What is covered under Part D?

What is covered under Part D?
Private companies that offer Part D coverage are permitted to propose their own benefit plans, as long as the overall value of the plan is at least as good as the basic plan outlined in the 2003 Medicare Act. Different plans offer various lists of covered medicines (called a formulary), and at different costs. Beneficiaries should evaluate the various drug plans available in their area to find the one that best fits their needs.

The basic Part D plan usually meets the following criteria:

The annual deductible can’t be more than $615
The plan must cover at least two drugs in each drug class
Members must be able to seek an exception if a drug is medically necessary but not covered under the plan
Plans must have a network of pharmacies that provide convenient access
Lists of covered drugs and pharmacy networks must be readily available to members
Plans must work with nursing homes
Plans must help transition a member’s current drug coverage
Plans must offer catastrophic coverage that is at least as good as the coverage outlined in the 2003 Medicare

What is not covered?
Some drugs are not required to be covered by Medicare Part D, including:

Over-the-counter drugs
Most prescription vitamins and minerals
Certain anti-anxiety and anti-seizure drugs (barbiturates and benzodiazepines which will become covered in 2014)
Fertility drugs
Erectile dysfunction drugs when used for the treatment of sexual or erectile dysfunction
Drugs for weight loss or gain, and anorexia
Cosmetic and hair growth drugs
Drugs that treat symptoms of the common cold (e.g., coughs, congestion)
Drugs covered under Part A or Part B

Late Enrollment Penalty?

The late enrollment penalty is an amount that is added to your Part D premium. You may owe a late enrollment penalty if one of the following is true:

You did not join a Medicare drug plan when you were first eligible for Medicare, and you didn’t have other creditable prescription drug coverage. Creditable Prescription Drug Coverage is coverage that is expected or anticipated to pay, on average, at least as much as Medicare’s standard prescription drug coverage. Typically, this coverage is provided from an employer or union. Anyone who has this kind of coverage after they become eligible for Medicare can normally keep that coverage without paying a penalty if they decide to enroll in a Medicare Prescription Drug plan later.
You did not have Medicare prescription drug coverage or other creditable prescription drug coverage for 63 days or more in a row.

The cost of the late enrollment penalty depends on how long you didn’t have creditable prescription drug coverage. Currently, the late enrolment penalty is calculated by multiplying 1% of the “National Base Beneficiary Premium” which is $38.99 2026, times the number of full, uncovered months that you were eligible but didn’t join a Medicare drug plan and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium.

As of 2025, the Part D donut hole is eliminated. In 2026, the maximum out-of-pocket coverage works as follows:

When clients reach the $2,100 out-of-pocket threshold in 2026 (adjusted up slightly from $2,000 in 2025), they'll continue to pay $0 for covered prescriptions for the remainder of the year.

The script behind the scenes continues with specific cost-sharing among sponsors (60%), manufacturers (20% for applicable drugs), and CMS (20-40% depending on the medication type).

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What is covered under Part D?

Late Enrollment Penalty?

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