The Problem Most Medicare Enrollees Don't Expect
When people first enroll in Medicare, one of the biggest surprises is discovering that Original Medicare — Parts A and B — covers very few prescription drugs. If you're taking daily medications for blood pressure, diabetes, cholesterol, or any chronic condition, you need to take an extra step to get that coverage. The good news: you have options. The bad news: if you miss the enrollment window, you could face a permanent late-enrollment penalty. This guide walks you through everything you need to know.
Option 1: Medicare Part D (Standalone Drug Plan)
Medicare Part D is a standalone prescription drug plan you add on top of Original Medicare (Parts A and B). These plans are offered by private insurance companies approved by Medicare. Each plan has its own formulary — a list of covered drugs — organized into tiers that determine your cost. Lower-tier drugs (generics) cost less; higher-tier drugs (brand-name or specialty) cost more. You pay a monthly premium for Part D in addition to your Part B premium. Premiums vary by plan and by the drugs you take, but the national average is around $40–$55 per month. The key is to compare plans based on your specific medications, not just the premium.
Pro tip: Use Medicare's Plan Finder tool at medicare.gov to compare Part D plans based on the exact drugs you take. The cheapest premium isn't always the cheapest plan once you factor in your drug costs.
Option 2: Medicare Advantage with Drug Coverage (Part C + D)
Medicare Advantage plans (Part C) are an alternative to Original Medicare that bundle Parts A, B, and usually D into a single plan. Most Medicare Advantage plans include prescription drug coverage, which means you don't need a separate Part D plan. These plans often have lower out-of-pocket costs for drugs than standalone Part D, especially if you use preferred pharmacies in the plan's network. However, Medicare Advantage plans have provider networks — you'll need to use in-network doctors and hospitals, which matters if you travel frequently or split time between states.
Pro tip: If you're considering Medicare Advantage, confirm that your current doctors and preferred pharmacy are in-network before enrolling.
When to Enroll: Don't Miss Your Window
You can enroll in Part D during your Initial Enrollment Period — the 7-month window around your 65th birthday (3 months before, the month of, and 3 months after). If you miss this window and don't have other creditable drug coverage (like from an employer), you'll face a late-enrollment penalty: 1% of the national base beneficiary premium for every month you went without coverage. That penalty is permanent and added to your monthly premium for as long as you have Part D. The Annual Enrollment Period (October 15 – December 7) lets you switch or add Part D coverage each year, with changes taking effect January 1.
Pro tip: If you're still working at 65 and have drug coverage through your employer, you may be able to delay Part D without penalty — but get this confirmed in writing from your employer's HR department.
The Coverage Gap ("Donut Hole") — What It Means Now
For years, the Medicare Part D coverage gap — known as the donut hole — was a major source of confusion and unexpected costs. Under the Inflation Reduction Act, the coverage gap has been effectively eliminated starting in 2025. Once you've spent $2,000 out of pocket on covered drugs in a plan year, you enter catastrophic coverage and pay nothing for the rest of the year. This is a significant improvement from prior years and means most Medicare beneficiaries with high drug costs will see substantially lower annual expenses.
Pro tip: Even with the donut hole eliminated, your costs still depend heavily on which tier your drugs fall into. Generic drugs on Tier 1 can cost just a few dollars per month; specialty drugs on Tier 5 can still run hundreds.
Extra Help: Lowering Costs If You Have Limited Income
Medicare's Extra Help program (also called the Low Income Subsidy) helps people with limited income and resources pay for Part D premiums, deductibles, and copays. If you qualify, you could pay as little as $0 in premiums and very low copays for your medications. Eligibility is based on income and assets — in 2025, individuals with income up to about $22,000 and assets under $16,600 may qualify (limits are higher for married couples). You can apply through the Social Security Administration at ssa.gov or by calling 1-800-772-1213.
Pro tip: If you receive Medicaid, Supplemental Security Income (SSI), or Medicare Savings Program benefits, you automatically qualify for Extra Help — you don't need to apply separately.
Other Ways to Lower Your Drug Costs
Beyond Part D and Extra Help, there are several other strategies to reduce what you pay for medications. First, ask your doctor about generic alternatives — they're therapeutically equivalent and dramatically cheaper. Second, use your plan's preferred pharmacy network; many plans charge lower copays at preferred pharmacies. Third, check manufacturer patient assistance programs for brand-name drugs — many pharmaceutical companies offer free or reduced-cost medications to qualifying patients. Fourth, GoodRx and similar discount programs can sometimes beat your Part D copay for certain drugs, especially generics.
Pro tip: You can use GoodRx even if you have Part D — just compare the GoodRx price to your plan's copay at the pharmacy counter and pay whichever is lower. Note that GoodRx purchases don't count toward your Part D deductible or out-of-pocket maximum.
The Bottom Line
- Original Medicare (Parts A & B) does not cover most prescription drugs.
- Add Part D as a standalone plan or choose a Medicare Advantage plan that includes drug coverage.
- Enroll during your Initial Enrollment Period to avoid a permanent late-enrollment penalty.
- The coverage gap (donut hole) is eliminated in 2025 — your out-of-pocket cap is $2,000 per year.
- If you have limited income, apply for Extra Help to dramatically reduce your drug costs.
- Compare plans annually during the October 15 – December 7 enrollment period.