Medicare Prescription Drug Plan (Part D) FAQs

All drug plans have a maximum of three different phases: (1) the deductible phase, if any; (2) the initial coverage phase; and (3) the catastrophic phase.

For 2026, the "standard benefits" model has a deductible of $615, 25% coinsurance for all drug tiers, and out-of-pocket drug spending for covered medications is capped at $2,100 (indexed for inflation annually). Once a person has spent $2,100 in True Out-of-Pocket costs (TrOOP) for covered medications, they pay nothing further for covered medications for the rest of the calendar year.

How TrOOP is calculated: TrOOP represents what you and certain programs pay on your behalf for covered Part D drugs. It includes your deductible payments, your coinsurance or copays during the initial coverage phase, and amounts paid on your behalf by programs like Extra Help.

Importantly, if you are enrolled in an "enhanced"alternative benefit plan rather than the standard benefit plan — as most enrollees are — your plan may pay a higher share of certain drug costs than the standard design requires. The amount your enhanced plan pays above the standard benefit design counts toward your TrOOP, which means you may reach the $2,100 cap before you have personally spent $2,100 out of your own pocket. This is why your actual out-of-pocket spending may be less than $2,100 even though you've technically reached the cap.

Manufacturer discounts are not included in the TrOOP calculation. To count toward TrOOP, drugs must be on the plan's formulary (or the beneficiary must have an approved formulary exception) and must be purchased through a network pharmacy or out-of-network in accordance with the plan's out-of-network policy.

Enhanced benefits: Carriers may offer enhanced benefits covering items such as folic acid, 50,000 units of Vitamin D, and sildenafil/tadalafil. Payments a beneficiary makes for an enhanced medication do not count toward TrOOP, and the same cost applies during all plan phases for enhanced medications.

Medicare Prescription Payment Plan (M3P): Available since 2025, this option allows Part D enrollees to spread their out-of-pocket drug costs evenly across the months of the year rather than facing high costs in a single month. Beneficiaries who expect to reach the $2,100 cap — particularly those taking high-cost medications — are most likely to benefit. Those who enroll pay their medication costs to the carrier rather than at the pharmacy.

The following changes took effect for the first time in 2026:

Initial coverage phase:

• Negotiated prices apply for the ten drugs initially selected for the first cycle of Medicare price negotiations
• CMS pays Part D plans a 10% subsidy for drugs selected for price negotiations during the price applicability period
• The Part D sponsor pays 65% for applicable drugs and drugs selected for negotiation, and 75% of the cost of all other Part D covered drugs
• The manufacturer, through the manufacturer discount program, pays 10% of the cost of applicable drugs

Catastrophic phase:

• The enrollee pays nothing for covered Part D drugs
• The Part D sponsor pays 60% of the cost of all covered Part D drugs
• The manufacturer pays a discount equal to 20% for all applicable drugs (the ten drugs selected for negotiation)
• CMS pays a reinsurance subsidy of 20% for applicable drugs and 40% for all other covered Part D drugs during a price applicability period

The CMS subsidy and reinsurance changes do not impact beneficiary cost-sharing (which was substantially reduced beginning in plan year 2025 by eliminating the coverage gap and capping beneficiary out-of-pocket costs). However, they will affect the price of negotiated drugs.

Note: There are significant changes to many drug plans for 2026, including increased premiums (though $0 premium plans still exist), formulary changes, and increased deductibles (the standard deductible increased from $590 in 2025 to $615 in 2026, though many MAPD HMO plans have no deductible on any tier). In some cases copays have been changed to coinsurance. Carriers face increased cost pressures in part because they now pay 60% of drug costs in the catastrophic phase, which is a primary driver of 2026 plan design changes.

Make sure you review how all your current medications will be covered under your 2026 plan before enrolling.

Drug plans continue to have the same three phases as mentioned in FAQ 1.

For 2027, the “standard benefits” model has a deductible of $700 (increased from $615 in 2026), 25% coinsurance for all drug tiers, and the out-of-pocket spending for covered medications is capped at $2,400 (up from $2,100).

If you are enrolled in an "enhanced" alternative benefit plan rather than the standard benefit plan — as most enrollees are — your plan may pay a higher share of certain drug costs than the standard design requires. (“Enhanced” alternative benefit plans must offer benefits that are at least actuarially equivalent to the benefits offered in the “standard benefits” model.)

The amount your enhanced plan pays above the standard benefit design counts toward your TrOOP (see FAQ 1 for an explanation of how TrOOP is calculated), which means you may reach the $2,400 cap before you have personally spent $2,400 out of your own pocket. This is why your actual out-of-pocket spending may be less than $2,400 even though you've technically reached the cap.

Note: at least one carrier has consolidated the two generic tiers into tier 1 and changed preferred brand name and non-preferred brand name drugs to lower tiers. Note that regardless of tier, the maximum coinsurance permitted for preferred brand name medications is 25% and for non-preferred brand name and specialty medications is 50%.

The Medicare Prescription Payment Plan (M3P) continues to be available (see FAQ 1).

The TrOOP calculation is unchanged.

Medicare used its new negotiation authority to set lower prices on 15 high cost drugs in 2025. Those negotiated prices take effect in 2027, so they directly influence 2027 plan design and liability.

These drugs include treatments for:

• Diabetes and weight management (e.g., Ozempic, Rybelsus, Wegovy)
• COPD and asthma (e.g., Breo Ellipta, Trelegy Ellipta)
• Cancer (e.g., Ibrance, Calquence, Pomalyst, Xtandi)
• IBS and GI conditions (e.g., Linzess, Xifaxan)
• Mental health (e.g., Vraylar)
• Autoimmune and inflammatory conditions (e.g., Otezla)
• Movement disorders and neurologic conditions (e.g., Austedo)

These 15 drugs are among the highest spend medications in Part D, so even with negotiated prices, plans still carry substantial liability on them.

Several forces have pushed 2027 Part D premiums above 2026 levels:

• More total spending flows through the plan before the catastrophic protection kicks in.
• Carriers pay 60% of catastrophic drug costs. Carriers continue to be responsible for 60% of the costs in the catastrophic phase, which is heavily driven by specialty and GLP-1 drugs.
• Drug price negotiation lowers Medicare’s spending and manufacturer prices, but the carriers still pay a large share for these negotiated-price drugs. The mix of high-cost diabetes, oncology, and specialty drugs keeps overall plan costs elevated.
• Some prior stabilizing mechanisms and subsidies that existed for 2025 and 2026 have been reduced or eliminated for 2027, so carriers have less cushion to absorb rising drug costs.

Drug spending keeps climbing, the catastrophic cap is higher, deductibles have increased in many plans, and plans still shoulder a big share of catastrophic and negotiated drug cost—so premiums rise to match that reality.

Some carriers will change copays to coinsurance, move some medications into higher drug tiers, and increase utilization management (e.g., prior authorization, quantity limits, and step therapy) on additional drugs.

It is more important than ever for beneficiaries to check how all their medications will be handled in their 2027 drug coverage before deciding on their 2027 plan.

Unless you're eligible for a Special Election Period, you must enroll in a Medicare Advantage Prescription Drug Plan or Medicare drug coverage (Part D):

• During your Initial Coverage Period (the period beginning three months before and ending three months after your 65th birthday month); or
• During the Annual Election Period which runs from October 15-December 7 for a January 1 enrollment.

Note: Medicare begins the first of the preceding month for individuals whose birthday is the first day of the month.

Some Medicare Advantage plans (called "MAPD" plans) include prescription drug coverage while others (called "MA" or "MA Only" plans) do not.

If you purchase a Medicare Advantage HMO or PPO plan without prescription drug coverage, you CAN'T purchase a separate Part D plan. You can purchase a separate Part D plan with a PFFS (Private Fee for Service plan) that doesn't provide drug coverage and with Medicare Savings Account plans and Cost plans (Cost plans are available on a very limited basis and are not available in Florida).

You can also purchase separate Medicare drug coverage (Part D) with a Medicare Supplement plan or with Original (Fee for Service) Medicare (i.e., without enrolling in either a Medicare Supplement or Medicare Advantage plan).

NOTE: The rule is that a beneficiary can have only ONE CMS-regulated plan [Medicare Advantage or Medicare Drug Coverage (Part D)] at a time.

Although they must meet minimum Federal guidelines, Medicare Advantage Prescription Drug and separate Medicare drug coverage (Part D) differ markedly between carriers, and one of the most important differences is which drugs are covered and which are not. [There are 35 therapeutic categories of drugs, and carriers are required to include at least two drugs in each category, except they are required to include all drugs in these six categories: antiretrovirals (HIV/AIDS treatments); antidepressants; antipsychotic medications; anticonvulsive treatments for seizure disorders; immunosuppressant drugs; and antineoplastics (certain anticancer drugs) unless one of these drugs is covered under Part B of Medicare.

Each carrier provides a formulary that lists which drugs are covered under that plan and which copay or coinsurance tier the drug falls into. Beneficiaries should always check the formulary to determine if their drugs are covered--and at which copay pay or coinsurance rate--before purchasing a plan. It's also a good idea to review your Medicare Advantage Prescription Drug or separate Medicare drug coverage (Part D) every year to see if your plan covers the medications you need now and may need in the upcoming year.

Be sure to talk to your doctor to see if you're taking the lowest cost medications available to you.

Because Part D plans can be designed to be actuarially equivalent to the standard benefit model (see FAQ 1) , these plans can have no or lower deductibles than required by the standard benefit model, copays and/or coinsurance can vary, and there can be other differences in plan design as well. Specific coverage will vary from plan to plan, so read your documentation carefully and make sure to check out which of your drugs are included in your plan’s formulary.

Medicare (CMS) has a formulary finder on their website that permits beneficiaries to enter their medications, dosages, and frequency of use and then lists the carriers that cover these medications in their formulary. After the beneficiary enters his or her drugs into the formulary finder there are various options as to how to present the findings: i.e., list in order of plans with the lowest premium; list in order of lowest premium AND cost of drugs; and list in order of plans with the lowest deductible.

Note: We use a sophisticated formulary finder called Search and Save. Our tool uses four different feeds from Connecture (Medicare.gov also uses data supplied by Connecture but the Search and Save system utilizes more extensive data than that used by Medicare.gov). We can input clients’ medication data and determine which Medicare Advantage or separate Medicare Part D coverage plan has the lowest drug costs (considering both premium and the cost of the drugs) for clients and prospects.

Please contact us at 561-734-3884 or 877-734-3884 for help in determining your outpatient medication costs.

Plans are required to include medication therapy management including step therapy, quantity limits and prior authorization. Part D sponsors may substitute generic drugs for brand name drugs if the generic drugs have the same or lower cost sharing and certain conditions are met. In accordance with the Comprehensive Addiction and Recovery Act (CARA), plans may impose certain limitations to manage utilization for beneficiaries who are at risk of misusing or abusing frequently abused drugs, such as opioids.

You may owe a late enrollment penalty (LEP) if, at any time after your initial enrollment period is over there is a period of 63 or more continuous days when you don't have Part D or other creditable coverage (i.e. coverage that, as a minimum, meets the Part D standard benefit model).

The late enrollment penalty is assessed for EACH month that you haven't had creditable drug coverage.

The amount of the penalty changes annually and is calculated by multiplying 1% of the “national base beneficiary premium” ($38.99 for 2026) by the number of full, uncovered months a beneficiary did not have Part D or “creditable coverage.” This penalty applies ONLY when an individual who did not have Part D or “creditable coverage” enrolls in a Part D plan (including a Medicare Advantage Prescription Drug Plan). Note: the Inflation Reduction Act puts a cap of 6% regarding the percentage the national base beneficiary premium can increase from year to year. The 2026 number has been capped at 6% above the 2025 number, which was $36.78.

Since 2011, a beneficiary’s Part D (outpatient drug coverage) monthly premium has been affected by income. This income-related monthly adjustment amount (referred to and abbreviated as “Part D IRMAA”) affects roughly 8% of Medicare beneficiaries with Part D coverage.

Individuals affected by the Part D IRMAA pay the adjustment amount in addition to their Part D premium. Payment is deducted from Social Security checks if the beneficiary is receiving Social Security. Otherwise, Social Security bills the beneficiary directly for these amounts.

For 2026, individuals filing single returns (as well as married individuals who file separate returns) with modified adjusted gross income over $109,000 and joint filers with modified adjusted gross income over $218,000 pay Part D IRMAA. [Note: Part D IRMAA applies both to Medicare Advantage Prescription Drug Plans and separate Medicare drug coverage (Part D)]. LEARN MORE about how IRMAA is calculated.

IRMAA is calculated annually based on income reported on the tax return from two years’ previously. If no return has been filed, then they’re based on the most recent income tax return that is on file with the IRS. The income levels upon which IRMAA is based are adjusted for cost-of-living, and the various levels in the charts are periodically changed legislatively as well. This means that IRMAA is calculated based on 2024 modified adjusted gross income (MAGI) for most people affected.

IRMAA Premiums for 2026

See this chart for 2026 IRMAA Part D premiums.

This page from medicare.gov contains a number of suggestions about lowering your drug costs:

• Determine if you qualify for the “extra help” (low income subsidy) program and apply online using the link provided if you think you may qualify
• Other ways to lower your prescription drug costs
• What to do next

In addition, look into patient assistance programs at www.rxassist.org (this site contains a wealth of other useful information); shop around for the best prices on medications; tread carefully using current credit cards (look closely before choosing to use a medical credit card), and talk to your physician about switching to generics.

For a complete listing of plans available in your service area please contact 1-800-Medicare (TTY users should call 1-877-486-2048) or go to www.medicare.gov. Your copy of Medicare & You 2027 also contains a listing of 2027 plans available in your general area. You can also contact us at 561-734-3884 (TTY: 711) for this information. [Medicare & You 2027 is published and mailed to all those enrolled in Medicare (except for the most recent enrollees) in late September. Note: the linked version of Medicare & You included here does not contain listings of plans in your general area.]

For years, Medicare beneficiaries who wanted GLP-1 medications strictly for weight loss had to pay full price out of pocket — often $700–$1,000 or more per month. That changed on July 1, 2026, when CMS launched the Medicare GLP-1 Bridge, a short-term federal demonstration program providing eligible Medicare Part D enrollees access to certain GLP-1 weight loss medications for a flat $50 per month copay, regardless of dosage. The program runs through December 31, 2027.

How the program works: The Bridge operates entirely outside the standard Part D benefit. Part D carriers bear no risk and do not need to opt in. A single national processor handles all prior authorizations, claims, and pharmacy payments. CMS has negotiated a rate of $245 per approved prescription, well below list prices of $700–$1,000+. The projected total program cost is approximately $47.78 billion over 18 months.

The Bridge is designed to lead into the longer-term BALANCE (Better Approaches to Lifestyle and Nutrition for Comprehensive hEalth) model, and CMS will use data collected during the Bridge to inform potential permanent GLP-1 coverage in Part D.

Which medications are covered:

• Wegovy® — all formulations, injectable and oral (semaglutide, Novo Nordisk)
• Zepbound® — KwikPen® formulation only (tirzepatide, Eli Lilly); single-dose vial and pen are not covered
• Foundayo® — all formulations (orforglipron, Eli Lilly); an oral-only option for those who prefer not to inject

Who is eligible: You must be enrolled in a Medicare standalone PDP or MA-PD plan and be using the GLP-1 for chronic weight management only.

Beneficiaries already receiving a GLP-1 through standard Part D for Type 2 diabetes, obstructive sleep apnea, cardiovascular disease, or MASH/fatty liver disease are excluded — those indications are already coverable under Part D.

You must also meet one of the following clinical criteria at the time GLP-1 therapy is initiated:

• BMI (Body Mass Index) ≥ 35; or
• BMI ≥ 30 with diastolic (preserved EF) heart failure, uncontrolled hypertension requiring two or more medications, or Chronic Kidney Disease Stage 3a or higher; or
• BMI ≥ 27 with pre-diabetes, prior heart attack or stroke, or symptomatic peripheral artery disease (PAD)

Already on a GLP-1 for weight loss? You may still qualify. Your prescriber needs to attest that you met the applicable BMI criteria when you first began therapy — your current BMI does not disqualify you if you have lost weight since starting treatment.

Important limitations:

• The $50 copay does not count toward your Part D deductible or your $2,100 annual Part D out-of-pocket cap for 2026 or $2,400 for 2027.
• Extra Help (Low Income Subsidy) cannot be applied to Bridge prescriptions
• Your provider must certify the medication is being used as part of a lifestyle program incorporating diet and exercise
• The program ends December 31, 2027 unless extended by Congress; most studies show that people who stop taking GLP-1 medications regain the weight they lost

For program questions, contact CMS at glp1demo@cms.hhs.gov or visit the CMS Medicare GLP-1 Bridge webpage. Please call us at 786-970-0740 (Cell) or 561-734-3884 / 877-734-3884 (TTY: 711) with any questions about this program or for help determining whether you may qualify.