Prescription medications are often one of the biggest expenses for retirees. That’s why Medicare created Part D, which provides prescription drug coverage. But not all plans are the same, and choosing incorrectly can cost you hundreds or even thousands of dollars each year.
How Part D Works
Medicare Part D plans are offered by private insurance companies approved by Medicare. Each plan has its own list of covered drugs, called a formulary. Drugs are placed in tiers—generic medications may be in the lowest-cost tier, while brand-name or specialty drugs often cost more.
You’ll usually pay a combination of:
A monthly premium.
A yearly deductible.
Copayments or coinsurance for prescriptions.
It’s important to note that costs can vary widely from one plan to another, even for the exact same drug.
The Donut Hole (Coverage Gap)
Many people have heard of the Medicare Part D “donut hole.” This is a temporary coverage gap that begins once you and your plan spend a certain amount on drugs in a calendar year. While changes in recent years have closed much of the gap, you may still pay more for prescriptions during this stage. Once you’ve spent enough to reach “catastrophic coverage,” your costs drop significantly.
Why Choosing the Right Plan Matters
The wrong Part D plan can lead to:
Paying higher prices for your specific prescriptions.
Being unable to use your preferred pharmacy.
Unexpectedly falling into the coverage gap sooner than expected.
The right plan is tailored to your personal prescription list. That’s why it’s essential to gather all your medications—including dosage and frequency—before meeting with a Medicare agent. A licensed agent can run your list through the available plans and show you which one covers your medications at the lowest overall cost.
Bottom Line
Prescription drug coverage is not “one size fits all.” What works for your neighbor may not work for you. Take the time to compare, ask questions, and make sure your medications are fully covered at a price you can afford.