Medicare Part D covers most outpatient prescription drugs, certain vaccines, and some insulin products with price protections. It’s the part of Medicare specifically designed for medications you pick up at a pharmacy or receive through mail order, and it’s available either as a standalone plan or bundled into a Medicare Advantage plan. What Part D actually pays for depends on your plan’s drug list, but federal rules set a baseline that every plan must meet.
How the Drug List Works
Every Part D plan maintains a formulary, which is simply the list of drugs it covers. Plans organize these drugs into tiers, and your out-of-pocket cost depends on which tier your medication falls into. While plans can structure their tiers differently, most follow a pattern like this:
- Tier 1 (lowest cost): most generic prescription drugs
- Tier 2 (medium cost): preferred brand-name drugs
- Tier 3 (higher cost): non-preferred brand-name drugs
- Specialty tier (highest cost): very high-cost prescription drugs, often for complex conditions
A drug sitting on Tier 1 might cost you a $5 copay, while the same type of medication in brand-name form on Tier 3 could run $50 or more. This is why checking a plan’s formulary before you enroll matters so much. If the specific medications you take are on lower tiers, you’ll pay significantly less over the course of a year.
Drug Classes Every Plan Must Cover
Plans have some flexibility in choosing which drugs make their formulary, but federal law requires all Part D plans to cover drugs in six protected categories: antidepressants, antipsychotics, anticonvulsants (used for seizures), immunosuppressants for organ transplant recipients, antiretrovirals (for HIV), and cancer medications. Within these classes, plans must include essentially all available drugs, with very limited exceptions. This rule exists because people taking these medications often can’t safely switch to an alternative if their plan doesn’t cover their specific drug.
Outside these six categories, plans are required to cover at least two drugs in every therapeutic class but can choose which ones. That’s why two Part D plans might cover different brand-name blood pressure medications or different cholesterol drugs.
Vaccines Under Part D
Part D covers all commercially available preventive vaccines that aren’t already covered by Part B. In practice, this means Part B handles flu shots, pneumonia vaccines, COVID-19 vaccines, and hepatitis B vaccines for people at higher risk. Part D picks up the rest, including shingles, RSV, and tetanus booster shots.
The dividing line between Parts B and D for vaccines comes down to treatment versus prevention. If you get a tetanus shot because you stepped on a rusty nail, Part B covers it as treatment for an exposure. If you get a routine tetanus booster at your annual checkup, Part D covers it as prevention.
Insulin Cost Protections
Thanks to the Inflation Reduction Act, Part D caps your cost for insulin at $35 for a one-month supply of each covered insulin product. You don’t have to meet your deductible first. If you fill a three-month supply, you’ll pay no more than $105 total (that’s $35 per month’s worth). This cap applies to everyone on Part D who takes insulin, including people who receive Extra Help subsidies.
What Part D Does Not Cover
Federal law excludes certain categories of drugs from Part D coverage entirely. The most notable exclusions are medications used for weight loss or weight gain, drugs used for cosmetic purposes or hair growth, and fertility treatments. There are some nuances here. A weight-related drug prescribed for AIDS wasting, for example, is not considered a weight-gain agent and can be covered. Similarly, skin treatments prescribed for conditions like psoriasis, acne, or rosacea are not classified as cosmetic even though they affect appearance.
Over-the-counter medications are generally not covered unless your plan specifically includes them as a supplemental benefit. Drugs covered under Medicare Part A or Part B, such as certain medications administered during a hospital stay or in a doctor’s office, also fall outside Part D’s scope.
Costs and the Annual Deductible
For 2025, the maximum annual deductible a Part D plan can charge is $590. Until you hit that amount, you pay 100% of your drug costs out of pocket. Some plans set their deductible lower or waive it entirely for certain tiers, particularly generics. After you meet the deductible, you’ll pay copays or coinsurance at each tier level until you reach the catastrophic coverage threshold, at which point your costs drop significantly.
Starting in 2025, Part D includes a $2,000 annual cap on total out-of-pocket prescription drug spending. Once you hit that ceiling, you pay nothing more for covered drugs for the rest of the year.
What Happens When You Switch Plans
If you join a new Part D plan and you’re currently taking a drug that isn’t on that plan’s formulary, the plan is required to provide a transition fill. This is a one-time, 30-day supply of your current medication to bridge the gap while you and your doctor figure out next steps, whether that’s requesting an exception from the plan, switching to an equivalent drug that is covered, or appealing the decision. This rule also applies if your drug requires prior authorization or step therapy under the new plan.
The Late Enrollment Penalty
If you don’t sign up for Part D when you’re first eligible and you go 63 days or more without what Medicare calls “creditable coverage” (drug coverage at least as good as Part D), you’ll face a permanent penalty when you do enroll. The penalty adds 1% of the national base premium for every month you went without coverage. That’s 12% per year of delay, and it gets tacked onto your monthly premium for as long as you have Part D. Someone who waited three years without coverage, for instance, would pay roughly 36% more every month, indefinitely.
Extra Help for Lower Incomes
Medicare’s Extra Help program (also called the Low-Income Subsidy) reduces Part D costs for people with limited income and savings. To qualify, your annual income must be at or below $23,475 if you’re single, or $31,725 for a married couple living together. Your countable resources (savings, investments, real estate other than your home) must be below $18,090 for an individual or $36,100 for a couple. If you qualify, Extra Help can cover most or all of your premiums, deductibles, and copays. You can apply through the Social Security Administration.