Home | Understanding Medicare Part D Prescription Drug Plans
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If you already know you want help reviewing Medicare Part D options, request a call back now and speak with a licensed agent (License #0564249) about your prescriptions, pharmacy preferences, and plan choices. If you’re still figuring out how Part D works, keep reading below — we’ll walk through the key things to compare, including formularies, drug tiers, costs, and possible late-enrollment penalties if you delay coverage without other creditable drug coverage.
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Medicare Part D Prescription Plans
What is it?
Medicare Part D is an optional prescription drug coverage offered by private insurance companies approved by Medicare. It helps pay for many brand-name and generic medications, and it’s available to people with Original Medicare who want standalone drug coverage or drug coverage through certain Medicare Advantage plans. Even if you don’t take many prescriptions today, Part D is important to consider because delaying enrollment without other creditable drug coverage can lead to a late enrollment penalty later.
Not all Part D plans work the same way. One plan may cover your medications differently than another, place them on different cost tiers, or require you to use certain pharmacies for the best pricing. That’s why comparing plans based on your actual prescriptions, preferred pharmacy, and expected costs is more useful than looking at premium alone.
Key factors to consider:
- Eligibility: Medicare drug coverage is available to people with Medicare. To join a drug plan, you generally must live in the plan’s service area.
- Timing matters: Even if you don’t take prescriptions now, it can still make sense to consider Part D when you’re first eligible. Waiting too long to enroll without other creditable prescription drug coverage can create a permanent late enrollment penalty.
- Late enrollment penalty: You may owe a Part D late enrollment penalty if, after your Initial Enrollment Period, you go 63 or more days in a row without Medicare drug coverage or other creditable prescription drug coverage. That penalty is generally added to your monthly premium for as long as you have Part D coverage.
- Premiums, deductibles, and payment options: Part D plans can have monthly premiums, deductibles, and cost-sharing for covered drugs. In 2026, no Medicare drug plan can have a deductible higher than $615, though some plans may have a lower deductible or none at all.
Three Key Definitions
How Medicare Part D Works
Part D plans cover a wide range of prescription drugs, but each plan has its own drug list, also called a formulary. A formulary is the list of medications the plan covers. Two plans in the same area may both be Medicare-approved, but they may still cover different drugs, apply different rules, or charge different amounts for the same medication.
Plans may also use pharmacy networks and coverage rules that affect what you pay. In some cases, a plan may require prior authorization, step therapy, or quantity limits before certain drugs are covered. If a needed drug isn’t on the formulary, you or your prescriber may be able to request an exception.
That’s why choosing a Part D plan usually comes down to more than finding a low premium. For many people, one of the most important parts of choosing a Part D plan is simply answering: Are my medications covered, and how much will they cost at my pharmacy?
Many Medicare Part D plans place drugs into different tiers or cost levels. In general, drugs in lower tiers cost less than drugs in higher tiers, but each plan can structure its tiers a little differently. Medicare gives a common example like this:
Tier 1 for many generics
Tier 2 for preferred brand-name drugs
Tier 3 for non-preferred brand-name drugs
Specialty tier for very high-cost medications
This matters because a medication’s tier can directly affect your copay or coinsurance. A plan with a lower premium is not always the better value if your medications fall into higher-cost tiers or aren’t covered the way you expect.
If a drug is placed on a higher tier and your prescriber believes it’s medically necessary, you may be able to request a tiering exception in some situations.
Many people still use the term “donut hole” when talking about Medicare drug costs. Today, Medicare describes Part D drug costs in stages rather than the old gap structure. In general, plans now have 3 stages:
- A deductible stage
- An initial coverage stage
- A catastrophic coverage stage
In 2026, if your plan has a deductible, you pay your drug costs until you meet it. After that, during the initial coverage stage, you generally pay 25% coinsurance for covered generic and brand-name drugs until your out-of-pocket spending on covered Part D drugs reaches $2,100. After that, you move into catastrophic coverage and pay $0 out of pocket for covered Part D drugs for the rest of the calendar year.
So while people may still say “donut hole,” the more useful question today is: How will this plan handle my costs across the year, based on the drugs I take?
Key Questions We’ll Help Answer
Are my prescriptions on the plan’s formulary?
We’ll help you review whether your medications are covered and if similar alternatives are listed when needed.
What tier are my drugs on?
Drug tiers can affect what you pay, so we’ll help you understand whether your medications fall into lower- or higher-cost categories.
Will my preferred pharmacy give me the best price?
Costs can vary by pharmacy network, even within the same plan.
What will I actually pay over the year—not just per prescription?
We’ll look at premium, deductible, copays or coinsurance, and how your costs may change through the plan’s coverage stages
Does the plan require prior authorization or step therapy?
Some plans apply coverage rules before they’ll cover certain medications.
Could a lower-premium plan still cost me more overall?
Yes — if your drugs aren’t covered well, sit on a high tier, or your pharmacy is out of network, total costs can be higher.
Speak With a Heffernan Licensed Medicare Advisor
Submit the form below and a licensed agent (license #0564249) will reach out to discuss your Medicare Part D Plan options.
By submitting, you agree to be contacted about Medicare Part D options. No obligation.
Medicare Part D Guidance
Why Work With a Licensed Agent?
Choosing a Medicare Part D plan can be more complicated than it looks. Two plans may both seem affordable at first glance, but your actual costs can depend on your prescriptions, formulary coverage, pharmacy network, deductibles, and tier placement.
Our licensed agents can help you compare Part D plan options in California, Missouri, and Washington and focus on the details that matter most to you. If you already know your medications and preferred pharmacy, we can help you ask the right questions and narrow down the options worth reviewing.
Licensed Broker – Medicare
Drew Stitz, Senior Vice President
Drew has been a licensed broker since 1989. He’s built his expertise through the years by consulting, implementing, and servicing group employer health, individual health and Medicare insurance clients.
Heffernan Insurance Brokers acquired Drew’s brokerage in 2023 and he joined as a Senior Vice President. He continues to bring his experience and expertise in Medicare to Heffernan’s trusted clients everyday.
Frequently Asked Questions
What is Medicare Part D?
Medicare Part D is optional prescription drug coverage offered by private insurance companies approved by Medicare. It helps pay for covered brand-name and generic medications.
Does every Part D plan cover the same drugs?
No. Each Part D plan has its own formulary, which is the list of drugs the plan covers. That’s why it’s important to check your specific medications before enrolling.
What is a formulary?
A formulary is a plan’s list of covered drugs. It can include brand-name drugs, generic drugs, and other covered medications, but coverage can differ from one plan to another.
What are drug tiers in Medicare Part D?
Many plans place drugs into cost tiers. In general, lower-tier drugs cost less than higher-tier drugs, but each plan may structure its tiers differently.
What does the “donut hole” mean now?
People still use the term “donut hole,” but Medicare now explains Part D costs in stages: deductible, initial coverage, and catastrophic coverage. After your out-of-pocket spending on covered Part D drugs reaches the yearly threshold, you move into catastrophic coverage.
Do I need to enroll in Part D if I don’t take medications right now?
Possibly yes. If you delay Part D and don’t have other creditable prescription drug coverage, you may owe a late enrollment penalty later.
What is the Part D late enrollment penalty?
If you go 63 or more days in a row without Medicare drug coverage or other creditable prescription drug coverage after your Initial Enrollment Period, you may owe a penalty that gets added to your monthly premium.
Do all pharmacies cost the same under a Part D plan?
No. Your costs may vary depending on the pharmacy network and whether your preferred pharmacy is in network or offers preferred pricing.
Can a Part D plan require prior authorization or step therapy?
Yes. Some plans use rules like prior authorization, step therapy, or quantity limits for certain drugs.
How do I choose the right Part D plan?
The best plan usually depends on the medications you take, whether they’re on the formulary, what tier they’re on, which pharmacy you use, and what your total yearly drug costs may look like — not just the monthly premium.
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We do not offer every plan available in your area. Please contact www.medicare.gov or 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or your local State Health Insurance Program (SHIP) to get information on all of your options.
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