How much will my drug coverage cost?
Your costs for Medicare prescription drug coverage will vary depending on which drugs you use, which Medicare drug plan you join, and whether you get extra help paying for your drug costs. Medicare drug plans may design their plans with different coverage and costs, as long as what their plan offers is at least as good as the standard coverage described on the next page.Contact the plan(s) you are interested in to get specific cost information.
Medicare prescription drug coverage is insurance.
Payments you may make in a Medicare drug plan include the following:- Monthly premium —Most drug plans charge a monthly fee that varies by plan. You pay this in addition to the Part B premium. If you belong to a Medicare Advantage Plan or Medicare Cost Plan that includes Medicare drug coverage, the monthly premium you pay includes an amount for prescription drug coverage. Some drug plans charge no premium.
- Yearly deductible —This is the amount you pay for your prescriptions before your plan begins to pay. Some plans charge no deductible.
- Copayments or coinsurance —You pay these amounts for your prescriptions after the deductible. You pay your share and your plan pays its share for covered drugs.
- Catastrophic coverage If you have high drug costs, Medicare drug plans provide coverage called "catastrophic coverage."
This means that once you have paid up to a certain limit for covered drugs in a given plan year (known as the RxMOOP), you will pay nothing for your formulary prescription drug purchases for the rest of the calendar year.
Keep in mind that 2023 was the last year that Medicare Part D beneficiaries paid cost-sharing in the Catastrophic Coverage phase. For plan year 2024 and beyond, the Inflation Reduction Act (IRA) of 2022 eliminated beneficiary cost-sharing in the Catastrophic Coverage phase, so plan members do not have any out-of-pocket costs for formulary drug purchases after reaching the plan's total out-of-pocket threshold (TrOOP); also know as the RxMOOP.
See the Catastrophic Coverage FAQs for current plan year information.
The example below shows calendar year costs for covered drugs in a plan that meets Medicare’s standards in 2026: Mr. Jones joins the ABC Prescription Drug Plan. His coverage begins on January 1, 2026. He pays the plan a monthly premium throughout the year. He doesn’t get extra help and uses his Medicare drug plan membership card.
| 1. Yearly deductible -----> |
2. Copayment / Coinsurance -----> |
3. Catastrophic Coverage |
| Mr. Jones pays the first $615 of his drug costs. | Mr. Jones pays a copayment or coinsurance amount for each prescription, and his plan pays its share for each drug until his total out-of-pocket drug costs (including his deductible) reach $2,100. | Once Mr. Jones has spent $2,100 out-of-pocket for the year, his initial coverage phase ends. Now, he pays nothing ($0) for each formulary prescription until the end of the year. |
(Primary Source: Centers for Medicare and Medicaid Services - Your Guide to Medicare Prescription Drug Coverage 2008. This content may have been enhanced by this site to include further examples, explanations, and links.)