What is Medicare Part D?

Posted on March 6, 2024 By Jeff Snyder

Introduced in 2006, Medicare Part D prescription drug plans are the most recent addition to the Medicare program.

There are two ways to get drug coverage: purchasing a Part D plan or enrolling in a MAPD plan.

There are two ways of getting Part D coverage. The first is through purchasing a stand-alone plan to pair with Original Medicare coverage. The second is to enroll in a Medicare Advantage plan with prescription drug benefits, often called an MAPD plan.

Part D plans are sold by private insurers and are available to anyone enrolled in Original Medicare. There is no required physical exam, and you cannot be denied for financial or health reasons.

Though Medicare Part D coverage is optional, you may pay a late-enrollment penalty if you don’t enroll as soon as you’re eligible. This makes it worth at least exploring your options.

What Does Medicare Part D Cover?

Medicare Part D helps Medicare insurance beneficiaries afford necessary medications. Because of this, Part D plans are sometimes known as PDPs, or prescription drug plans. How Medicare Part D works is that each plan offers a formulary that breaks out drugs into tiers. Each tier will cost you a different amount out of pocket. You’ll also owe an annual Part D deductible before coverage will start each year. Once you’ve paid enough out-of-pocket, almost all your costs are covered by your plan.

The government specifies basic cost limits. In 2025, the standard limits are:

• Initial Deductible: $590
• Out-of-Pocket Threshold: $2,000

What Does Part D Cost?

The cost of a Part D plan varies from insurer to insurer. Each plan has a monthly premium, an annual deductible, and a share of the prescription costs, called a copay.

What Is The Coverage Gap?

Due to the Inflation Reduction Act of 2022 setting the out-of-pocket threshold for drug plans at $2,000, the coverage gap has also been closed. Once you reach that limit, you now enter catastrophic coverage, which means the plan covers most of your out-of-pocket costs for the rest of the year.

If you’re interested in learning more about Medicare Part D, contact Chastain Agency LLC! We would be more than happy to help you understand the differences in types of Medicare insurance plans, what each can cover, and more.

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