Medicare Part D: Prescription Drug Plans
Last reviewed: June 2026 · Reviewed by Galit Sacajiu MD, MPH
Medicare Part D is optional prescription drug coverage added to Original Medicare through private insurance companies approved by Medicare. As of 2026, the out-of-pocket cap for covered drugs is $2,000 per year — a major improvement from prior years.
How Part D Works
✅ 2026 Big Change: $2,000 Out-of-Pocket Cap
Starting in 2025, the Inflation Reduction Act capped Medicare Part D out-of-pocket drug costs at $2,000 per year. Before this, there was no true cap. This is especially important for people on expensive specialty medications.
What Is a Formulary?
Each Part D plan has a formulary — a list of covered prescription drugs organized into tiers. Lower tiers have lower copays; higher tiers cost more. Plans can change their formularies each year.
Late Enrollment Penalty
If you don't sign up for Part D when first eligible and go 63+ days without creditable drug coverage, you'll pay a permanent late enrollment penalty: 1% of the national base beneficiary premium for each month you went without coverage.
Part D vs. Medicare Advantage Drug Coverage
Most Medicare Advantage plans include prescription drug coverage (MAPD plans), so you don't need a separate Part D plan. If you have Original Medicare, you need a standalone Part D Prescription Drug Plan (PDP).
Standalone Part D (PDP)
Works alongside Original Medicare (Parts A + B) or Medigap. You choose your plan based on your specific medications.
Compare Part D plans →Medicare Advantage + Drug (MAPD)
Replaces Original Medicare and includes drug coverage in one plan. Usually the most convenient option.
Compare Advantage plans →Frequently Asked Questions
Do I need Part D if I take no prescription drugs?+
You do not have to enroll, but if you skip Part D and later need it, you will owe a permanent late enrollment penalty for every month you went without creditable drug coverage. Many financial advisors recommend enrolling in a low-cost Part D plan at 65 to avoid the penalty, even if your current drug costs are minimal.
What counts as creditable drug coverage?+
Coverage that pays at least as much as a standard Medicare Part D plan on average. This includes most employer group plans, TRICARE, and VA coverage. If you have creditable coverage, you can delay Part D without penalty. Your employer or insurer is required to send you a notice each year stating whether your coverage is creditable.
Can I change Part D plans?+
Yes, during the Annual Enrollment Period from Oct 15 to Dec 7 each year. Changes take effect Jan 1. If your circumstances change mid-year (you move, lose employer coverage, gain Extra Help), you may qualify for a Special Enrollment Period to switch plans outside the normal window.
What is Extra Help for Part D?+
Extra Help (also called the Low Income Subsidy) is a federal program that helps people with limited income and resources pay for Part D costs. It covers premiums, deductibles, and copays. You may qualify automatically if you have Medicaid, SSI, or Medicare Savings Program benefits. Others can apply through the Social Security Administration.
Does Medicare cover insulin?+
Yes. As of 2023, Medicare Part D caps the cost of covered insulin at $35 per month per prescription. This cap applies regardless of where you are in the coverage phases. It applies to insulin used with a traditional syringe or pen and to insulin pumps covered under Part B.