Part D Medicare Cost: Average Rates & What Drives Them

Medicare Part D is prescription drug coverage. It is sold by private insurers, so the premium depends on the plan you pick and where you live. You can get Part D through a stand-alone drug plan that pairs with Original Medicare, or through a Medicare Advantage plan that includes drug coverage.

A Part D cost has several layers: a monthly premium, a yearly deductible, copays or coinsurance at the pharmacy, and a yearly cap on what you pay out of pocket. This page walks through each layer and what changes it, so you can work out a cost estimate before you compare plans.

Premiums vary widely. Some plans charge nothing each month, and others charge much more. The average depends on whether you count stand-alone plans or the drug portion of Medicare Advantage plans, which is usually lower.

Drug coverage inside a Medicare Advantage plan averages far less than a stand-alone plan, but the plan's other costs and network rules are different. Compare the full cost of each plan, not just the drug premium.

There is also a trade off between premium and deductible. In the figures above, plans that charge no deductible carry much higher premiums than plans with the standard deductible.

No Part D plan may charge a deductible above the maximum shown in the table, and some charge none. After the deductible, you generally pay a share of each prescription until your yearly spending reaches the out of pocket limit. Past that limit, covered drugs are free for the rest of the calendar year.

The cap is the same for every plan, which makes it a useful ceiling when you estimate worst case costs. What the cap does not include is the monthly premium, drugs your plan does not cover, and drugs bought outside the plan's rules.

The Medicare Plan Finder on Medicare.gov works as a cost calculator. You enter your drugs, doses, and preferred pharmacy, and it estimates your total yearly cost under each plan, including the premium. Those results will beat a national average because drug lists differ so much between people.

Information to gather before you start:

• The names and doses of each prescription.
• The pharmacy you use, since preferred pharmacies often charge lower copays.
• Your Medicare number and the date your coverage began.

People with higher incomes pay an extra monthly amount on top of their plan premium. It is set in the same brackets as the Part B income adjustment and is based on your tax return from two years earlier.

The surcharge is paid in addition to your plan premium and is usually withheld from Social Security. It does not go to the insurer. If your income has dropped since the tax year used, you can ask Social Security to review the bracket.

If you go without creditable drug coverage after you first become eligible, you may owe a penalty when you join. Medicare calculates it from the national base beneficiary premium, shown in the table above as $38.99/mo. That number is a benchmark for the penalty and is not what a plan charges.

The sources above describe the same year but use different definitions. One reports enrollment weighted averages from federal data for stand-alone plans, and another cites the average announced by CMS before the plan year began. Differences of a dollar or two are normal and come from timing and weighting.