Medicare Part D

Prescription drug coverage. Sold by private insurers under Medicare rules, with a monthly premium plus copays. The 2025 Inflation Reduction Act capped out-of-pocket Part D costs at $2,000/year, eliminating the old "donut hole" pattern that hit many patients with chronic conditions.

What it means in practice

Part D drug plans are sold separately from Parts A and B. Each plan has its own monthly premium (typically $0-$80), its own formulary (the list of covered drugs), its own pharmacy network, and its own tier-based cost-sharing. The same drug can be a $5 copay on one plan, a $50 copay on another, and not covered at all on a third. Annual re-evaluation during Open Enrollment (Oct 15-Dec 7) matters: formularies change every year, and a plan that was the cheapest for your parent's medication list this year may not be next year.

The Inflation Reduction Act of 2022/2025 reshaped Part D dramatically. The "donut hole" coverage gap (which used to leave patients with chronic conditions paying full cost between $4,000-$8,000 in annual drug spending) is gone. Out-of-pocket Part D costs are now capped at $2,000/year. Patients can spread the $2,000 across the year through Medicare's "Smoothed Payment" option instead of paying the full out-of-pocket as drugs are filled.

The Inflation Reduction Act also lets Medicare negotiate prices for the highest-cost drugs — the first 10 drugs (Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara, Fiasp/NovoLog) have negotiated prices effective 2026. More drugs get negotiated each year. For patients on these drugs, the savings can be substantial.

Low-income subsidies (called "Extra Help" or LIS) cover most or all Part D costs for patients under income and asset thresholds. Many eligible patients don't know they qualify; the Social Security Administration administers the application. The State Health Insurance Assistance Program (SHIP) provides free counseling to help families pick a Part D plan and apply for LIS.

When you'll hear it

Whenever your parent has prescriptions. Plans use formularies (lists of covered drugs by tier); a drug your parent takes may be on one plan's formulary but not another's. Re-evaluate each Open Enrollment.

Is this the same as…?

Terms families frequently confuse with medicare part d.

Related terms

• Medicare Part A — The federal program that covers hospital stays, skilled nursing facility (SNF) stays after qualifying hospitalizations, hospice, and some home health care for people 65+ (and some younger people with disabilities).
• Medicare Part B — Covers physician services, outpatient care, durable medical equipment, and most preventive services.
• Medicare Advantage — A private-insurance alternative to original Medicare (Parts A + B), bundling the coverage with extras like prescription drugs, vision, dental, gym memberships, and sometimes meal delivery.
• Medigap — Private supplemental insurance designed to cover the deductibles and coinsurance that original Medicare (Parts A + B) doesn't.
• Formulary — The list of prescription drugs an insurance plan covers, usually organized into tiers (Tier 1 generic = cheapest, higher tiers = brand-name + specialty = most expensive).
• Prior authorization — A requirement from the insurance company that a doctor obtain approval before prescribing certain medications, ordering certain tests, or providing certain treatments.

See also: all glossary terms · conditions by name · step-by-step playbooks