Part D Prescription Drug Plans

What Is Part D?

Medicare Part D provides prescription drug coverage. If you have Original Medicare (Parts A and B), or Medigap, you'll need a standalone Part D plan to get drug coverage. (Medicare Advantage plans usually include Part D automatically.)

Part D plans are offered by private insurance companies and approved by Medicare. Plans vary by which drugs they cover (their formulary), what you pay at the pharmacy, and which pharmacies are in their network.

How Part D Works in 2026

The 2025 Inflation Reduction Act redesigned Part D. Key changes that are now in effect:

• $2,100 annual out-of-pocket cap: The most you'll pay for covered drugs in a year under Part D is $2,100 in 2026 (the cap is indexed each year).
• Medicare Prescription Payment Plan: Allows you to spread your out-of-pocket costs across monthly payments throughout the year.
• Deductible: Maximum $615 in 2026 (some plans have lower or no deductible).

Drug Tiers and Formularies

Each Part D plan has a formulary, a list of covered drugs organized into tiers. Tier 1 (generic drugs) typically costs the least; Tier 5 (specialty medications) costs the most. It's critical to compare plans based on your specific medications.

Extra Help (Low Income Subsidy)

If your income and savings are low enough, you may qualify for Extra Help. It's a federal program that pays part of your Part D premium, deductibles, and copays. In 2026, Extra Help can save eligible beneficiaries thousands of dollars per year in prescription costs.

Late Enrollment Penalty

Sign up for Part D when you first can. If you don't, and you have no other drug coverage that counts, you may owe a late enrollment penalty. The penalty is 1% of the national base beneficiary premium for each full month you went without coverage, and it's permanent.