Medicare Part D: Prescription Drug Coverage for 2025
Medicare offers prescription drug coverage to everyone with Medicare. If you decide not to join a Medicare Prescription Drug Plan when you’re first eligible, and you don’t have other creditable prescription drug coverage, or you don’t get Extra Help, you’ll likely pay a late enrollment penalty. To get Medicare drug coverage, you must join a plan run by an insurance company or other private company approved by Medicare. Each plan can vary in cost and drugs covered.
2 ways to get drug coverage
- Medicare Prescription Drug Plan (Part D). These plans (sometimes called “PDPs”) add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans.
- Medicare Advantage Plan (Part C) (like an HMO or PPO) or other Medicare health plan that offers Medicare prescription drug coverage. You get all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” You must have Part A and Part B to join a Medicare Advantage Plan.
What drug plans cover
Each Medicare Prescription Drug Plan has its own list of covered drugs (called a formulary). Many Medicare drug plans place drugs into different “tiers” on their formularies. Drugs in each tier have a different cost.
A drug in a lower tier will generally cost you less than a drug in a higher tier. In some cases, if your drug is on a higher tier and your prescriber thinks you need that drug instead of a similar drug on a lower tier, you or your prescriber can ask your plan for an exception to get a lower copayment.
2025 Prescription Drug Plan Updates
$2,000 Out-of-Pocket Maximum: Starting in 2025, all Medicare Part D plans have an annual out-of-pocket spending cap of $2,000 for covered prescription drugs. Once you reach this limit, your Part D plan will pay 100% for covered drugs for the rest of the plan year.
Medicare Prescription Payment Plan: The Medicare Prescription Payment Plan is a new payment option that works with your current drug coverage to help you manage your out-of-pocket costs by spreading them across the calendar year. This option is available to anyone with Medicare drug coverage, and all plans offer this payment option. While this doesn’t save money, it helps make costs more predictable.
Plan Choices: The average Medicare beneficiary has a choice of 48 options for Part D coverage in 2025, including 14 PDPs (7 fewer than in 2024) and 34 MA-PDs (2 fewer). Despite fewer stand-alone PDPs being available, beneficiaries still have multiple options in each state.
Premium Information: The Part D base beneficiary premium is $36.78 for 2025. No Medicare drug plan may have a deductible more than $590 in 2025, and some plans have no deductible.
Important Cost Information
Coverage Stages: After you reach your full deductible (if your plan has one), you’ll pay 25% of the cost as coinsurance for your drugs until your out-of-pocket spending reaches $2,000 in 2025. Then, you’ll automatically get “catastrophic coverage” where you won’t have to pay out-of-pocket for covered Part D drugs for the rest of the calendar year.
Late Enrollment Penalty: The Part D late enrollment penalty is calculated by multiplying 1% times the “national base beneficiary premium” ($36.78 in 2025) times the number of full, uncovered months you were eligible but didn’t have coverage. This penalty is added to your monthly premium, so it’s important to enroll when first eligible.
Additional Benefits for 2025
Insulin Costs: Medicare drug plans can’t charge you more than $35 for a one-month supply of each Part D-covered insulin product, and you don’t have to pay a deductible. If you get a 3-month supply, your costs can’t be more than $105.
Vaccine Coverage: People with Medicare Part D drug coverage now pay nothing out-of-pocket for vaccines recommended by the Advisory Committee on Immunization Practices, including vaccines for shingles, whooping cough, and more.
Drug Negotiations: Medicare negotiated prices for 10 of the most commonly used and expensive prescription drugs in 2024, with lower prices taking effect in 2026. In 2025, Medicare will select an additional 15 drugs covered under Part D to negotiate prices that will become available in 2027.
Extra Help Program
If you have limited income and resources, you might qualify for Extra Help from Medicare to pay your prescription drug costs. People who qualify may pay reduced premiums and lower out-of-pocket costs for their medications. Contact your local Social Security office or visit Medicare.gov to learn more about eligibility requirements.
Review your Medicare drug coverage each year during Medicare Open Enrollment (October 15-December 7) to make sure your plan still meets your needs for the coming year.
