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What are the costs for Medicare Part D?

En español | Medicare doesn’t automatically cover prescriptions, but you can buy Part D drug coverage from a private insurer. The costs you may pay out of pocket include:

  • A premium, your plan’s monthly bill
  • A copayment, a set fee based on the plan’s rules that you pay to a pharmacy for each of your prescriptions after you meet any deductible
  • A deductible, the set amount you pay to a pharmacy each year before the insurance kicks in
  • Coinsurance, the percentage of costs you pay to a pharmacy for each of your prescriptions after you meet any deductible

You can purchase either a stand-alone Part D plan or get health and drug coverage through a Medicare Advantage plan. You can acquire this coverage when you first enroll in Medicare or during open enrollment, Oct. 15 to Dec. 7 each year for coverage starting Jan. 1.

You also may be eligible to buy coverage or switch plans at other times. The average Medicare beneficiary has a choice of 54 Medicare plans with Part D drug coverage in 2022, including 23 stand-alone Part D plans and 31 Medicare Advantage plans with drug coverage, according to the Kaiser Family Foundation.

The private companies that sell Medicare Part D coverage set their own premiums, deductibles and copayments but need to follow the federal government’s rules. For example, Part D plans can decide to charge a deductible, but the maximum deductible in 2022 cannot be more than $480.

Your actual costs for Part D depend on the options in your area, the plan you select, how much it charges for your medications, how much you’ve paid for drug costs so far during the year and even your income.

How much are the premiums for Part D in 2022?

The average premium for a stand-alone Part D plan is $33 a month in 2022. But the specifics can vary a lot by plan.

Average monthly premiums for the largest stand-alone Part D plans range from $7 to $99 in 2022, according to the Kaiser Family Foundation. You may not have this full range of premiums available in your area.

If you choose a Medicare Advantage plan with drug coverage, you’ll generally pay one monthly premium for all benefits — hospital, medical and prescription drugs. The average monthly premium for Medicare Advantage enrollees is $19 in 2022.

How late enrollment affects Part D premiums

You could end up paying a permanent late-enrollment penalty if you don’t sign up for Part D at the right time.

If you didn’t sign up for Part D when you were first eligible and weren’t enrolled in another plan similar to Part D, which Centers for Medicare and Medicaid Services (CMS) officials call creditable coverage, you may have to pay a late-enrollment penalty. The calculation is this: 1 percent of the national average Part D premium, called the base beneficiary premium, multiplied by the number of months you went without creditable drug coverage since enrolling in Medicare Part A or Part B.

The national average premium changes annually. In 2022, it is $33.37 a month.

Remember, too, that you can’t enroll whenever you want in a Part D plan. If you’ve missed your initial enrollment period or don’t qualify for a special enrollment period, you’ll have to wait for the Oct. 15 to Dec. 7 open enrollment, and that could add months to your penalty calculation.

Part D costs for higher incomes

High earners always pay more for drug coverage, whether they have drug coverage through a stand-alone Part D plan or a Medicare Advantage plan.

If you’re single and your adjusted gross income is higher than $91,000 or if you’re married filing jointly with income greater than $182,000, you’ll have to pay a high-income surcharge for Part D in addition to your plan’s premium. This surcharge is officially called the income-related monthly adjustment amount (IRMAA). In 2022, the monthly IRMAA surcharge ranges from $12.40 to $77.90, with the larger surcharges at higher income levels.

You pay your regular premium to the plan and the surcharge to Medicare. Most people have the surcharge paid directly from their Social Security check if they’re already taking retirement benefits.

The surcharge is usually based on your most recent income tax return on file, which is 2020 for most people in 2022. But if your income has dropped since then because of certain life-changing events — such as marriage, divorce, death of a spouse or retirement — then you can contest the high-income surcharge and ask the Social Security Administration, which manages these surcharges, to recalculate your premiums based on your more recent income.

Part D surcharges for high-income earners

If the modified adjusted gross income on your 2020 federal tax return was greater than $91,000 for single filers or $182,000 for joint filers, then you’ll generally have to pay a monthly Part D surcharge in 2022.

Individual income Joint filing income Married filing separate income Monthly surcharge in addition to Part D premium
$91,000 or less $182,000 or less $91,000 or less None
$91,001 to $114,000 $182,001 to $228,000 Not applicable $12.40
$114,001 to $142,000 $228,001 to $284,000 Not applicable $32.10
$142,001 to $170,000 $284,001 to $340,000 Not applicable $51.70
$170,001 to $499,999 $340,001 to $749,999 $91,001 to $408,999 $71.30
$500,000 and greater $750,000 and greater $409,000 and greater $77.90

Source: Medicare

What are the out-of-pocket costs of Part D?

The amount you must pay beyond the premium depends on whether a plan has a deductible, how the plan covers your medications, and how much you’ve spent so far during the year on prescriptions.

Part D plans can charge a deductible of up to $480 in 2022, although many plans don’t charge any deductible. If yours does, you’ll have to pay the full cost of your medications yourself until you reach the deductible.

After that, you’ll pay either copayments (the dollar amount the plan charges for your medications) or coinsurance (the percentage of the cost the plan charges you for your medications) until you and your plan have spent $4,430 in 2022.

Each plan negotiates with drug manufacturers and pharmacies. Your copays or coinsurance rates are based on your plan’s negotiated prices and Medicare guidelines.

How do pricing tiers affect copayments?

Different plans can charge different copays for the same medication. Most plans have four or five pricing tiers, with the lowest copayments for preferred generic medications and then non-preferred generics, and higher cost sharing for preferred brand-name drugs and then other brand-name drugs. Plans may charge even more for specialty medications.

Most plans also have preferred pharmacies. If you use them, you may have lower copayments within each pricing tier than you would pay at other in-network pharmacies.

No matter how a plan prices your medications, it needs to follow a general pricing structure that Medicare sets. After you and your plan have spent $4,430 in 2022, you’ll reach the coverage gap, formerly known as the donut hole, and you’ll pay up to 25 percent of the cost of your medications.

When your out-of-pocket spending hits $7,050 in 2022 — the amount you have paid, not the insurer’s share — you’ll reach the catastrophic level. At that level, you’ll pay only 5 percent or less of the cost of your drugs for the rest of the year. However, Part D plans have no out-of-pocket cap on costs.

The old ‘donut hole’ is gone

After paying your Part D deductible, you’ll have to share various costs of many drugs until you’ve reached $7,050 total, not including premiums.

Annual deductible Initial coverage Coverage gap Catastrophic coverage
You pay for your medicines until reaching your plan’s deductible. You pay your plan’s copays or coinsurance for brand-name and generic drugs. You pay no more than 25 percent of the cost of brand-name and generic drugs. You pay a small copay amount or small insurance percentage.
If your plan has no deductible, initial coverage starts with your first prescription. You stay in this stage until your total drug costs reach $4,430 in 2022. You stay in this stage until your out-of-pocket costs reach $7,050 in 2022 You stay in this stage for the rest of the year.

Source: Medicare

How can I compare total costs for Part D plans?

You can compare the cost of premiums plus copayments for your drugs for all of the plans in your area using the Medicare Plan Finder. Type in your zip code, drugs and dosages to see the copayments for your specific medications and an estimate for the total costs you will pay throughout the year.

Plans can change their Part D costs and coverage from year to year. Some even change their drug lists during the year. So it’s a good idea to compare your options annually during open enrollment to make sure it’s the best plan for you each year.

Keep in mind

If your income and assets are below a certain level, you may qualify for the federal Extra Help program, which can help cover Part D premiums, deductibles and copayments. If you qualify for Extra Help, you can switch Part D plans as often as once each quarter, and you will not be subject to the late-enrollment penalty if you delayed signing up for Part D without having other eligible coverage.

Updated June 3, 2022

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