Medicare’s drug program is the most confusing aspect of Medicare. Complicated drug plans coupled with an ever-changing Medicare program leave seniors frustrated at the pharmacy. I’m hoping the information below will shed some light on how these plans work and eliminate a bit of that frustration.
Drug plans can be changed once a year (Oct. 15 – Dec. 7), unless you have a special election period.
Seniors typically receive drug coverage in one of two ways: “stand alone” drug coverage, or Medicare Advantage plans that include drug coverage. Both types of coverage are comparable, except that the stand-alone drug plan has a monthly premium while drug coverage on the Advantage plan typically does not. Locally, we still have a few Part D drug plans that don’t have a premium.
These drug plans operate in “phases,” so seniors must work through them in order.
1st Phase: Deductible – Most (though not all) drug plans have a deductible. This means that seniors typically pay the “retail price” for a drug until the deductible is satisfied. For 2026, the deductible on most plans is $615. It’s worth noting that certain plans only apply the deductible to tier 3 drugs and above (this can vary).
2nd Phase: Cost after Deductible – In this phase, seniors receive the “discounted price” on medications. Patient responsibility varies depending on the tier level of each drug. Remember, generics are always substantially less than brand. This phase ends when total out-of-pocket costs reach $2,100.
3rd Phase: Catastrophic – The enrollee pays no cost sharing for “covered” drugs. Once a senior hits this phase, they remain here through the end of the calendar year.
The “donut hole” or “coverage gap” was eliminated in 2025.
Picture yourself at the beginning of this path on Jan. 1. As you pay toward your deductible and beyond, you move down the path towards the next phase. Prescription costs generally change as you move through each phase. No matter how far you move each year, you start back at Phase 1 again on Jan. 1.
In the interest of space, I’ve left out a lot of detail, but this should help give you a general understanding of Part D. As always, I’m here to help and would love to talk through how this applies to your unique circumstances.
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