How Medicare Part D Works
Medicare Part D is prescription drug coverage. Understanding how it works, including tiers, phases, and the 2026 out-of-pocket cap, helps you choose the right plan and avoid costly surprises.
What Is Medicare Part D?
Medicare Part D is the prescription drug benefit of Medicare. It is offered by private insurance companies approved by Medicare and helps cover the cost of both generic and brand-name medications.
Part D can be purchased as a standalone plan (PDP) to add drug coverage to Original Medicare, or it may be bundled into a Medicare Advantage plan (MAPD). Either way, the core structure of how the benefit works is the same.
Every Part D plan has its own formulary (list of covered drugs), premium, deductible, and cost-sharing structure. This is why comparing plans based on your specific medications is essential, not just the monthly premium.
Drug Tiers: How Your Costs Are Determined
Every Part D plan organizes its covered drugs into tiers. The tier your medication falls on determines how much you pay. Lower tiers cost less.
Generic drugs preferred by your plan. These are the most affordable option.
Generic drugs not on the preferred list. Still affordable but slightly more than Tier 1.
Brand-name drugs preferred by your plan. Costs are higher than generics.
Brand-name drugs not preferred by your plan. Ask your doctor about alternatives.
High-cost specialty medications. These can be very expensive without proper coverage.
Copay amounts are approximate and vary by plan. Always check your specific plan's formulary.
The 3 Phases of Part D Coverage (2026)
Your Part D costs change as you move through the year. Understanding these phases helps you budget and plan for your medication expenses.
You pay 100% of drug costs until you meet your deductible. In 2026, the maximum deductible is $590. Many plans offer a $0 deductible for Tier 1 and 2 drugs.
Your plan shares costs with you. You pay copayments or coinsurance based on your drug's tier. This continues until your total drug costs reach $2,100 in 2026.
In 2026, once your out-of-pocket costs reach $2,100, you pay $0 for covered drugs for the rest of the year. The coverage gap (donut hole) was eliminated starting in 2025.
When Can You Enroll?
Part D enrollment is limited to specific windows. Missing your window can result in permanent penalties.
Begins 3 months before your 65th birthday and ends 3 months after. Enrolling during the first 3 months ensures coverage starts on your birthday.
Every year you can join, switch, or drop a Part D plan. Coverage for any changes starts January 1 of the following year.
If you lose creditable drug coverage, move to a new area, or qualify for Extra Help, you may be eligible for a Special Enrollment Period.
If you are enrolled in a Medicare Advantage plan with drug coverage, you can switch plans or return to Original Medicare during this period.
Related Medicare Topics
Eligibility, costs, the Extra Help program, and how to enroll in Florida.
How Medigap plans fill the gaps in Original Medicare coverage.
A complete overview of all four parts of Medicare and how they work together.
Common Part D Questions
Find the Right Part D Plan for Your Medications
Our licensed agents compare every Part D plan available in your area based on your specific medications, preferred pharmacies, and budget. The comparison is free and takes about 15 minutes.
We do not offer every plan available in your area. Currently we represent 17 organizations which offer 149 products in your area. Please contact Medicare.gov, 1-800-MEDICARE, or your local SHIP for information on all options.