Medicare Part D
Medicare Drug Coverage

An Overview of the Medicare Part D Prescription Drug Benefit (2025)

Medicare Part D helps pay for outpatient prescription drugs. It’s voluntary coverage offered through private insurers that contract with Medicare.

$2,000 annual cap on covered Part D out-of-pocket Deductible: up to $590 (plan-dependent) Prescription Payment Plan: monthly budgeting option

How Part D Works

  • Stand-Alone Prescription Drug Plan (PDP): Works with Original Medicare (Parts A & B).
  • Medicare Advantage Drug Plan (MA-PD): Many Advantage (Part C) plans bundle hospital, medical, and drug benefits.

Enrollment Snapshot

Millions rely on Part D through either a stand-alone PDP or an MA-PD. Plans are run by Medicare-approved private insurers, each with its own formulary and cost structure (premiums, deductibles, copays/coinsurance).

Costs You May Pay (vary by plan)

  • Monthly Premium: Plan-specific; higher-income enrollees may owe IRMAA.
  • Annual Deductible: Up to $590 in 2025 (some plans charge less or $0).
  • Copays/Coinsurance: Based on drug tier and pharmacy (preferred vs. standard).

2025 Coverage Phases (Redesigned)

  • Deductible: You pay 100% until your plan’s deductible (max $590).
  • Initial Coverage: You typically pay 25% for covered drugs until your out-of-pocket costs hit $2,000.
  • Catastrophic (after $2,000 OOP): $0 cost-sharing for covered Part D drugs for the rest of the year.
  • Budgeting Option: The Medicare Prescription Payment Plan lets you spread eligible OOP costs into monthly payments.

What Part D Plans Cover

  • Prescription drugs (generic & brand) on the plan’s formulary
  • Most vaccines and many insulin products (plan rules apply)

What’s Typically Not Covered

  • OTC drugs; cosmetic-purpose drugs
  • Most prescription vitamins/minerals (limited exceptions)

Formularies & Tiers

  • Plans must include at least two drugs in each therapeutic class.
  • Tiered costs are common: Tier 1 (low-cost generics), Tier 2 (preferred brands), Tier 3 (non-preferred brands), Specialty (high-cost meds).
  • Higher tiers usually mean higher copays/coinsurance. Review your plan each year.

Medicare Prescription Drug Plan Availability in 2025

In 2025, there are 464 stand-alone Prescription Drug Plans (PDPs) offered nationwide (34 PDP regions), the lowest since Part D began. These PDPs are offered by 7 firms, down from 11 in 2024 (about a 35% decrease in PDP choices year over year).

YearStand-Alone PDPs AvailableNotes
2025464Lowest since 2006; offered by 7 firms
2024709 (approx.)Sharp decline in 2025 (~35% fewer)

What This Means for You

  • Compare carefully: Formularies, premiums, and pharmacy networks differ.
  • Review annually: Plans can change each year; check during Open Enrollment (Oct 15–Dec 7).
  • Act on time: Late enrollment without creditable coverage can trigger a permanent penalty.

How to Get Prescription Drug Coverage

  • Option 1: Part D PDP — add a stand-alone drug plan to Original Medicare.
  • Option 2: MA-PD — many Medicare Advantage plans include Part D.
  • You can only have one type of drug coverage at a time (PDP or MA-PD).