Medicare Prescription Drug Coverage Guide
Understanding Medicare Part D prescription drug coverage, including formularies, coverage phases, and how to save on your medications.
Types of Medicare Drug Coverage
Medicare Advantage with Drug Coverage
Most Medicare Advantage plans include prescription drug coverage (Part D) built into the plan.
- Integrated medical and drug benefits
- One plan, one card, one premium
- Often includes additional drug benefits
- May have preferred pharmacy networks
Stand-Alone Part D Plans
Separate prescription drug plans that work alongside Original Medicare.
- Add to Original Medicare (Parts A & B)
- Separate premium and deductible
- Wide variety of plan options
- Can be changed annually
Understanding Drug Formularies
What is a Formulary?
A formulary is the list of prescription drugs covered by your Medicare plan. Plans organize drugs into different "tiers" with different costs.
Standard Drug Tiers
Important Formulary Facts
- Formularies can change during the year with proper notice
- Plans must cover at least two drugs in most therapeutic categories
- Some drugs require prior authorization or step therapy
- You can request formulary exceptions if your drug isn't covered
2025 Part D Coverage Phases
Phase 1: Deductible Period
You pay the full cost until you reach the plan's deductible.
- Maximum deductible: $545 in 2025
- Many plans have $0 deductibles
- Some drugs may be exempt
Typical Costs:
100% of drug cost until deductible is met
Phase 2: Initial Coverage
You pay copays or coinsurance until total drug costs reach $5,030.
- Plan pays most of the cost
- Costs vary by drug tier
- Preferred pharmacies may offer lower costs
Typical Costs:
Phase 3: Coverage Gap (Donut Hole)
You pay no more than 25% for brand and generic drugs.
- Applies from $5,030 to $8,000 in out-of-pocket costs
- Manufacturer discounts count toward your out-of-pocket costs
- Much improved from previous years
Your Costs:
Phase 4: Catastrophic Coverage
After $8,000 in out-of-pocket costs, you pay very little for covered drugs.
- Applies for the rest of the calendar year
- Lowest costs of any phase
- Resets January 1st each year
Your Costs:
Pharmacy Networks
Network Pharmacies
Plans contract with pharmacies to provide covered drugs at negotiated rates.
- In-network pharmacies offer lower costs
- Most major chains are included
- Some independent pharmacies participate
- Mail-order options often available
Preferred Pharmacies
Special partnerships that offer even lower costs for covered drugs.
- Additional savings on copays
- May include major chains like CVS, Walgreens
- Limited geographic availability
- Check availability in your area
Special Drug Coverage Rules
Prior Authorization
Some drugs require approval from your plan before they'll be covered. Your doctor must show the drug is medically necessary.
Step Therapy
You may need to try a lower-cost drug first before the plan will cover a more expensive alternative. If the first drug doesn't work, you can get coverage for the preferred drug.
Quantity Limits
Plans may limit how much of a drug you can get at one time. This is often used for drugs that can be dangerous in large quantities or are commonly misused.
How to Save on Prescription Drugs
Cost-Saving Strategies
- Choose generic drugs when available
- Use preferred pharmacies
- Consider mail-order for maintenance drugs
- Ask about 90-day supplies
- Review your plan annually during Open Enrollment
- Check for manufacturer coupons or programs
Extra Help Programs
- Low Income Subsidy (LIS): Reduces premiums, deductibles, and copays
- State Pharmacy Programs: Additional assistance in some states
- Manufacturer Programs: Patient assistance for specific drugs
- 340B Programs: Discounts at qualifying health centers
Choosing the Right Drug Coverage
Key Questions to Ask
About Your Medications:
- Are my current drugs covered?
- What tier are they on?
- Are there restrictions or requirements?
- What will I pay for each drug?
About Pharmacies:
- Is my pharmacy in the network?
- Are there preferred pharmacies near me?
- Does the plan offer mail-order?
- What are the pharmacy costs differences?
Medicare Drug Coverage Gaps
⚠️ What Medicare Doesn't Cover
Never Covered:
- Over-the-counter medications
- Vitamins and supplements
- Drugs for weight loss or gain
- Fertility drugs
- Cosmetic purposes
Limited Coverage:
- Benzodiazepines (anxiety medications)
- Barbiturates (except for specific conditions)
- Some cough and cold medications
- Medical devices and supplies
Get Personalized Drug Coverage Help
Finding the right prescription drug coverage can be complex. Our licensed agents can help you compare plans, check your drug coverage, and estimate your annual costs.