Medicare Part D

What it means

Original Medicare does not pay for prescriptions taken at home. Part D fills that gap, and it is bought separately: either as a standalone drug plan alongside Parts A and B, or built into a Medicare Advantage plan.

Every plan publishes a formulary — the list of drugs it covers and the tier each sits in — and the formularies differ from each other substantially. The right plan for one person is the wrong plan for their neighbor, because the question is which plan covers the particular drugs they take.

Plans may be changed once a year during open enrollment, and the formulary may change at the same time. A plan that was the cheapest last year is not necessarily the cheapest this year, and the default is to stay put.

Going without creditable drug coverage for more than a short period after first becoming eligible attracts a late enrollment penalty, which is added to the premium permanently rather than for a year.

Why it matters

Prescriptions are the recurring medical cost most likely to be rationed, and plan choice changes it by a large multiple.

The penalty for delaying is permanent, and it catches people who did not take medication when they turned 65 and saw no reason to buy a drug plan.

When you are likely to meet it

• When somebody first enrols in Medicare.
• When a new prescription turns out not to be on the plan's formulary.
• During the annual open enrollment period, when plans and prices change.

Related terms

• Creditable coverageDrug coverage at least as good as Medicare's — losing it involuntarily opens a window to enroll.
• Extra HelpA federal subsidy that pays most of the cost of Medicare prescription drug coverage.
• MedicareThe federal health insurance program for people aged sixty-five and over, and for some younger people with disabilities. It does not pay for long-term care.
• Medicare AdvantageMedicare delivered by a private insurance plan instead of directly by the government. It is also called Part C.
• Medicare Savings ProgramA state-run program that pays Medicare premiums, and sometimes the deductibles too.
• Medication therapy managementA Part D service that reviews everything a person takes at once, with a written summary — and enrols people automatically.
• MedigapA private policy that pays some of what Original Medicare leaves the patient to pay. It cannot be combined with a Medicare Advantage plan.
• PolypharmacyTaking enough different medicines that the combination becomes a risk in its own right.
• Service areaThe geographic area a Medicare Advantage plan is sold for — and outside which a person may not stay enrolled.
• Special enrollment periodA window outside the annual one in which Medicare coverage can be changed, opened by a named life event.

Official sources

The authority this page describes, at the agency that publishes it. Sahvelo does not restate a rule from a secondary source.

• Medicare — joining a plan (opens in a new tab)

Sahvelo guidance that uses this

• Medicare