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The Background and Basics of Medicare Part D Prescription Drug Plans

What are the basic details of the 2024 Medicare Part D Program?

In general, Medicare Part D prescription drug plans provide insurance coverage for your prescription drugs - just like other types of insurance. Your Medicare prescription drug coverage can be provided by a "stand-alone" Medicare Part D plan (only prescription coverage) or a Medicare Advantage plan that includes prescription coverage (or an MA-PD that includes Medicare health and prescription drug coverage). If you join a Medicare Part D prescription drug plan, you will pay a monthly premium ranging from only a few dollars up to over 100 dollars. If you join a Medicare Advantage plan, you may have a $0 premium. Your monthly premiums will vary depending on the benefits of your selected Medicare Part D plan or Medicare Advantage plan and your resident state.

Some Medicare Part D or Medicare Advantage plans have an initial deductible where you pay 100% of your prescription costs before your Part D prescription drug coverage or benefits begin. Other Medicare Part D or Medicare Advantage plans have no initial deductible or a $0 deductible, providing you with coverage as soon as you purchase your first prescriptions. Please note, that you may pay a higher monthly premium for Medicare Part D plans with no initial deductible. Also, the amount of the initial deductible can (and probably will) change each coverage year.

Each Medicare prescription drug plan will have a list of prescription drugs or formulary that are covered by the plan. Drug lists or formularies can vary greatly from one prescription drug plan to the next. So it is key that you ensure that your medications are covered by your chosen Medicare prescription drug plan.

When you use your Medicare Part D plan after the initial deductible (if applicable), you will pay a certain part of your prescription costs and your Medicare prescription drug plan will pay a part of your drug costs. Your plan's cost-sharing (copayments or coinsurance) will vary depending on the particular drug plan you choose.
The Centers for Medicare and Medicaid Services (CMS) notes:

Medicare prescription drug coverage (Part D) helps you pay for both brand-name and generic drugs. Medicare drug plans are offered by insurance companies and other private companies approved by Medicare. You can get coverage 2 ways:

1. Medicare Prescription Drug Plans (sometimes called “PDPs”) add prescription drug coverage to Original Medicare, some Medicare Private Fee-for-Service (PFFS) Plans, some Medicare Cost Plans, and Medicare Medical Savings Account (MSA) Plans.

2. Some Medicare Advantage Plans (like HMOs or PPOs) or other Medicare health plans offer prescription drug coverage. You generally get all of your Medicare Part A (Hospital Insurance), Medicare Part B (Medical Insurance), and Part D through these plans. Medicare Advantage Plans that offer prescription drug coverage are sometimes called “MA-PDs.”

CMS uses the term “Medicare drug plans” to mean all plans that provide Medicare prescription drug coverage.

Here is a quick summary of a Medicare Part D plan:
  • Each year, Medicare Part D prescription drug plans (or Medicare Advantage plans will be available in your state for a wide range of monthly premiums. (You can click here to see our Medicare Part D Plan Overview by State and get an overview if the Medicare Part D plan features and premiums in your state.)

  • The CMS or Medicare defined standard benefit or model Medicare Part D plan has an annual $545 initial deductible. However, many Medicare Part D plans do not have the initial deductible (or have a $0 deductible) and provide "first dollar" drug coverage.

  • In the Medicare model standard plan, after the initial deductible is met the insured (for instance, you) has paid the first $545), your Medicare prescription drug plan will pay 75% of the covered prescription costs up to $4,485 (the initial coverage limit $5,030 minus the deductible $545) .

  • The insured person pays the remaining 25% ($1,121). These types of plans (that follow the CMS model plan) are using coinsurance: 25% Insured - 75% Insurer

  • In many/most plans, prescription drugs are arranged in "tiers" or logical groups and are assigned a fixed dollar value based on the tier. This is meant as Copayment.

  • After the initial coverage limit $5,030 has been reached, you are in the so called "Donut Hole" or Coverage Gap. Prior to plan year 2011, the insured was 100% responsible for their medication costs in the Donut Hole unless their plan offered Gap Coverage. Beginning in plan year 2011, both the Medicare Part D plan and brand-name drug manufacturers share a portion of your medication expenses while in the Donut Hole, in the form of a Donut Hole Discount.

    In plan year 2024, your Medicare Part D plan will pay 75% of your generic medication costs in the Donut Hole and your brand-name drug purchases receive a 75% discount while in the Donut Hole. The brand-name drug manufacturer pays 70% and your Medicare Part D plan pays 5% of this discount. These discounts apply, even if your plan’s coverage states that it has "No Gap Coverage". In addition, some plans will provide some coverage through the Donut Hole, at an additional monthly premium.

  • The insured person then has a copayment thereafter of 0%. Here the person has emerged from the Coverage Gap when there out of pocket expenses have reached $8,000. They are now in what is called "Catastrophic Coverage".

  • Benefits may vary depending on income levels. Extra-Help programs are available based on financial need.

  • Premiums may increase annually. Drug lists or formularies may change with 60 days notice.

The Centers for Medicare and Medicaid Services (CMS) notes:

Drug coverage is insurance. Doctor samples, drug discount cards, free clinics, or drug discount websites are not drug coverage.

Which governmental agency is responsible for the Medicare Part D program?

The Centers for Medicare and Medicaid Services (CMS) or Medicare is responsible for the administration of the Medicare Part D prescription drug program. Private insurance carriers actually implement the various Medicare Part D plans across the country under the direction of CMS.

How many Medicare Part D plans are currently available?

There are approximately 40 to 50 Medicare Part D prescription drug plans (or PDPs) available in each state or CMS region.

Estimates suggest that in 2024 there are 1,439 Stand Alone Medicare Part D prescription drug plans (or PDPs) across the entire county.

Of these plans, there are 19 companies offering plans on a national level.

(Click here if you would like to see our 2024 Medicare Part D Plan Overview by State to review features and premiums of the nationally available stand-alone prescription drug plans available in your own state.)

Where did the Medicare Part D prescription drug program come from?

Medicare Part D plans have their origin in the Medicare Prescription Drug, Improvement, and Modernization Act which was passed on December 8, 2003. This law established a voluntary drug benefit for Medicare beneficiaries and created the new Medicare Part D program. In short, the Medicare Modernization Act and the Medicare Prescription Drug Improvement feature gives Medicare beneficiaries, that is seniors and disabled citizens eligible for Medicare access to drug coverage beginning in January of 2006.

Tips & Disclaimers
  • Q1Medicare®, Q1Rx®, and Q1Group® are registered Service Marks of Q1Group LLC and may not be used in any advertising, publicity, or for commercial purposes without the express authorization of Q1Group.
  • The Medicare Advantage and Medicare Part D prescription drug plan data on our site comes directly from Medicare and is subject to change.
  • Medicare has neither reviewed nor endorsed the information on our site.
  • We provide our Q1Medicare.com site for educational purposes and strive to present unbiased and accurate information. However, Q1Medicare is not intended as a substitute for your lawyer, doctor, healthcare provider, financial advisor, or pharmacist. For more information on your Medicare coverage, please be sure to seek legal, medical, pharmaceutical, or financial advice from a licensed professional or telephone Medicare at 1-800-633-4227.
  • We are an independent education, research, and technology company. We are not affiliated with any Medicare plan, plan carrier, healthcare provider, or insurance company. We are not compensated for Medicare plan enrollments. We do not sell leads or share your personal information.
  • Benefits, formulary, pharmacy network, provider network, premium and/or co-payments/co-insurance may change on January 1 of each year. Our PDPCompare.com and MACompare.com provide highlights of annual plan benefit changes.
  • The benefit information provided is a brief summary, not a complete description of benefits. For more information contact the plan.
  • Limitations, copayments, and restrictions may apply.
  • We make every effort to show all available Medicare Part D or Medicare Advantage plans in your service area. However, since our data is provided by Medicare, it is possible that this may not be a complete listing of plans available in your service area. For a complete listing please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.
    Statement required by Medicare:
    "We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options."
  • When enrolling in a Medicare Advantage plan, you must continue to pay your Medicare Part B premium.
  • Medicare beneficiaries with higher incomes may be required to pay both a Medicare Part B and Medicare Part D Income Related Monthly Adjustment Amount (IRMAA). Read more on IRMAA.
  • Medicare Advantage plans that include prescription drug coverage (MAPDs) are considered Medicare Part D plans and members with higher incomes may be subject to the Medicare Part D Income Related Monthly Adjustment Amount (IRMAA), just as members in stand-alone Part D plans. In certain situations, you can appeal IRMAA.
  • You must be enrolled in both Medicare Part A and Part B to enroll in a Medicare Advantage plan. Members may enroll in a Medicare Advantage plan only during specific times of the year. Contact the Medicare plan for more information.
  • If you are enrolled in a Medicare plan with Part D prescription drug coverage, you may be eligible for financial Extra Help to assist with the payment of your prescription drug premiums and drug purchases. To see if you qualify for Extra Help, call: 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048, 24 hours a day/ 7 days a week or consult www.medicare.gov; the Social Security Office at 1-800-772-1213 between 7 a.m. and 7 p.m., Monday through Friday. TTY users should call, 1-800-325-0778; or your state Medicaid Office.
  • Medicare evaluates plans based on a 5-Star rating system. Star Ratings are calculated each year and may change from one year to the next.
  • A Medicare Advantage Private Fee-for-Service plan (PFFS) is not a Medicare supplement plan. Providers who do not contract with the plan are not required to see you except in an emergency.
  • Disclaimer for Institutional Special Needs Plan (SNP): This plan is available to anyone with Medicare who meets the Skilled Nursing Facility (SNF) level of care and resides in a nursing home.
  • Disclaimer for Dual Eligible (Medicare/Medicaid) Special Needs Plan (SNP): This plan is available to anyone who has both Medical Assistance from the State and Medicare. Premiums, co-pays, co-insurance, and deductibles may vary based on the level of Extra Help you receive. Please contact the plan for further details.
  • Disclaimer for Chronic Condition Special Needs Plan (SNP): This plan is available to anyone with Medicare who has been diagnosed with the plan specific Chronic Condition.
  • Medicare MSA Plans combine a high deductible Medicare Advantage Plan and a trust or custodial savings account (as defined and/or approved by the IRS). The plan deposits money from Medicare into the account. You can use this money to pay for your health care costs, but only Medicare-covered expenses count toward your deductible. The amount deposited is usually less than your deductible amount, so you generally have to pay out-of-pocket before your coverage begins.
  • Medicare MSA Plans do not cover prescription drugs. If you join a Medicare MSA Plan, you can also join any separate (stand-alone) Medicare Part D prescription drug plan
  • There are additional restrictions to join an MSA plan, and enrollment is generally for a full calendar year unless you meet certain exceptions. Those who disenroll during the calendar year will owe a portion of the account deposit back to the plan. Contact the plan provider for additional information.
  • Medicare beneficiaries may enroll through the CMS Medicare Online Enrollment Center located at www.medicare.gov.
  • Medicare beneficiaries can file a complaint with the Centers for Medicare & Medicaid Services by calling 1-800-MEDICARE 24 hours a day/7 days or using the medicare.gov site. Beneficiaries can appoint a representative by submitting CMS Form-1696.