How to Choose a Medicare Prescription Drug Plan in 5 Steps
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Big changes are coming to Medicare Part D prescription drug coverage following the passage of the Inflation Reduction Act of 2022, which gives Medicare the power to negotiate for lower prescription drug prices. The act also includes caps on out-of-pocket spending, limits on increases in Medicare Part D premiums and drug prices, and more.
Certain changes took effect at the start of 2023, while others start as late as 2026.
» Read more: What the Inflation Reduction Act means for your Medicare coverage
Whether you’re new to Medicare or a beneficiary gearing up for the annual open enrollment period from Oct. 15 through Dec. 7, you’ll want to pay special attention to your prescription drug coverage.
Medicare Part D plans, which are sold by private insurance companies, cover prescription drugs. There are two ways to get a Part D plan: Either you can purchase a stand-alone policy, or you can get prescription drug coverage as part of a Medicare Advantage plan.
People with Original Medicare (Part A and/or Part B) may purchase a stand-alone Medicare Part D plan for prescription drug coverage.
Most Medicare Advantage plans include prescription drug coverage. However, if you sign up for a Medicare Advantage plan that doesn’t provide Part D coverage, you generally can’t purchase separate Part D coverage unless you’re in a specific plan type, such as medical savings account plans or some private fee-for-service plans. If, later, you want to switch to a plan that includes Part D coverage, you’ll likely have to pay a permanent Medicare Part D late enrollment penalty.
In any case, it’s important to know the medications that are covered and understand how the costs can vary from plan to plan.
Medicare will have big changes in 2025. Compare Medicare Part D Plans
What Medicare Part D covers
Medicare prescription drug plans cover generic and brand-name drugs. All plans must meet a minimum level of coverage set by Medicare. This means they must all cover certain categories of drugs, such as high blood pressure, cholesterol or asthma drugs, but plans can choose which specific drugs are covered in each drug category.
Each Medicare Part D plan chooses the drugs it covers in what’s called a formulary. A specific formulary may not include your medicine but may include a similar option.
Like formularies, the cost of your drugs can vary from plan to plan depending on copays, tiered pricing and various restrictions discussed below. It’s important to research your coverage options thoroughly to find the plan that best fits your current prescription needs and your budget. “So often people just stick with the coverage they have even when there may be better, less expensive alternatives out there,” says Sue Greeno, a Medicare advocate who recently retired from the Center for Medicare Advocacy. These five steps can help you with your search.
1. Stay up to date with your current plan
Each year by the end of September, your plan will send you an Annual Notice of Change. This is also available on your insurance company’s website by mid-October. Greeno recommends everyone read this document carefully and check for the following critical information:
2. Use Medicare.gov to find plans
Because plans can change each year and because new plans become available each year, it makes sense to shop for the best Part D coverage for you during each annual Medicare open enrollment period (Oct. 15 to Dec. 7).
The Medicare.gov comparison tool can help. The tool has features that make it clearer and easier to determine if your medicines are covered, what pharmacies are in-network near you, and what your total out-of-pocket costs will be including copays and deductibles.
These pro tips can help you navigate the comparison tool:
3. Look for other restrictions
In addition to tiered pricing, prescription drug coverage may come with other restrictions.
Shopping for Medicare Part D plans? We have you covered.
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4. Understand the exception process
Many times patients will undergo an unexpected health change well into the calendar year that changes their prescription drug needs, which may include a medication not on their plan’s formulary. In other cases, patients may find a covered drug becomes ineffective, and they need to switch to a more expensive version or one that isn’t included in their plan’s formulary.
In these cases, with the help of their doctors, enrollees can file for an exception. “In most cases insurers will grant the exemption,” Greeno says. But it is another hoop patients have to go through. Be sure to examine how this process works in the Part D plans you're considering.
5. Ask for help
Even people with modest drug needs can find it challenging to compare the various options. You can get help with the process through your local State Health Insurance Assistance Program, so find the SHIP nearest you. Or, as Greeno suggests, check with your local senior center for help. Often staff can assist with open enrollment questions or will know a good resource.
The parts of Medicare
Read more about the different parts of Medicare and what they cover.
