Medicare Part D – Prescription Drug Coverage

Medicare drug coverage helps pay for prescription drugs you need. It’s optional and offered to everyone with Medicare. Even if you don’t take prescription drugs now, consider getting Medicare drug coverage. If you decide not to get it when you’re first eligible, and you don’t have other creditable prescription drug coverage (like drug coverage from an employer or union) or get Extra Help, you’ll likely pay a late enrollment penalty if you join a plan later. Generally, you’ll pay this penalty for as long as you have Medicare drug coverage. To get Medicare drug coverage, you must join a Medicare-approved plan that offers drug coverage. Each plan can vary in cost and specific drugs covered.

Except for vaccines covered under Medicare Part B (Medical Insurance), Medicare drug plans must cover all commercially available vaccines (like the shingles vaccine) when medically necessary to prevent illness.

There are 2 ways to get Medicare drug coverage:
1. Medicare drug plans. These plans add drug coverage to Original Medicare, some Medicare Cost Plans, some Private Fee‑for‑Service plans, and Medical Savings Account plans. You must have Medicare Part A (Hospital Insurance) and/or Medicare Part B (Medical Insurance) to join a separate Medicare drug plan.

2. Medicare Advantage Plan (Part C) or other Medicare Health Plan with drug coverage. You get all of your Part A, Part B, and drug coverage, through these plans. Remember, you must have Part A and Part B to join a Medicare Advantage Plan, and not all of these plans offer drug coverage.

To join a Medicare drug plan, Medicare Advantage Plan, or other Medicare health plan with drug coverage, you must be a United States citizen or lawfully present in the United States.

Deductibles vary between Medicare drug plans. No Medicare drug plan may have a deductible more than $505 in 2023). Some Medicare drug plans don’t have a deductible. In some plans that do have a deductible, drugs on some tiers are covered before the deductible.

If your income is above a certain limit, you’ll pay an income-related monthly adjustment amount in addition to your plan premium. 


If your filing status and yearly income in 2021 was
File individual tax return File joint tax return File married & separate tax return You pay each month (in 2023)
$97,000 or less $194,000 or less $97,000 or less your plan premium
above $97,000 up to $123,000 above $194,000 up to $246,000 not applicable $12.20 + your plan premium
above $123,000 up to $153,000 above $246,000 up to $306,000 not applicable $31.50 + your plan premium
above $153,000 up to $183,000 above $306,000 up to $366,000 not applicable $50.70 + your plan premium
above $183,000 and less than $500,000 above $366,000 and less than $750,000 above $97,000 and less than $403,000 $70.00 + your plan premium
$500,000 or above $750,000 and above $403,000 and above $76.40 + your plan premium

Most Medicare drug plans have a coverage gap (also called the “donut hole”). This means there’s a temporary limit on what the drug plan will cover for drugs.

Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. Once the person and their plan spend $4,660 combined on drugs (including deductible in 2023), they will pay no more than 25% of the cost for prescription drugs until they reach their out-of-pocket spending is $7,400 in 2023 under the standard drug benefit. Once they get out of the coverage gap (Medicare prescription drug coverage), they will automatically get “catastrophic coverage.” It assures that they will only pay a small coinsurance percentage or copayment for covered drugs for the rest of the year. Also, people with Medicare who get Extra Help paying Part D costs won’t enter the coverage gap.

If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan’s coverage has been applied to the drug’s price.

In order to determine whether or not to choose Part D and what Part D plan is right for you, it is important to understand:

  1. if the prescriptions you take are covered;
  2. how much they cost;
  3. if the plan premiums are worth it for your situation; and
  4.  if you want an upgraded plan that may not have a deductible or has better coverage than the Standard Medicare Part D plan.

Extra help/Low-income subsidy (LIS).  If you meet certain income and resource limits, you may qualify for a program called Extra Help from Medicare to pay the prescription costs, premiums, deductibles, and coinsurance of Medicare prescription drug coverage.

Part D late enrollment penalty

The late enrollment penalty is an amount added to your Medicare Part D monthly premium. You may owe a late enrollment penalty if, for any continuous period of 63 days or more after your Initial Enrollment Period is over, you go without one of these:

  • A Medicare Prescription Drug Plan (Part D);
  • A Medicare Advantage Plan (Part C) or another Medicare health plan that offers Medicare prescription drug coverage; or
  • Creditable prescription drug coverage.

How much is the Part D penalty?

The cost of the late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage.

Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($32.74 in 2023) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.

The national base beneficiary premium may increase each year, so your penalty amount may also increase each year.

What if I don’t agree with the late enrollment penalty?
You may be able to ask for a “reconsideration.” Your drug plan will send information about how to request a reconsideration.  Complete the form, and return it to the address or fax number listed on the form.  You must do this within 60 days from the date on the letter telling you that you owe a late enrollment penalty. Also send any proof that supports your case, like a copy of your notice of creditable prescription drug coverage from an employer or union plan.

Do I have to pay the penalty even if I don’t agree with it?
By law, the late enrollment penalty is part of the premium, so you must pay the penalty with the premium. You must also pay the penalty even if you’ve asked for a reconsideration. Medicare drug plans can disenroll members who don’t pay their premiums, including the late enrollment penalty portion of the premium.

How soon will I get a reconsideration decision?
In general, Medicare’s contractor makes reconsideration decisions within 90 days. The contractor will try to make a decision as quickly as possible. However, you may request an extension. Or, for good cause, Medicare’s contractor may take an additional 14 days to resolve your case.

What happens if Medicare’s contractor decides the penalty is wrong?
If Medicare’s contractor decides that all or part of your late enrollment penalty is wrong, the Medicare contractor will send you and your drug plan a letter explaining its decision. Your Medicare drug plan will remove or reduce your late enrollment penalty. The plan will send you a letter that shows the correct premium amount and explains whether you’ll get a refund.

What happens if Medicare’s contractor decides the penalty is correct?
If Medicare’s contractor decides that your late enrollment penalty is correct, the Medicare contractor will send you a letter explaining the decision, and you must pay the penalty.

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