If you've ever stood at a pharmacy counter watching your jaw drop faster than the pharmacist's computer can process your prescription, you're not alone. Welcome to the world of Medicare prescription drug coverage—where a simple refill can feel like solving a puzzle where the picture keeps changing.
Because a $12 refill shouldn't become $112 (yes, that can happen).
Part D 101 • How Part D Works • Part D + MA vs. Original Medicare • Downsides & Gotchas • What it Costs • Creditable Coverage & Penalties • How to Choose • Decision Checklist • FAQs • How MyALEXHealth™ Can Help
Here's the thing: Medicare Part D doesn't have to be a mystery wrapped in an acronym inside a formulary. We're going to break down everything you need to know about stand-alone prescription drug plans (PDPs) in the kind of plain English your neighbor would use—because that's exactly what you deserve.
Let's start with the basics, because Medicare has enough moving parts to make a Swiss watch jealous.
Medicare Part D is prescription drug insurance sold by private companies that Medicare has given a thumbs-up. Think of it as Medicare's way of saying, "We've got your hospital and doctor visits covered with Parts A and B, but for those little orange bottles? You're going to have to look elsewhere when you need some help."
You can get Part D coverage in exactly two ways, and understanding this choice is crucial:
1. Stand-alone PDP with Original Medicare: This is what we're diving deep into today. You keep your Original Medicare (Parts A & B), maybe add a Medicare Supplement plan (Medigap), and then grab a separate Part D plan for your prescriptions. Think of it as building your own Medicare sandwich—you pick each layer based on what works for you.
2. Built-in drug coverage (MA-PD) inside Medicare Advantage: Many Medicare Advantage (MA) plans bundle prescription drug coverage right in. One plan, one card, one premium. Sounds simple, right? It can be, but it also means you're getting a pre-made sandwich instead of building your own.
Before we get too excited, let's talk about what Part D won't do for you It doesn't cover:
❌ Drugs you get during a hospital stay (that's Part A's job)
❌ Drugs you receive in a doctor's office or outpatient clinic (hello, Part B)
❌ Over-the-counter medications (though some plans offer allowances)
❌ Vitamins and supplements (unless prescribed for specific medical conditions)
Part D is specifically for the prescriptions you pick up at your local pharmacy or order through the mail.
Now, here's where Part D gets interesting—and by interesting, we mean "designed by people who clearly love complicated math." Your costs change throughout the year based on how much you and your plan have spend. Let's walk through each phase:
This is the "pay full price until you hit your limit" phase. In 2026, no Medicare drug plan may have a deductible more than $615, though many plans have lower deductibles or none at all.
During this phase, you pay 100% of your drug costs until you hit your plan's deductible amount. Here's the kicker: not all drugs may count toward your deductible. Some plans let you skip the deductible for Tier 1 generics, meaning your plan starts sharing costs for your basic medications.
Once you've met your deductible (if your plan has one), you enter the "let's share the cost" phase. In this phase, beneficiaries pay 25% of their prescription drug costs—typically in the form of coinsurance or copayments. The Part D plan pays 65% of the costs, while the drug manufacturer is responsible for 10%.
Your exact costs depend on two things: what tier your drug is in and whether you're using a preferred pharmacy. We'll get into the whole tier system in a moment, but think of it as Medicare's way of organizing drugs into price buckets.
Good news: As of Jan 1, 2025, the Medicare Part D coverage gap (commonly known as the "donut hole") is gone. That confusing middle phase where your costs suddenly jumped? History. Thanks to the Inflation Reduction Act, Part D coverage got a major simplification.
Here's where the really good news kicks in: All 2026 Medicare Part D plans feature a $2,100 maximum out-of-pocket cost. Once your out-of-pocket costs reach $2,100, your Part D plan will pay 100% for covered drugs for the rest of the plan year.
In this phase, the Part D plan pays 60% of the drug costs, the drug manufacturer pays 20%, and Medicare pays 20%. Beneficiaries pay nothing for covered medications for the rest of the calendar year.
Quick translation: No matter how expensive your medications are, you'll never pay more than $2,100 out of pocket in a year for covered drugs. That's a pretty decent safety net.
Choosing between getting Part D through a Medicare Advantage plan or as a stand-alone plan with Original Medicare (or Original Medicare + a Medigap plan) is like choosing between a combo meal and ordering a la carte. Both have their place, depending on your appetite for choice and control.
| Medicare Advantage with Built-In Drug (MA-PD) | Original Medicare + Medigap + Stand-Alone Part D (PDP) | |
| Plan style | Combo meal | Build-your-own |
| What you carry | One ID card (medical + drugs) | Multiple ID cards (Medicare, Medigap, PDP) |
| Extras | Often includes dental, vision, hearing | Usually none bundled (buy separate if needed) |
| Monthly premium | Can be $0 or low | Higher total (Medigap + PDP premiums) |
| Network for doctors | Plan network (HMO/PPO); limited out-of-area | Any doctor/hospital that accepts Medicare |
| Pharmacy network | Must use plan's pharmacy network | You choose a PDP with pharmacies you prefer |
| Drug coverage flexibility | Formularies can change annually; tied to the MA plan | Pick the exact PDP that fits your meds; can switch annually during AEP |
| Travel/multi-location living | Coverage may be limited outside service area | Travels with you nationwide (Original Medicare) |
| Billing & service | Simplified—one plan handles most things | Multiple policies → multiple bills and contacts |
| Cost predictability (medical) | Varies by plan; MOOP applies | Medigap can make medical costs very predictable |
| Changing drug plans | Typically can't add a separate PDP if MA-PD drug coverage isn't a fit | Can switch PDP each year without touching your medical coverage |
| Overall complexity | Lower (integrated) | Higher (you manage separate parts) |
🚨 Important Pairing Rule: If you choose a Medicare Advantage plan without drug coverage, you typically cannot add a stand-alone Part D plan later. The few exceptions include certain Private Fee-for-Service (PFFS) or Medical Savings Account (MSA) plans. Choose wisely to avoid late enrollment penalties.
If you're leaning toward Original Medicare with a Medicare Supplement plan, here's why adding a stand-alone Part D plan might be the right move for you:
Unlike the one-size-fits-most approach of many Medicare Advantage plans, stand-alone PDPs let you shop for the exact formulary (drug list) that covers your specific medications at the right price. Taking three generic medications and one brand-name drug? You can find a plan optimized for exactly that combination.
💪 Pro tip: Use our Formulary Guide when shopping for plans to make sure your prescriptions are covered (and at the cost you expect).
Stand-alone PDPs often have extensive pharmacy networks, and you can compare preferred vs. standalone pharmacies to minimize your costs. Love your local independent pharmacy? Many PDPs include them in their networks. Prefer mail order for your maintenance medications? Most plans offer that options with significant savings.
Here's something many people don't realize: you can switch Part D plans every year during the Annual Enrollment Period (October 15 - December 7) without affecting your medical coverage. Your medications changed? No problem. Found a plan with better coverage for your drugs? Switch away. Your Medicare Supplement plan stays exactly the same.
Many stand-alone PDPs offer genuinely useful benefits:
We'd be doing you a disservice if we didn't mention the potential pitfalls of stand-alone Part D plans. Knowledge is power, especially when it comes to Medicare.
Every fall, you'll receive an Annual Notice of Change (ANOC) from your Part D plan. This isn't junk mail—it's your early warning system. Plans can change their formularies, move drugs to different tiers, or add new restrictions like prior authorization or step therapy. That medication that was Tier 2 this year? It might be Tier 4 next year.
💪 Pro tip: Set a calendar reminder each October to review your ANOC and compare plans, even if you're happy with your current coverage. We make it easy with our ANOC Guide and Checklist.
Your neighborhood pharmacy might in your plan's network, but that doesn't mean it's a "preferred" pharmacy. The difference in cost between preferred and standard pharmacies can be substantial—sometimes doubling your copays. Always check both the network status and preference level of your favorite pharmacy.
Part D plans use three main tools to manage costs, and they can definitely slow things down:
Understanding your plan's appeals process for these restrictions can save you time and frustration. Our Formulary Guide walks you through it step-by-step.
If your income surpasses certain thresholds, you'll pay an Income-Related Monthly Adjustment Amount (IRMAA) on top of your Part D premium. The Part D late enrollment penalty is calculated by multiplying 1% times the "national base beneficiary premium" ($38.99 in 2026) times the number of full, uncovered months you were eligible to join Medicare drug coverage but didn't. The IRMAA calculation uses your tax return from two years prior, so your 2026 IRMAA is based on your 2024 income.
What Part D Costs: The Real Numbers
Let's talk money, because understanding the full picture helps you make smart decisions.
Part D premiums vary wildly based on your location, the plan you choose, and the level of coverage. You might find plans ranging from $7 per month to $150 per month or more. But here's the thing: the cheapest premium doesn't always mean the lowest total cost if your medications are expensive.
No Medicare drug plan may have a deductible more than $615 in 2026, and some plans have no deductible. Many plans waive the deductible for generic drugs, meaning you start getting plan coverage immediately for your less expensive medications.
This is where the rubber meets the road. Your costs depend heavily on what tier your drugs are in and whether you use preferred pharmacies:
Higher-income Medicare beneficiaries pay extra for Part D coverage. The 2026 IRMAA amounts range from $14.50 to $91 per month, and are added to your plan premium, based on your modified adjusted gross income from two years prior.
To understand what you'll actually pay, add up:
Example: Sarah takes two generic drugs and one brand-name medication. Her preferred plan's premium costs $25/month, has a $200 deductible, and her annual drug costs (copays and coinsurance) total about $400 after the deductible. Her total annual Part D cost: $300 (premiums) + $200 (deductible) + $400 (drug costs) = $900 per year, or about $75 per month.
💪 Pro tip: Check out our IRMAA blog post for a quick look at IRMAA brackets and premiums.
Creditable Coverage & Late-Enrollment Penalties: Read This Twice
This section could save you thousands of dollars over your lifetime, so let's make sure you understand it completely.
Creditable coverage is prescription drug coverage that's at least as good as Medicare's standard Part D coverage. This typically includes:
🔑 Key point: COBRA coverage after you leave a job is NOT creditable coverage for Medicare Part D purposes.
You may owe a late enrollment penalty if at any time after your Initial or Special Enrollment Period is over, there's a period of 63 or more days in a row when you don't have Medicare drug coverage or other creditable prescription drug coverage.
The penalty calculation: The Part D late enrollment penalty is calculated by multiplying 1% times the "national base beneficiary premium" ($38.99 in 2026) times the number of full, uncovered months you were eligible to join Medicare drug coverage but didn't.
Real-world example: Let's say you turned 65 in January 2024 but didn't enroll in Part D until January 2026—that's 24 months without coverage. Your permanent monthly penalty would be: 1% x $38.99 x 24 months = $9.36 per month added to the premium of whatever Part D plan you choose, forever.
Even if you don't take medications now, consider enrolling in a low-premium Part D plan to avoid future penalties. Your health needs will likely change, and the penalty never goes away.
Choosing the right Part D plan doesn't have to involve spreadsheets and prayer circles. Here's our systematic approach:
Write down every prescription medication you take, including:
Don't forget seasonal medications like allergy prescriptions or occasional pain medications.
Decide which pharmacies matter most to you:
This is the most important step. For each plan you're considering:
💪 Pro tip: Call the plan if you have questions about specific drugs or restrictions. Don't assume.
For each plan, calculate:
Don't just look at the premium—a $10/month plan that puts your expensive medication on Tier 5 could cost you thousands more than a $50/month plan that keeps it on Tier 3.
Check the plan's Star Rating on Medicare.gov (1-5 stars, with 5 being best). Look at:
Before you enroll in any Part D plan, make sure you check "yes" to each of these:
✅ Drug Coverage Verification:
✅ Pharmacy Network:
✅ Cost Analysis:
✅ Coverage Protection:
✅ Plan Quality:
Do I need Part D if I don't take medications?
Yes, usually. Unless you have creditable coverage from another source, you should enroll to avoid the lifetime late enrollment penalty. Even if you're healthy now, your medication needs will likely change as you age, and the penalty compounds every month you wait.
Can I change my PDP mid-year?
Generally no, unless you qualify for a Special Enrollment Period due to moving, losing other coverage, or qualifying for Extra Help. Otherwise, you can change plans during the Annual Enrollment Period (October 15 - December 7).
What's Extra Help (LIS)?
The Low-Income Subsidy program (also called "Extra Help") cam dramatically reduce Part D premiums and copays for those who qualify based on income and resources. If you qualify, you might pay $0 premiums and $1.55 - $4.30 copays for generics, and $4.30 - $9.85 for brand-name drugs.
Does Medicare Supplement (Medigap) include drug coverage?
No. If you choose Original Medicare with a Medigap plan, you need a separate Part D plan for prescription drug coverage. Medigap policies sold since 2006 are prohibited from including prescription drug coverage.
Do I pay IRMAA on Part D if I have a Medicare Advantage plan?
Yes. IRMAA applies to all Part D coverage, whether it's a stand-alone plan or built into a Medicare Advantage plan.
What happens if my drug isn't covered?
You have several options: ask your doctor about covered alternatives, request a formulary exception from your plan, or pay full price (which won't count toward your out-of-pocket maximum). The appeals process exists if your initial exception request is denied.
Can I use any pharmacy?
You can fill prescriptions at any pharmacy, but you'll pay much more at out-of-network pharmacies—sometimes the full retail price. Always use network pharmacies, and preferably "preferred" network pharmacies for the lowest costs.
We get it. Even with all this information, choosing the right Part D plan can feel overwhelming. You're comparing formularies, calculating costs, checking pharmacy networks—it's a lot.
That's exactly why we built MyALEXHealth. Instead of spending hours with spreadsheets and a calculator, you can have a conversation with ALEX® that handles all the heavy lifting.
Here's how ALEX makes Part D plan selection actually manageable:
Drug Matching that Actually Works
Tell ALEX what medications you take: exact names, dosages, how often you fill them. ALEX instantly checks every available plan's formulary to see which ones cover your drugs, what tier they're on, and if there are any restrictions you need to know about.
Real Cost Calculations
ALEX doesn't just show you premiums. Based on your specific medications and preferred pharmacies, ALEX calculates your real annual costs for each plan: premiums, deductibles, copays, the works. No surprises. No hidden math.
Pharmacy Network Intelligence
Love your local pharmacy? ALEX checks not just whether it's in each plan's network, but whether it's designated as "preferred" for the lowest costs. ALEX also notes mail order options if you want to save on maintenance medications.
IRMAA Integration
If you're subject to income-related adjustments, ALEX factors those into your total cost calculations automatically. No separate math required.
Annual Review Made Simple
Create a MyALEXHealth account, and ALEX saves your information for easy annual reviews. When it's time for the Annual Enrollment Period, you can quickly see how your current plan stacks up against new options.
The best part? ALEX does it all in the same conversational, no-jargon style you've been reading here. No insurance speak, no confusing charts—just clear guidance to help you pick the right plan with confidence.
Ready to stop worrying about formularies and start choosing with confidence?
ALEX walks you through your Part D options in minutes, not hours. Because you have better things to do than become a Medicare expert—like actually enjoying the retirement you've earned.
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