Example #1 - If you use no medications, the lowest-premium drug plan may be the most affordable.
Some Medicare beneficiaries are able to simply enroll in a Medicare Part D plan with the lowest monthly premium because their health is stable and their medication needs are low or non-existent – that is, some people simply do not need Part D coverage, but they wish to avoid the late-enrollment penalty by joining a Medicare drug plan just in case their prescription drug needs change. In such situations, you can choose the lowest premium Medicare Part D plan in your state (see: https://PDP-Finder.com) or you may wish to consider a low or $0 premium Medicare Advantage plan that includes drug coverage (MAPD see: https://MA-Finder.com).
Important Reminder: Always be sure that any medications you use are covered by the Medicare drug plan and that a network (or preferred network) pharmacy is located in your area.
Example #2 - If you have higher medication costs, it would make sense to choose a Medicare drug plan with the lowest total cost-sharing, a generous formulary that covers all of your drugs, and a large network of pharmacies (with local preferred pharmacies when applicable) - as compared to just choosing a drug plan with the lowest monthly premiums.
In short, the total annual Part D cost must be considered that will include: monthly premiums and total drug cost. On the positive side, the Inflation Reduction Act (IRA) eliminated beneficiary cost-sharing in the Catastrophic Coverage phase for anyone with annual total out-of-pocket (TrOOP) spending over $2,000 (increasing to $2,100 in 2026).
Important Reminder #2: The annual maximum out-of-pocket spending limit (RxMOOP) only applies to Medicare Part D drugs covered by your Medicare Part D plan. Therefore, in this high-cost example, the most important point is to ensure that your medications are covered by your chosen Medicare Part D plan. Again, in such a situation where you have high monthly drug spending, monthly plan premiums may amount to only a very small portion of the annual healthcare costs - especially if you are able to find a Medicare Advantage plan with a low or $0 premium that includes drug coverage.
Question: Do you have a tool to help me see how my Medicare Part D spending changes throughout the year?
You can use our Out-of-pocket Cost Calculator (PDP-Planner.com) to more accurately estimate (or visualize) your annual drug spending through the various phases of your Part D drug coverage, see an example for a person with retail drug costs totaling $800 in 2025.
You can see in our example PDP-Planner link above, if your retail drug costs are $800 a month, you will enter the 2025 Catastrophic Coverage in August and have no additional medication costs for the remainder of the year. Your total annual out-of-pocket costs (without considering monthly premiums) would remain $2,000.
So in this example,
(1) if you purchase formulary drugs that have a monthly retail cost of around $800 ($9,600 per year) and -
(2) your Medicare Part D plan's cost-sharing is approximately 25% of retail (you pay 25% of the retail drug cost) and -
(3) your Medicare Part D plan premium is $20 per month (chosen based on the coverage of your medications), (4) your spending on prescription drugs covered by your 2025 Part D plan will be $2,000 per year - plus
(5) your total plan premium will amount to $240. Again, the monthly premium is a small part of the total drug spending per year.
For more information about the monthly premium costs of Medicare Part D plans in your state, please try our Medicare Part D plan search tools: PDPFinder.com and MAFinder.com