How Much Is the Cost of Medicare Part D?
Unlike Medicare Part A and Part B, the cost of Medicare Part D is largely determined by the private insurers that provide the coverage. The exact amounts can vary based on the location, the type of drug, and the provider you choose.
The cost of Medicare Part D can be broken up into a few different categories:
- Monthly premiums. A premium is the fee you pay each month to carry Part D coverage. In 2017, premiums can range from $13 to $75 depending on your plan and provider.*
- Deductibles. The amount you must pay each year before your Prescription Drug Plan starts to pay its share of costs is called a deductible. Medicare regulates Part D deductibles—in 2017, they can’t exceed $400.1
- Coinsurance and copayments. These are fees you pay for each prescription after you have met your deductible. Coinsurance is a percentage of the cost (such as 20%), while a copayment is a set dollar amount (such as $10 per prescription). The plan you choose will determine which of these payments you’ll pay and how much your payments will be.
How much are Medicare Part D premiums?†
Medicare Part D premiums vary depending on the provider and the specific plan you choose. Since Part D plans are provided by private insurers, they set the prices. The cost can also vary between different locations. The best way to determine what your premium will be is to list all the medications you’ll be taking and then shop for plans in your area that cover all those medications.
If your income is above a certain amount, you may have to pay a Part D income-related monthly adjustment amount (Part D-IRMAA) on top of your regular premium. This adjustment is paid to Medicare rather than your plan provider. To determine how much you’ll have to pay, Medicare uses the modified adjusted gross income from your most recent, IRS-provided tax return information—usually from two years ago. So for 2017, your adjusted gross income from 2015 will be used to determine the amount you’ll pay.
The table below, pulled from Medicare.gov, outlines the additional Part D-IRMAA you’ll be responsible for in 2017. If you must pay, Social Security will contact you and let you know. The Part D-IRMAA is generally taken automatically from your Social Security check, so you won’t have to worry about paying another bill. ‡
|If your filing status and yearly income in 2015 was|
|File individual tax return||File joint tax return||File married & separate tax return||You pay (in 2017)|
|$85,000 or less||$170,000 or less||$85,000 or less||Your plan premium|
|Above $85,000 up to $107,000||Above $170,000 up to $214,000||Not applicable||$13.30 + your plan premium|
|Above $107,000 up to $160,000||Above $214,000 up to $320,000||Not applicable||$34.20 + your plan premium|
|Above $160,000 up to $214,000||Above $320,000 up to $428,000||Above $85,000 up to $129,000||$55.20 + your plan premium|
|Above $214,000||Above $428,000||Above $129,000||$76.20 + your plan premium|
Source: Medicare.gov, “Monthly Premium for Drug Plans”
What are the costs if I have a late enrollment penalty?
In addition to your premium and IRMAA fee, you may also be responsible for paying a late enrollment penalty. This penalty comes into effect if you go without a Part D plan, a Medicare Advantage plan, or another Medicare health plan that provides Medicare prescription drug coverage for a continuous 63-day period after your Initial Enrollment Period (IEP) ends.2
The amount of the late enrollment penalty is based on the length of time you went without prescription drug coverage you were eligible for. The penalty is determined by taking 1% of the national base beneficiary premium ($35.63 for 2017)3 and multiplying that by how many entire months you didn’t have Part D coverage when you could have. The result is then rounded to the nearest $0.10 and combined with your monthly Part D premium.
For instance, if you went 20 months without Part D coverage following the IEP and then decided to sign up, your penalty would be 20% (1% for each month) of $35.63, which is $7.13. The result would then be rounded to the nearest $0.10, making it $7.10 in this example, and added to your monthly premium indefinitely.
When you sign up for a plan, the provider will let you know if you’ll have a late enrollment penalty and how much it will be. If you disagree with the penalty, you can request a reconsideration from your provider, in which case Medicare will review the penalty and circumstances and come to a decision that must be followed.
How much is the Medicare Part D yearly deductible?
The yearly deductible varies among different Part D plans. Some plans don’t have a deductible at all. If the plan does have a deductible, Medicare requires that it be less than $400 in 2017.4
What is a Medicare Part D copayment or coinsurance?
Once you’ve met your deductible for the year, you’ll pay the coinsurance or copayment your plan specifies. The plan may divide drugs into different tiers based on the type of prescription, and each tier has different copayment or coinsurance amounts.
Typically, a drug plan will require either a copayment or coinsurance, not both. Which is better for you will depend on the drugs you take and the specific payment amounts set by the plan.‡
What is the donut hole and what are my costs inside it?
Most Medicare Part D plans have what is known as a coverage gap or “donut hole.” This is a temporary limit on what the plan will cover. This basically means that if you are in the donut hole, your costs for prescriptions will go up until you’ve paid a certain total amount.
For 2017, the coverage gap starts once you and your plan have spent $3,700 on covered drugs. Once you reach this point and enter the gap, you’ll pay no more than 40% of a brand name drug’s cost and 51% of a generic drug’s cost.
Once you reach a certain out-of-pocket amount, you’ll exit the donut hole. This amount is determined by your plan provider. For brand name drugs, 95% of the total cost of the drugs count towards your out-of-pocket spending, while only 51% of what you pay for generic drugs counts.
We hope this information answers your questions about Medicare Part D costs. If you have additional questions about Medicare Part D or other Medicare coverage, visit our FAQs page.
* This article does not contain a complete listing of plans available in your service area. For a complete listing please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.
† You must continue to pay your Medicare Part B premium.
‡ This information is not a complete description of benefits. Contact the plan for more information. Limitations, copayments, and restrictions may apply. [Benefits, premiums and/or copayments/coinsurance] may change on January 1 of each year.
1Medicare.gov, “Yearly deductible for drug plans”
2Medicare.gov, “Part D late enrollment penalty”
3Medicare.gov, “Part D late enrollment penalty”
4Medicare.gov, “Yearly deductible for drug plans”