There are 2 ways to get Medicare prescription drug coverage.
- Join a Medicare Prescription Drug Plan and keep your health coverage under Original Medicare.
- Join a Medicare Advantage Plan that offers Medicare drug coverage to get your Medicare benefits through a private insurance company.
Whichever you choose, prescription drug coverage can vary by cost, coverage, convenience, and quality. Some of these things might be more important to you than others, depending on your situation and prescription drug needs.
No matter which type of Medicare drug plan you join, your plan will send you information about plan changes each fall. You should review your prescription drug needs and compare Medicare drug plans during Medicare Open Enrollment, which runs between October 15–December 7.
Cost
When you get drug coverage, you pay part of the costs, and Medicare pays part of the costs. Your costs will vary depending on which drug plan you choose and whether or not you get Extra Help (see page 3). You should look at your current prescription drug costs to find a drug plan that works with your financial situation.
Monthly premium
Monthly premium Most drug plans charge a monthly fee that varies by plan. You pay this fee in addition to the Medicare Part B (Medical Insurance) premium. If you have the type of Medicare Advantage Plan or Medicare Cost Plan that includes Medicare prescription drug coverage, the monthly premium you pay to your plan may include an amount for drug coverage.
Note: What you pay for Medicare prescription drug coverage could be higher based on your income. Visit Medicare.gov to learn more about the monthly premium for drug plans.
Consider automatic premium deduction
When you join a Medicare drug plan, think about having your premiums automatically deducted from your Social Security payment. Automatic premium deduction has many benefits:
- It takes the worry out of remembering to pay your premiums.
- Your premiums will get paid on time.
- You’ll be helping the environment by not getting a paper bill from your plan.
Contact your drug plan (not Social Security) if you want your premium deducted from your monthly Social Security payment. Your first deduction will usually take 3 months to start, and 3 months of premiums will likely be deducted at once.
After that, only one premium will be deducted each month. You may also see a delay in premiums being withheld if you switch plans. If you want to stop premium deductions and get billed directly, contact your drug plan.
Yearly deductible
This is the amount you must pay before your drug plan begins to pay its share of your covered drugs. Some drug plans don’t have a deductible.
Copayment/coinsurance
This is the amount you pay for each of your prescriptions after you’ve paid the deductible (if the plan has one). Some drug plans have different levels or “tiers” of coinsurance or copayments, with different costs for different types of drugs. Coinsurance means you pay a percentage (25%, for example) of the cost of the drug. With a copayment, you pay a set amount ($10, for example) for all drugs on a tier. For example, you might have to pay a lower copayment for generic drugs than brand-name drugs, or lower coinsurance for some brand-name drugs than for others.
Coverage gap
Most drug plans have a coverage gap (also called the “donut hole”). This means that there’s a temporary limit on what the drug plan will cover for drugs. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. Once you and your plan have spent $4,020 on covered drugs in 2020 ($4,130 in 2021), you’re in the coverage gap (this amount may change each year). You’ll pay 25% of the plan’s cost for covered brand-name drugs and for covered generic drugs until you reach the end of the coverage gap. Not everyone will enter the coverage gap.
All these amounts will count toward you getting out of the coverage gap:
- Your yearly deductible, coinsurance, and copayments
- The discount you get on brand-name drugs in the coverage gap
- What you pay in the coverage gap
These amounts won't count toward you getting out of the coverage gap:
- Your Medicare drug plan premium
- What you pay for non-covered drugs
- What’s paid by other insurance
Some plans offer additional coverage during the gap, like for generic drugs, but they may charge a higher monthly premium. Check with the plan first to see if your drugs would be covered during the gap.
Catastrophic coverage
Once you’ve spent $6,350 out-of-pocket in 2020 ($6,550 in 2021), you’re out of the coverage gap and you automatically get “catastrophic coverage.” Catastrophic coverage means that you only pay a small coinsurance amount or copayment for covered drugs for the rest of the year.
Late enrollment penalty
If you don’t join a Medicare drug plan when you’re first eligible, and you don’t have other creditable prescription drug coverage or get Extra Help, you’ll likely pay a Part D late enrollment penalty. Creditable prescription drug coverage is coverage (for example, from an employer or union) that’s expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. If you’re subject to the penalty, you may have to pay it each month for as long as you have Medicare drug coverage. For more information about the late enrollment penalty, visit Medicare.gov or call 1-800-MEDICARE (1-800-633-4227). TTY users can call 1-877-486-2048.
Extra Help is available!
If you have limited income and resources, you may be able to get Extra Help paying your prescription drug coverage costs. If you qualify for Extra Help, you may pay little or nothing out of pocket when you fill your prescriptions. You can apply for Extra Help at any time. There’s no cost to apply for Extra Help, so you should apply even if you’re not sure if you qualify. To apply for Extra Help online, visit socialsecurity.gov/i1020. Or, call Social Security at 1-800-772-1213 to apply by phone or to get a paper application. TTY users can call 1-800-325-0778.
Coverage
Review your prescription drug needs, and look for a plan that meets these needs. Medicare drug plans may vary in what drugs they cover, and some may have special rules that you must follow before a drug is covered.
Formulary
A formulary is a list of the drugs that a drug plan covers. It includes how much you pay for each drug. If the plan uses tiers, the formulary lists which drugs are in each tier. Formularies include both generic and brand-name drugs. In general, each drug plan’s formulary must include most types of drugs that people with Medicare use. However, each drug plan has its own formulary, so you should check to make sure your drugs are covered.
Coverage rules
Drug plans may require “prior authorization.” This means that before the drug plan will cover certain prescriptions, you must show the plan you meet certain criteria for you to have that particular drug. Your doctor may need to provide additional information about why the drug is medically necessary for you before you can fill the prescription. Plans may also require “step therapy” on certain drugs. This means you must try one or more similar, lower cost drugs before the plan will cover the prescribed drug. Plans may also set “quantity limits”—limits on how much medication you can get. Call your Medicare drug plan to find out the specific drug coverage rules for your plan.
Convenience
Check with each drug plan you’re considering to make sure your current pharmacy is in the plan’s network or there are pharmacies convenient to you. Some drug plans charge lower copayments or coinsurance amounts at some pharmacies in their network than at others. Also, some drug plans may offer a mail-order program that will allow you to have drugs sent directly to your home. You should consider the most cost effective and convenient way to have your prescriptions filled.
Important: Even if you’re not changing plans, make sure your pharmacy is still in your plan’s network next year. Plans may change their network pharmacies each year.
Quality
In addition to a plan’s costs, coverage, and convenience, you should also review the quality ratings for plans before you decide which one best meets your needs. Medicare uses information from member satisfaction surveys, plans, and health care providers to give overall performance star ratings to plans. A plan can get a rating between 1–5 stars. A 5-star rating is considered excellent. These ratings are listed on the Medicare Plan Finder at Medicare.gov/plan-compare.
5-star Special Enrollment Period
You can switch to a Medicare Advantage Plan or a Medicare Prescription Drug Plan that has 5 stars for its overall plan rating once from December 8, 2020–November 30, 2021. The overall plan ratings are available at Medicare.gov/plan-compare. Medicare updates these ratings each fall for the following year. These ratings can change each year.
- You can only switch to a 5-star Medicare drug plan if one is available in your area.
- You can only use this Special Enrollment Period once during the above timeframe.
Visit Medicare.gov/plan-compare to find and compare plans.
Things to consider when choosing Medicare drug coverage
If you:
- Take specific drugs, look at drug plans that include your drugs on their formulary (a list of prescription drugs covered by a drug plan). Then, compare costs.
- Want extra protection from high prescription drug costs, look at plans offering coverage in the coverage gap, and then check with those plans to make sure they cover your drugs in the gap.
- Want your drug expenses to be balanced throughout the year, look at plans with no or a low deductible, or with additional coverage in the coverage gap.
- Take a lot of generic prescriptions, look at plans with “tiers” that charge you nothing or low copayments for generic prescriptions.
- Don’t have many drug costs now, but want coverage for peace of mind and to avoid future penalties, look at plans with a low monthly premium for drug coverage. If you need prescriptions in the future, all plans still must cover most drugs used by people with Medicare.
- Like the extra benefits and lower costs available by getting your health care and prescription drug coverage from one plan, and you’re willing to accept the plan’s restrictions on what doctors, hospitals, and other health care providers you can use, look for a Medicare Advantage Plan with prescription drug coverage.
What should I do before making a decision?
Each year, you have the opportunity to join or switch Medicare drug plans during Medicare Open Enrollment, which runs from October 15–December 7. If you switch plans during this time, your coverage with the new plan will start on January 1. As you make a decision about your health and prescription drug coverage, remember to review your current health and prescription drug plans. Health and drug plan benefits and costs can change each year. Look at other plans in your area to see if one may better meet your needs. If you want to keep your current plan, and it’s still being offered next year, you don’t need to do anything for your enrollment to continue.
Where can I get help?
To help you compare Medicare drug plans, think about what you need in terms of cost, coverage, convenience, and quality. Then, visit Medicare.gov/plan-compare to see which plans are available in your area.
To get personalized information, you need:
- Your Medicare card that has your Medicare number and Medicare effective date (Medicare Part A (Hospital Insurance) or Medicare Part B (Medical Insurance))
- Date of birth
- Last name
- ZIP code
To get general drug plan information or to find out what plans are available in your area, just answer a few simple questions. You can also enter your current prescription drug information to get more detailed cost information.
Note: This tool provides useful information to help you review drug plans based on your current drug needs. The drug costs displayed are estimates and may vary based on the specific quantity, strength and/or dosage of medication, whether you buy your prescriptions at the pharmacy or through mail order, and the pharmacy you use.
- Call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.
- Call your State Health Insurance Assistance Program (SHIP) for personalized counseling at no cost to you. Visit shiptacenter.org, or call 1-800-MEDICARE to find the phone number for your state.
Important: If you have employer or union coverage, call your benefits administrator before you make any changes to your coverage.