay every month for the plan | $30-80/month average (varies widely) |
| Annual Deductible | Amount you pay before plan starts covering drugs | $0-545 (many plans have $0) |
| Copays | Fixed amount per prescription (common for generics) | $0-50 typical depending on tier |
| Coinsurance | Percentage of drug cost (common for expensive drugs) | 25-50% typical |
| Coverage Gap | Higher cost-sharing after initial coverage ends | 25% of drug costs |
Don't Just Compare Premiums!
A plan with a $40 premium might cost you $3,000/year total, while a $70 premium plan might only cost you $1,500/year—if it covers your drugs better. I can calculate your total annual costs for each plan based on YOUR specific medications.
Drug Formularies & Tiers
Every Part D plan has a formulary—a list of covered drugs organized into tiers. Not all plans cover all drugs, and where your drug falls in the tier system dramatically affects your cost:
| Tier | What's Included | Your Cost |
|---|---|---|
| Tier 1 | Preferred generic drugs | Lowest ($0-15 copay typical) |
| Tier 2 | Generic drugs | Low ($10-30 copay typical) |
| Tier 3 | Preferred brand-name drugs | Medium ($35-60 copay typical) |
| Tier 4 | Non-preferred brand-name drugs | High (often 25-50% coinsurance) |
| Tier 5 | Specialty drugs (cancer, MS, etc.) | Highest (often 25-33% coinsurance) |
Important: Formularies Change Yearly
Part D plans can (and do) change their formularies every year. A drug covered this year might not be covered next year, or it might move to a higher tier. That's why it's important to review your Part D plan annually during the enrollment period.
Prior Authorization & Step Therapy
Some drugs have additional requirements before the plan will cover them:
Prior Authorization
Your doctor must get approval from the plan before you can fill certain prescriptions. The plan will review medical necessity.
Step Therapy
You must try a lower-cost drug first before the plan will cover a more expensive alternative. If the cheaper drug doesn't work, the plan will approve the other medication.
Quantity Limits
The plan limits how much of a medication you can get at one time (e.g., 30-day supply only, no 90-day refills). This is common for controlled substances.
Generic Substitution
If a generic version of your medication exists, many plans require you to use the generic unless your doctor specifies "brand medically necessary."
Late Enrollment Penalty
One of the biggest mistakes Medicare beneficiaries make is delaying Part D enrollment. If you don't have creditable drug coverage and go 63 days or more without Part D, you'll face a permanent penalty.
Part D Late Enrollment Penalty is Permanent!
The penalty is calculated as 1% of the national base premium ($34.70 in 2024) for each month you were eligible but didn't have coverage. This penalty lasts as long as you have Part D.
Example:
If you were without coverage for 24 months:
• Penalty = 1% × 24 months = 24%
• 24% × $34.70 = $8.33/month
• You'll pay this $8.33 extra EVERY month for life
You Won't Face a Penalty If You Have:
- ✓ Part D coverage (stand-alone or through Medicare Advantage)
- ✓ Employer or union drug coverage that's creditable
- ✓ TRICARE
- ✓ VA benefits
- ✓ Federal employee health benefits (FEHB)
Make sure your coverage is "creditable"—your employer/plan will notify you annually.
How to Choose the Right Part D Plan
With dozens of Part D plans available in Texas, how do you choose? Here's what to consider:
Make a list of all your prescriptions (drug name, dosage, frequency). Use Medicare's Plan Finder or work with an agent to see which plans cover ALL your medications at the lowest total cost.
This is the MOST important factor—don't skip it!
Don't just look at the monthly premium. Add up:
- • Annual premiums (premium × 12)
- • Deductible
- • Estimated copays/coinsurance for YOUR drugs
A $70/month plan might cost less overall than a $40/month plan if it covers your drugs better.
Most plans have preferred pharmacies where you'll pay less. Make sure your preferred pharmacy (or mail order) is in the plan's network. Some plans charge significantly more at non-preferred pharmacies.
If you take maintenance medications (medications you take regularly), mail order pharmacies often offer 90-day supplies at lower costs than 30-day retail fills. Check if the plan offers this option.
Part D plans change every year—premiums, formularies, pharmacy networks, and costs can all change. Review your plan every October during Annual Enrollment to make sure you're still getting the best deal.
Extra Help (Low-Income Subsidy)
If you have limited income and resources, you may qualify for Extra Help—a Medicare program that helps pay Part D costs. Extra Help can save you thousands per year:
Extra Help Saves You Money
If you qualify for Extra Help, you'll pay:
- • Little or no monthly premium
- • No deductible
- • Low copays ($0-$10 per prescription)
- • No coverage gap
You may qualify if:
- • Your annual income is under $22,590 (single) or $30,660 (married) for 2024
- • Your resources (savings, investments) are under $17,220 (single) or $34,360 (married)
When Can You Enroll in Part D?
You can enroll in or change Part D plans during specific periods:
Initial Enrollment Period (IEP)
7 months: 3 months before you turn 65, your birthday month, and 3 months after. Enroll during this period to avoid late enrollment penalties.
Annual Enrollment Period (AEP)
October 15 - December 7 every year. Switch Part D plans, join a plan, or drop coverage. Changes effective January 1.
Special Enrollment Periods (SEP)
Qualify if you move, lose other coverage, qualify for Extra Help, or enter a nursing home. Allowed to change plans outside normal enrollment periods.
Get Expert Part D Help
Comparing Part D plans is complicated—each plan covers different drugs at different costs, uses different pharmacies, and has different restrictions. I can help you:
- Check all your medications against every plan's formulary
- Calculate your total annual costs for each plan
- Find plans that use your preferred pharmacy
- Identify prior authorization or step therapy requirements
- Help you avoid the late enrollment penalty
- Enroll you in your chosen plan
- Review your plan annually to ensure you're still getting the best value
Find Your Best Part D Plan
Let's review your medications and compare all Part D plans in Texas. I'll calculate your total costs and help you find the plan that covers your drugs at the lowest price. Free consultation, no obligation.