Medicare Prescriptions and Drugs (Part D)

How Part D is structured

Part D plans have a monthly premium, an annual deductible (up to $590 in 2025 for non-low-income subsidy enrollees), and cost-sharing that varies based on which tier your drug falls into. After meeting your deductible, you pay a copay or coinsurance per fill depending on the drug tier.

• Tier 1: Preferred generics. Lowest copay, often $0-5.
• Tier 2: Non-preferred generics. Low copay.
• Tier 3: Preferred brand-name drugs. Moderate copay.
• Tier 4: Non-preferred brand-name drugs. Higher copay.
• Tier 5: Specialty drugs. Highest cost-sharing, often 25-33% coinsurance.

Understanding formularies

A formulary is the list of drugs a plan covers. Every Part D plan has its own formulary, and the same drug can be on different tiers (or not covered at all) depending on which plan you choose. This is why comparing plans against your specific list of medications matters more than comparing premiums alone. Medicare Plan Finder at Medicare.gov lets you enter your drugs and see estimated annual costs by plan.

The coverage gap

Starting in 2024, the coverage gap (formerly called the donut hole) was largely eliminated. Your out-of-pocket costs for covered drugs are now capped at $2,000 per year in 2025 under the Inflation Reduction Act. Once you reach that cap, you pay $0 for covered drugs for the rest of the plan year.

Extra Help (Low Income Subsidy)

If your income and assets are below certain thresholds, you may qualify for Extra Help, a federal subsidy that reduces or eliminates your Part D premium, deductible, and copays. About 1 in 3 Medicare beneficiaries qualify but do not apply. Talk to an Advocate to find out if you are eligible.

Common questions