How To Know If A Medicare Part D Prescription Drug Plan Is Right For You

Learn why Medicare Part D prescription drug plans are beneficial, who they're for and what they cover.

By Sharrarne Morton

Updated October 15, 2020

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Key Takeaways:

Most Part D plans charge a monthly fee that differs from plan to plan — in addition to the Medicare Part B premium.
Your drug coverage costs depend on monthly premiums, yearly deductibles, copayments, coinsurance and coverage gaps.
Medicare drug plans cover generic and brand-name drugs.
All Medicare drug plans must cover the same categories of drugs, but individual insurance providers can choose which brands and medications are covered in each drug category.
Medicare Part B doesn't cover most drugs you get at the pharmacy.

What You Need to Know About Medicare Part D Prescription Drug Plans

You must already be enrolled in Medicare Part A (hospital insurance) and/or Medicare Part B (medical insurance) to enroll in Medicare Part D. You must also live in the service area of the Medicare health plan or Medicare drug plan you want to join.

Prescription drug coverage is a very important benefit that's offered optionally to all Medicare recipients. Medicare drug coverage is only available through private insurance companies approved by Medicare.

The cost and availability of certain drugs may vary depending on your plan, but having prescription drug coverage through Medicare Part D provides a boost to your overall Medicare health coverage because it helps you pay for both brand-name and generic drugs.

Enroll in Medicare Part D

Enrolling in Medicare Part D when you're first eligible is a good idea as it will help you avoid a late enrollment penalty. You'd have to pay this penalty in addition to the monthly premium for your Medicare drug plan.

How Much Does Medicare Prescription Drug Coverage Cost?

Most drug plans charge a monthly fee that differs from plan to plan. For Medicare prescription drug coverage, this fee is in addition to the Medicare Part B premium. Your drug coverage costs are affected by several factors including the monthly premium, yearly deductible, copayments or coinsurance, and coverage gaps. Here's a breakdown:

A deductible is an amount you must first pay out of pocket for healthcare services before your Medicare insurance coverage kicks in.
A copayment is a fixed charge you pay for a certain service, and your health insurance plan pays the rest of the cost. The amount you pay for this is based on the tier your drug fits into in the Part D formulary.
Coinsurance refers to a percentage of the Medicare-approved cost of your health care services. You're expected to pay this percentage after you've paid your plan deductible.
Coverage gaps are a temporary limit on what your drug plan will cover for drugs. Once you and your plan have spent $4,020 on covered drugs in 2020, you're in the coverage gap.

If you belong to a Medicare Advantage plan (like an HMO or PPO), your monthly premium may include an amount for drug coverage. You can confirm this with your plan representative.

Different plans offer different combinations of coverage and costs. However, all Medicare drug plans have to meet at least a standard level of coverage that is set by Medicare. Different plans also determine which pharmacies you can use.

When you're shopping for a Part D plan, be sure to review your options carefully to make sure the available pharmacies in the plan are near where you live. If not, see if the plan will allow you to get your drugs by mail.

Why Compare Prescription Drug Plans?

The Part D plan you have your eye on may not cover a certain medication because of one of the following.

It's not a Medicare-approved drug
The drug is approved but it is not included on the plan formulary

If one plan doesn't cover your prescription drugs, do your research to check out other Medicare Part D plans available to you.

What If You Don't Have Any Prescriptions?

Even if you aren't prescribed any medications or if the drugs you use aren't expensive, it is still in your best interest to consider joining a Medicare drug plan to help lower your current drug costs and protect against higher costs in the future.

Medicare drug plans cover generic and brand-name drugs. All plans must cover the same categories of drugs, but individual insurance providers can choose which brands and medications are covered in each drug category. If you decide to sign on to Medicare Part D, compare the different plans in your area.

Can You Join or Switch a Medicare Part D Plan at Any Time?

You can join or switch Medicare drug plans every year between October 15 and December 7, with your coverage beginning on January 1 of the following year.

Don't hesitate to review the drug coverage you may already have including coverage from an employer or union, the Department of Veterans Affairs or a Medicare Supplement insurance policy (also known as Medigap).

How Is Medicare Part D Coverage Different from Medicare Part B Coverage for Certain Drugs?

Medicare Part B (medical insurance) includes limited drug coverage including:

Injections you get in a doctor's office
Certain oral cancer drugs
Drugs used with some types of durable medical equipment, like a nebulizer or external infusion pump

Part B also covers certain vaccines such as:

Seasonal flu
Pneumonia
Shingles
Tetanus
Diphtheria
Pertussis

However, Medicare Part B doesn't cover most drugs you get at the pharmacy. Therefore, you will need to join a Medicare Part D prescription drug plan to get coverage for medically necessary oral medications prescribed by your doctor.

The following chart shows the differences in coverage between Medicare Part B and Medicare Part D:

	Medicare Part B	Medicare Part D
Eligibility	Age 65 or over with qualifying work history. You might qualify before age 65 if you are disabled or have End Stage Renal Disease (ESRD).	Anyone enrolled in Part A and/or Part B.
Vaccines	Flu, pneumococcal, hepatitis B and possibly others depending on your condition.	All commercially available vaccines not covered by Part B.
Insulin	Only if used with an insulin pump.	Only if NOT used with a pump.
Oral medications	Generally limited to: Oral cancer medications Oral medications to treat nausea as a result of cancer treatment Oral immunosuppressive medications Certain transplant drugs ESRD drugs	Covers most oral medications to treat your condition; check your plan's formulary for specifics.
Injections and infusions	Typically covered if medically necessary to treat your condition.	May cover medically necessary injections and infusions not covered by Part B.
Costs	20% of allowable charges after Part B deductible is met.	Copayment or coinsurance percentage depending on the plan. You may have to pay an annual deductible.

Getting Medicare drug coverage is an important step in lowering your health care costs. As you are researching, make sure any plan you are considering covers the specific drugs you take. Review various plans' formularies and compare drug costs in your area to find the right plan for you.

Sharrarne Morton taught English and journalism in higher education for 16 years and has an extensive background in business development and finance.