Font Size
    • Share to Facebook
    • Twitter
    • Email
    • Print

Medicare Part D Basics

What is Medicare Part D?

Established under the Medicare Modernization Act of 2003, the Medicare prescription drug benefit — also known as Medicare Part D — is voluntary insurance that Medicare beneficiaries can purchase to help cover the costs of their prescription drugs.  In 2016, about 72 percent (nearly 41 million) of Medicare beneficiaries enrolled in a Part D plan.

Only private insurance companies can offer Medicare Part D plans.  Medicare Part D plans are available as a stand-alone prescription drug plan (PDP) or through a private insurance Medicare Advantage plan, such as a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO), which provides all of your Medicare benefits, including prescription drug coverage.  

Who is Eligible?

Individuals aged 65 and older and persons with disabilities are eligible to enroll in the Medicare Part D program every year during the open enrollment period. 

How Much Does Part D Cost?

The cost of Medicare Part D coverage varies by plan and an individual’s income level.  In 2017, the average premium is $34 across all plans, plus an annual deductible (up to $400) and coinsurance up to a certain limit.  Those with higher incomes ($85,000/individual; $170,000/couple) pay a greater share of standard Part D costs, depending on their income.

What is the Donut Hole?

In 2017, when the total of what the plan spends on a Medicare beneficiary’s drug costs plus the beneficiary’s out-of-pocket drug costs exceed $3,700 the individual enters a coverage gap, known as the “donut hole.”  Coverage resumes when costs total $4,950.  This year, when beneficiaries fall into the coverage gap, they receive a discount on generic drugs of 49 percent and 60 percent on brand-name drugs.  The Affordable Care Act eliminates the donut hole by 2020.

How are Medicare Drug Prices Determined?

Drug prices are determined through negotiations between the private drug plan that administers the benefit and the drug manufacturer.  By law, the federal government cannot negotiate for Medicare prescription drug prices. 

How Can I Learn More About Medicare Part D?

The National Committee to Preserve Social Security and Medicare provides comprehensive information, updated each year, which explains the Medicare Part D benefit and enrollment on its website.

Please support our public policy and research



Subscribe e-Alerts

Sign up to receive National Committee updates on Social Security and Medicare.

Read Our Blog

House GOP Recklessly Pursues Privatization of Medicare in Budget Process

Congress is targeting the health and financial well-being of America’s seniors by making yet another attempt to privatize Medicare. Yesterday the House Budget Committee passed the GOP’s FY 2018 budget resolution, which includes Speaker Paul Ryan’s “Medicare premium support” scheme – an innocuous name for turning time-tested senior health care coverage into “Coupon-Care.”

Read More




Copyright © 2017 by NCPSSM
Login  |