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Medicare Part D: Prescription Drug Coverage

Help with prescription medication costs

What Part D Covers

Medicare Part D helps cover the cost of prescription drugs. Plans are offered by private insurance companies approved by Medicare.

Each Plan Has a Formulary

A formulary is a list of covered drugs. Plans place drugs into different "tiers" on their formularies. Drugs in lower tiers cost less than drugs in higher tiers.

Typical Drug Tiers

  • Tier 1: Preferred generic (lowest cost)
  • Tier 2: Generic
  • Tier 3: Preferred brand
  • Tier 4: Non-preferred drug
  • Tier 5: Specialty tier (highest cost)

2025 Part D Changes

$2,000 Out-of-Pocket Cap: Starting in 2025, your total out-of-pocket drug costs will be capped at $2,000 per year.

Payment Option: You can choose to spread your out-of-pocket costs over the year instead of paying all at once.

Late Enrollment Penalty

If you go without creditable prescription drug coverage for 63+ days, you may owe a late enrollment penalty added to your premium for as long as you have Part D.

Avoid Penalties – Talk to Gary