Updated July 2026 · Reviewed by the CoverageCo team
Part D covers prescription drugs you fill at a pharmacy, either through a standalone plan alongside Original Medicare or built into a Medicare Advantage plan. Every plan has its own formulary — the list of drugs it covers and what tier each falls on — which is why two plans with similar premiums can cost very different amounts for the same person.
Key takeaways
- The formulary, not the premium, determines what Part D actually costs you.
- Plans can require prior authorization or step therapy before covering certain drugs.
- Formularies change annually, so a plan that fit last year may not fit this year.
- Going without creditable drug coverage triggers a [permanent late enrollment penalty](/medicare/part-d/late-enrollment-penalty).
Two ways to get Part D
If you're on Original Medicare, you'd add a standalone Part D plan. If you're on a Medicare Advantage plan, drug coverage is usually built in — though not always, so it's worth confirming.
You generally can't have both a standalone Part D plan and an Advantage plan that includes drug coverage. Enrolling in a standalone plan while on certain Advantage plans can actually disenroll you from the Advantage plan, which is a genuinely unpleasant surprise.
Why the formulary is everything
Every Part D plan publishes a formulary: the list of drugs it covers, and the tier each drug sits on. Tiers determine your share of the cost.
Two plans with nearly identical premiums can differ by a large margin for one specific person, because one covers their medication on a preferred tier and the other places it on a higher tier or doesn't cover it at all.
This is why comparing Part D plans on premium alone is the costliest routine mistake in Medicare. The only reliable method is to price your actual medication list — exact drugs, exact doses — against each plan.
Rules that can delay a prescription
Beyond the formulary, plans use a few management tools you should know about before you need them:
- Prior authorization — the plan must approve the drug before it will pay.
- Step therapy — you may need to try a lower-cost drug first before the plan covers the one prescribed.
- Quantity limits — caps on how much you can get in a given period.
How Part D costs are structured
Part D has moved through phases historically, and the structure has changed meaningfully in recent years. The coverage gap once known as the "donut hole" has been eliminated, and Part D now includes an annual cap on what you pay out of pocket for covered drugs — after which covered prescriptions cost you nothing for the rest of the year.
That cap is a significant protection, particularly for anyone on expensive medications. The exact figure is set by CMS and adjusts each year, so check the current amount at Medicare.gov rather than relying on any agency's website, including this one.
There's also a program that lets you spread your out-of-pocket drug costs across the year in monthly payments instead of paying large amounts at the pharmacy counter. It doesn't reduce what you owe, but it smooths the timing.
Review it every single year
Formularies change annually. So do tiers, premiums, and pharmacy networks. A plan that was ideal for you last year can quietly become a poor fit, and the notice announcing it looks like junk mail.
Checking your current medication list against next year's plans each fall is the highest-value hour you'll spend on Medicare. A licensed agent can run that comparison at no cost, and if your current plan is still the best fit, you'll know rather than hope.
Common questions
Do I need Part D if I don't take any prescriptions?
It's usually still worth enrolling. Going without creditable drug coverage triggers a late enrollment penalty that's added to your premium permanently once you do enroll, and prescription needs tend to arrive without warning.
Is there still a Medicare donut hole?
The coverage gap known as the donut hole has been eliminated, and Part D now includes an annual out-of-pocket cap on covered drugs. The exact cap amount is set each year — confirm the current figure at Medicare.gov.
Why is my drug so expensive on this plan?
Most likely it sits on a higher formulary tier, or it isn't on the plan's formulary at all. Plans differ substantially in how they tier the same medication, which is why pricing your specific drug list against each plan matters more than comparing premiums.
Can I have a standalone Part D plan and a Medicare Advantage plan?
Usually not. Most Advantage plans include drug coverage, and enrolling in a separate Part D plan can disenroll you from your Advantage plan. Check before making any change.