What does Medicare Part D cost?
Like Medicare Advantage plans, Part D stand-alone plans will also vary in costs based on the plan you choose. Each plan negotiates prices with drug manufactures and pharmacies. Your copays and coinsurance rates are based on these prices and on guidelines set by Medicare. You can find explanations of specific drug costs in each Part D plan's Summary of Benefits or Evidence of Coverage materials.
Your total prescription drug costs will also be impacted by the number of prescriptions you take, how often you take them, if you get them from an in-network or out-of-network pharmacy, and what Part D coverage stage you are in. Your costs may also be less if you qualify for the Extra Help program.
First, let's look at what kinds of costs you could pay for Part D, then dive into the different coverage stages and how they work.
Costs you could pay with Medicare Part D
With stand-alone Part D plans, you will pay a monthly premium and may also pay an annual deductible, copays and coinsurance.
Some plans charge deductibles, some do not, but Medicare sets a maximum deductible amount each year. In 2023, the annual deductible limit for Part D is $505.
Copays are generally required each time you fill a prescription for a covered drug. Amounts can vary based on the plan’s formulary tiers as well as what pharmacy you use if the plan has network pharmacies.
Some plans may also set coinsurance rates for certain drugs or tiers. In this case the plan charges a percentage of the cost each time you fill a prescription.
Understanding the Part D Coverage Stages
During the year, you may go through different drug coverage stages. There are four stages, and it's important to understand how each impact your prescription drug costs. You may not go through all the stages. People who take few prescription drugs may remain in the deductible stage or move only to the initial coverage stage. People with many medications (or expensive ones) may move into the coverage gap (the Part D "Donut Hole") and/or catastrophic stage.
The coverage stage cycle starts over at the beginning of each plan year, usually January 1st.