Understanding Medicare Part D Costs
What you need to know
The basics
Many Medicare health plans include medical and pharmacy benefits for your health and drug needs. Medicare Parts A and B coverage includes medical needs like doctor, clinic or hospital visits. Part D coverage includes most of your prescription medicines.
Medicare Part D drug costs*
Your Medicare Part D plan separates drugs into different tiers based on how much they cost. The medicine you take will fall into one of these categories:
Tier 1:
Preferred generic
This group of generic and some brand-name drugs has the lowest cost.
Tier 2:
Generic
These generic or brand-name drugs cost more than the preferred generic drugs.
Tier 3:
Preferred brand
This group includes lower-cost, brand-name medicines and some higher-cost generics.
Tier 4:
Non-preferred brand
The drugs in this group are higher-cost, brand-name medicines and some high-cost generic drugs.
Tier 5:
Specialty
These drugs treat long-term, complex conditions like multiple sclerosis and rheumatoid arthritis. They usually cost the most.
For example, let's say you take the drug Januvia for diabetes. This brand-name medicine would be in Tier 3.
How your drug costs change
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Medicare Part D has four stages throughout the benefit year. If your plan has a deductible, you start in Stage 1. It not, you start in Stage 2.
Your drug costs will change depending on which stage you're in. As an example, here's what monthly costs might be for the diabetes drug Januvia.**
Stage 1:
Deductible
If your plan has a deductible, you pay the total cost of your drugs until you reach that deductible amount.
Member cost for Januvia in Stage 1: $445
Stage 2:
Initial coverage
During this stage, you and your plan share the cost of your medicines. Depending on your plan, you'll either pay a copay (a set amount per fill) or coinsurance (a percentage of the drug's cost). You'll stay in this stage until your pharmacy and medical drug costs reach $4,130.**
Member cost for Januvia in Stage 2: $45
Stage 3:
Coverage gap
(the "donut hole")
In this stage, you pay most of your drug costs yourself. You'll pay 25 percent of the cost for generic drugs and 25 percent of the cost for brand-name drugs. You'll stay in this stage until your True Out-Of-Pocket (TrOOP) costs total $6,550.**
These costs include any amount you paid, like your deductible, copays or coinsurance. It also includes what you pay in this stage and discounts you may receive for brand-name drugs.
If you reach $6,550, you'll move to Stage 4. If you don't reach that amount, you'll stay in Stage 3 until the end of the plan year.
Member cost for Januvia in Stage 3: $125
Stage 4:
Catastrophic
coverage
When you reach this stage, you'll pay only a small amount for your medicines until the end of the plan year. Then you start back in Stage 1 (or Stage 2 if your plan doesn't have a deductible).
Member cost for Januvia in Stage 4: $25
*Tiers listed are for example purposes only. Log in for more information about your plan’s drug tiers.
**Costs shown are for example only and may be different for your health plan.
All brand names are property of their respective owners.
Getting the best drug prices
Some doctors can look up the drugs that are covered under your Medicare Part D plan and their costs. They can check the drug they want to prescribe for you and see options that may be less expensive but work just as well.
For more information on Medicare Part D costs, call the number on the back of your health plan ID card.
