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 →