Medicare Part D, or Medicare drug coverage, is a part of Medicare that can help you pay for a variety of medications. You can buy a stand-alone Part D policy if you have Original Medicare (Parts A and B), but not if you have Medicare Advantage (Part C).
The average cost of a Medicare Part D plan is $59 per month.
Prices depend on the Part D plan you select. Rates can be higher if you decide to wait and join a Part D plan after your initial enrollment period ends, which is usually about three months after you turn 65.
How much does Medicare Part D cost for 2024?
All Medicare Part D customers pay a monthly rate. For 2024, the average cost for a basic Medicare Part D plan is $59 per month, although rates can vary from $0 to $195 per month.
In addition, some customers pay one or two extra fees on top of this, such as a late enrollment penalty.
You might also pay more for Part D if you have a higher income. You'll pay this extra fee, called the income-related monthly adjustment amount (IRMAA), if you make more than $103,000 per year.
The federal government will automatically take your IRMAA surcharge from your Social Security payments. Medicare will send you a bill if you don’t get Social Security or railroad retiree benefits.
Who you pay
|Part D monthly rate
|Your insurance company
|Part D income adjustment
|Part D late enrollment fee
|Your insurance company
You may also qualify for Part D Extra Help, which could reduce your monthly rate and how much you pay for prescriptions. Part D Extra Help is a program that lowers or eliminates your Part D costs if you have a limited income.
You can apply for Extra Help online through the Social Security Administration website.
How are extra Medicare Part D fees determined?
Medicare sets your Part D rate based on your reported income, similar to how Medicare Part B rates are determined. The income you reported for 2022 will be used to set your Part D costs for 2024.
Say you reported a 2022 income of $105,000 and are enrolled in a Part D plan for $50 per month. Based on your income, you would pay the cost of your plan ($50) plus an income adjustment of $12.90, for a total Part D rate of $62.90.
Note that you pay the $50 to your insurance company, while the income adjustment fee ($12.90) goes directly to Medicare.
Medicare Part D fees by income
Extra cost per month
|$103,000 or less
|$500,001 or more
Medicare Part D late enrollment fee
Like Medicare Part B, Medicare Part D charges a late enrollment fee. You have to pay it if you decide not to enroll in Part D during your initial enrollment period and you don't have other drug coverage from a group health plan, private health insurance or a Medicare Advantage plan during that time.
The late enrollment fee is a permanent amount that is added to your overall Medicare Part D rate for as long as you have Part D.
The fee depends on how late you enroll. Medicare adds together the number of months that you've gone without drug coverage and multiplies that by 1%. Then it multiplies that number by $34.70, the base Part D rate for 2024. This rate changes from year to year, so your fee will also change going forward.
For example, if you enroll in Part D 12 months after your initial enrollment period, your fee will be:
12% x $34.70, or $4.16
This means you will pay $4.16 extra every month. You'll pay a late enrollment fee for as long as you have Part D coverage. The fee is part of your monthly rate, and you pay it directly to your insurance company.
How to avoid the Medicare Part D late enrollment fee
There are easy ways to avoid the late enrollment fee.
- Enroll in Part D or a Medicare Advantage plan with drug benefits as soon as you become eligible.
- If you've lost your prescription plan due to a life-changing event such as an employment change, enroll in Medicare drug coverage within two months of losing coverage.
- If you think there's been a mistake, ask Medicare to reconsider within 60 days of learning about the fee. You can typically expect a reply within 90 days.
What you'll pay with Medicare Part D
In addition to your monthly rate, you'll pay part of the cost of the drugs you buy. Typically, you're responsible for 100% of your medication cost until you meet your annual deductible.
Then you either pay a certain dollar amount each time you buy a drug, also called a copay, or a percentage of your total bill, also called coinsurance. For example, you might pay $10 each time you buy a prescription drug or you might be responsible for 20% of the drug's cost.
Your out-of-pocket costs vary depending on how much you've already paid. There are four phases to this process.
- Initial deductible. During this time, you pay the full price for prescriptions until your costs reach a certain amount set out in your plan. The maximum deductible for 2024 is $545, but your plan may charge less.
- Initial coverage period (ICP). After you meet your deductible, you enter the ICP. While in the ICP, you pay your normal coinsurance or copays for prescriptions until total costs (paid by both you and your insurer) reach $5,030.
- Coverage gap or donut hole. This is the time between the initial coverage period and the catastrophic period. You pay 25% of the cost of generic and brand-name prescriptions.
- The donut hole is set to go away by 2025.
- Catastrophic benefit period. The catastrophic benefit period kicks in once you've reached $8,000 in total prescription costs. You then pay either a copay or 5% coinsurance for prescriptions (whichever is greater) for the remainder of the calendar year.
- Starting in 2024, you will no longer have to pay anything once you reach the catastrophic benefit period.
Depending on your plan, you might pay anywhere from $0 to $545 during the initial deductible phase. Out-of-pocket costs charged during the initial coverage period will vary by plan.
When you get to the coverage gap, or donut hole, you pay more for prescriptions until you spend enough to qualify for the catastrophic period.
An insurance plan charges a deductible of $545, and then a member pays a coinsurance of 30% for each prescription, with the plan paying 70%, during the initial coverage period.
- You: 100%
What you'll pay
What the plan pays
Total spent: $545
Initial coverage period (ICP)
- You: 30%
- Plan: 70%
What you'll pay
- Up to $1,345.50 plus the $545 deductible already paid, for a total of $1,890.50
What the plan pays
- $3,139.50 in plan payments
Total spent: $5,030
Coverage gap or donut hole
- You: 25% of drug cost and a part of the drug dispensing fee
- Plan: 75% of generic drug price, 5% of brand-name price
- Manufacturer: 70% discount toward brand-name drugs
What you'll pay
What the plan pays
- Plan payments don't count toward donut hole costs. Only what you pay and the manufacturer's 70% discount "payments" are applied to the total out-of-pocket cost during this phase.
Total spent: $2,930
Catastrophic benefit period
- You: Nothing
- Plan: 100%
What you'll pay
What the plan pays
- The entire drug cost
Total spent: All prescription costs for the remainder of the calendar year
Buying brand-name drugs helps you reach the catastrophic benefit period sooner. This is because while you pay just 25% of the charge, almost the full price of any brand-name drug counts toward your gap amount. With generic drugs, only the amount you pay (your 25%) counts toward the gap amount.
What is Medicare Part D?
Medicare Part D is the prescription drug part of Medicare that helps members pay for brand-name and generic drugs.
Medicare Part D plans are handled by private insurance companies. All policies have to offer a standard level of coverage. That means every plan will pay for at least two different drugs for each drug category.
Outside the core set of prescriptions that each Part D Medicare plan has to cover by law, coverage and what you'll pay for drugs will vary from company to company. Before enrolling, review plans to find out whether your drugs are covered and how much you'll have to pay out of pocket.
If you need coverage for a specific medication, it is important to look at the list of prescription drugs covered by the insurance plan, also called a drug formulary. You can find coverage information in the insurance company's plan documents or by visiting the Medicare Part D plan finder tool.
Medicare Part D groups drugs together with similar out-of-pocket costs. Inside these groups, name-brand drugs are either labeled "preferred" or "nonpreferred." If a drug falls into the nonpreferred category, it's because the insurance company found a lower-cost version that serves the same purpose.
Nonpreferred drugs typically have the highest copays. Generics usually have the lowest copays.
Other Medicare parts
You can learn more about the other parts of Medicare with the following guides.
Medicare Part D eligibility and enrollment
You must first enroll in Medicare A and B before you can apply for Part D. To qualify for Part D Medicare plans, you must fall into one of several categories.
- Be over the age of 65
- Have a disability if you are under the age of 65
- Have end-stage renal disease (kidney failure)
- Have Lou Gehrig's disease (ALS)
The Part D initial enrollment period usually begins three months before your 65th birthday and ends three months after, similar to Part B. If your birthday falls on the 1st of the month, your enrollment period starts four months before your birth month and ends two months after.
Do I need Medicare Part D?
You probably need a Part D plan if you have Original Medicare.
Almost everyone who has Original Medicare (Parts A and B) will need a Medicare Part D plan at some point in their life. Even if you don't need prescription drug coverage right now, you will almost certainly need it at some point in the future since the need for prescription drug coverage increases as you age.
Because Medicare Part D has a late enrollment fee that lasts for as long as you have Medicare coverage, it's a good idea to enroll in a Part D plan when you turn 65.
Choosing your Medicare Part D plan
Use your prescription drug needs to guide your Part D plan choice. For example, if you mostly use generic drugs, then review the drug lists for each plan, and pick a policy with small copayments for generic, lower-tier drugs.
If you need coverage for a very specific drug, then you should carefully review the drug list, called a formulary, to make sure the drug you need will be covered.
Medicare Advantage: Your alternative to Medicare Part D
Medicare Advantage, also called Medicare Part C, lets you bundle together your Part A, B and D coverage in a single plan. In addition, many plans come with extra benefits, such as fitness programs and vision and hearing coverage.
Not all Medicare Advantage plans offer drug coverage.
Check your Part C plan's list of covered drugs for any medications you're currently taking before you enroll.
You won't have to pay a late enrollment fee if you switch from your Medicare Advantage plan with drug coverage to Original Medicare as long as you buy a Part D policy within 63 days.
Medicare Advantage (Part C) plans are run by private insurance companies like UnitedHealthcare and Humana. You can save money on your Medicare costs by choosing from one of the many widely available $0-per-month Medicare plans.
Keep in mind that Medicare Advantage plans often limit you to a network of doctors. By contrast, Original Medicare lets you see any doctor who accepts Medicare nationwide.
Frequently asked questions
How much is Medicare Part D?
For 2024, the cost of Medicare Part D is $59 per month on average. These Medicare drug plans pay for your medications if you have Original Medicare (Parts A and B).
What changes are coming to Medicare Part D in 2024?
A big change to Medicare in 2024 is that you will no longer have to pay anything once you reach the catastrophic phase of coverage because of the Inflation Reduction Act. That means after you and your insurance plan have paid a combined $8,000, you won't be responsible for paying anything else for drugs.
You may also be eligible for full benefits under the Part D low-income subsidy program if you make up to $21,870 as an individual or $45,000 for a family of four.
Is it worth getting Medicare Part D?
Yes, you should get prescription drug coverage through Medicare Part D if you're enrolled in Original Medicare. Even if you don't need prescription drug coverage now, you should sign up within three months of your 65th birthday to avoid paying a late penalty fee.
What can I do to avoid Part D late enrollment fees?
To avoid late enrollment fees, join a Part D plan (or a Medicare Advantage plan with drug coverage) when you first become eligible for Medicare. Even if you don't take prescriptions now, you'll have coverage when you need it without paying a fee.
Similarly, enroll in Part D or Medicare Advantage as soon as you lose other health insurance with drug coverage.
Cost, eligibility and enrollment information for Medicare Part D came from Medicare's website, Medicare.gov, as well as from the Centers for Medicare & Medicaid Services (CMS).