Medicare Part D: What You NEED To Know

It’s hard to believe, but Medicare didn’t cover medications before 2006. In the 2000s, medication costs were killing seniors. One vial of Humalog insulin cost $21 in 1999, and by 2019, it was $332—more than a 1,000% price increase.

Congress expanded Medicare insurance to include prescription drug coverage in 2006. Private health insurers partnered with Medicare to offer Part D plans, making medications affordable for seniors.

In 2025, a whopping 464 plans will be available, with over 53 million people riding the Part D wave and Medicare spending more than $135 billion on these plans.

But here’s the kicker: you’re not forced to sign up. Part D is not required. Some people who are on no medications–or very few medications–choose to opt out of Part D. It’s a massive mistake, especially when your health—and your wallet—is on the line.

As we age, health issues multiply. The drugs to deal with health issues can be expensive—many times more expensive than the average person can comfortably afford.

On top of that, if you don’t choose to get a Part D plan when you’re first eligible, there is a penalty that grows with each month you don’t have a plan. You will regret that penalty later—they all do.

Medicare Part D is your prescription drug coverage. It’s not included in Original Medicare (Parts A & B), so if you need medication (and let’s be honest, most of us do at some point), Part D is how you get help paying for medications.

You can enroll in a stand-alone Part D plan (if you have Original Medicare) or get it bundled with a Medicare Advantage plan (Part C). Either way, Medicare Part D covers the cost of:

All Medicare Part D must cover a wide range of drugs that people with Medicare commonly need to ensure access to essential medications.

Each plan has a “formulary,” in other words, a list of what Medicare Part D covers. Medications will have different costs depending on the plan you choose, so reviewing this list (formulary) is critical!

You can ask for an exception if you discover one of your medications is not on the formulary, but getting the exception is not fun, even when it is granted. Check the formulary before you enroll.

USP (United States Pharmacopeia) is a published list of medications by the USP Convention that outlines categories and standards for medications. Part D plans use the USP Model Guidelines classification structure. Each Part D plan must have at least two different medications in each therapeutic category of medications—there are over 57 categories. The two must be chemically different. Each plan is free to have more than the required two. Formularies include:

All Part D plans must cover most drugs in protected drug classes:

I have several clients on cancer drugs that are self-administered. Some of these are incredibly expensive. Clients tell me they have to take them after their cancer treatment for the rest of their lives to stay alive.

Thanks to the Ryan White Program and strict Medicare guidelines, every drug for HIV/AIDS is on each formulary. This ensures that those living with HIV/AIDS receive comprehensive coverage without any gaps.

One of the screenings Medicare allows to be done repeatedly is for depression. Mental health is as crucial as physical health. Medicare recognizes that managing depression can be life-saving, so most antidepressants are covered, giving you access to a wide range of options tailored to your needs.

For those managing severe mental health disorders, antipsychotics are indispensable. Every medication in this class must be on your formulary, ensuring you get the consistent care you deserve.

I met with a client today who has Epilepsy. My son has Epilepsy. I know how critical these medications are for survival.

My father had a kidney transplant. We always worried about him taking his anti-rejection medications. He was pretty lackadaisical when it came to taking medications, but my mother and his grandkids put the fear of God into him, so he religiously took his immunosuppressants till his last day. Imagine facing a health crisis and finding out your plan doesn’t cover the critical medication you need. With protected drug classes and the rules for drug categories, Medicare Part D is designed to safeguard you—ensuring that every essential drug is available when you need it most. This structure not only provides peace of mind but also keeps your out-of-pocket costs in check, especially when expensive medications are involved.

Medicare Part D plans are offered by private insurance companies approved by Medicare, which means:

NEW for 2025: No more 5% coinsurance. Instead, once you’ve paid $2,000 out of pocket, Medicare Part D will cover 100% of your drug costs for the rest of the year. You pay zero. This is a massive relief for people who take high-cost medications!

The coverage gap (aka the donut hole) will no longer function as it used to. Instead, Medicare Part D will now have a more predictable structure with clear cost limits, making it easier to budget for your medications.

Great question! If you take zero medications, you might think you don’t need Part D coverage.

During this year’s Medicare annual election, I met with a fiery 79-year-old business owner who heard us on the radio. Let’s call her Betty. Betty came into the office to see if I could save her some money on her Medicare Supplement. I showed her a plan that would save her about $1,000 a year. Betty was in superb health, so she passed underwriting with flying colors. We changed her supplement.

But during the conversation, I discovered Betty didn’t have a Part D plan, and her doctor had just put her on Eliquis. If you don’t know what Eliquis is, it is a very expensive heart medication. She complained about what she was paying. Betty never took any medications, at least until the Eliquis, so she never got on a Medicare Part D plan.

I showed her how much she would save in medication costs if she had a Part D plan. She was interested. But when I told her she would have a penalty for the 14 years she didn’t have a drug plan, she was spitting mad. I reminded her I was just the messenger. Medicare made the rules. She eventually cooled down.

We enrolled Betty in a Part D drug plan, but her monthly penalty was around $66 per month, more than the monthly cost of the drug plan and the copay combined. The whole thing, however, was cheaper than paying cash for the Eliquis, which is about $650.

Skipping Part D when you’re first eligible could mean a late enrollment penalty—and that penalty sticks with you for life. Plus, you never know when you might need an expensive medication. It’s better to have coverage and not need it than to need it and not have it!

So, what does Medicare Part D cover? It helps you afford the medications you need to stay healthy. But choosing the right plan isn’t one-size-fits-all. Costs, coverage, and formularies vary, so it’s essential to review your options carefully.

Our state-of-the-art software quickly analyzes all the Part D and Medicare Advantage plans in your zip code—anywhere in the country. The plans and medications are laid out in an easy-to-understand format. You’ll immediately see which drugs are covered or not. The plans are listed in order of cost, breaking down the individual monthly and annual prices for the prescriptions. Side-by-side plan comparisons make it easy to determine which plan is better suited for your situation. You then decide based on your own budget.

After our free consultation, you’ll have all the information you need to make an informed choice about your Medicare Part D plan or Medicare Advantage. Enrolling in a plan is as simple as a few mouse clicks. We can walk you through your choices and help you pick a plan that fits your needs—and your budget.

📞💙 Give us a call to speak with an experienced and licensed insurance agent professional at 402-614-3389.