Does Medicare Cover Any Prescription Drugs?

Medicare provides prescription drug coverage, though the extent varies across its different parts. While Original Medicare offers limited assistance for certain medications, the primary avenue for comprehensive prescription drug benefits is through a separate program. This system ensures most beneficiaries have access to necessary medications, depending on the type of drug and setting.

Medicare Part D Coverage

Medicare Part D is the primary component for outpatient prescription drug coverage. These plans are offered through Medicare-approved private insurance companies. Beneficiaries select a Part D plan to help cover the costs of their medications, which are typically dispensed at retail pharmacies.

Each Part D plan maintains a formulary, a list of prescription drugs it covers. Formularies categorize drugs into different tiers, with each tier usually corresponding to a specific cost-sharing level. For example, generic drugs often fall into lower tiers with minimal co-payments, while specialty drugs may be in higher tiers with higher co-insurance. Plans must include a wide range of medications within various drug categories to ensure coverage for common health conditions.

Formularies can change, but plans are required to notify members of any changes to their covered drugs or cost-sharing amounts. These plans generally cover both brand-name and generic prescription drugs. The specific drugs covered and the associated costs can differ significantly between plans, requiring careful review by beneficiaries.

Other Medicare Parts and Drug Coverage

While Medicare Part D is the main source for retail prescription drug coverage, other parts of Medicare offer limited coverage for medications under specific circumstances. Medicare Part A, Hospital Insurance, covers prescription drugs administered to beneficiaries during an inpatient stay. This includes medications provided as part of treatment in a hospital, a skilled nursing facility, or during hospice care. The drugs covered under Part A are those that are medically necessary for the patient’s inpatient treatment and are not self-administered.

Medicare Part B, Medical Insurance, also provides limited coverage for certain outpatient prescription drugs. This includes medications administered by a doctor or other medical professional in an outpatient setting, such as a doctor’s office or hospital outpatient clinic. Examples often include injectable drugs that cannot be self-administered, certain vaccines like flu shots or pneumonia vaccines, and some drugs used with durable medical equipment, such as nebulizer medications. Part B also covers some chemotherapy drugs and immunosuppressive drugs under specific conditions. This Part A and Part B drug coverage is tied to the setting of care or the method of administration, not to filling prescriptions at a pharmacy for self-administration.

Understanding Part D Costs

Understanding the financial aspects of Medicare Part D plans involves several cost-sharing elements. Most Part D plans require a monthly premium, a regular payment made by the beneficiary to the insurance company. This premium varies by plan and can be deducted directly from Social Security benefits or paid directly to the plan provider. Some beneficiaries with higher incomes may also pay an Income-Related Monthly Adjustment Amount (IRMAA) in addition to their plan premium.

Many Part D plans include an annual deductible, an amount beneficiaries must pay out-of-pocket for their prescription drugs before the plan begins to cover costs. After meeting the deductible, beneficiaries typically enter the initial coverage phase, where they pay a co-payment or co-insurance for each prescription. A co-payment is a fixed dollar amount, while co-insurance is a percentage of the drug’s cost. The cost-sharing amounts in this phase vary depending on the drug’s tier on the plan’s formulary.

Once the total cost of drugs (what you and your plan have paid) reaches a certain limit, beneficiaries may enter the coverage gap, often referred to as the “donut hole.” In this phase, beneficiaries typically pay a percentage of the cost for both generic and brand-name drugs until their out-of-pocket spending reaches a specific threshold. For instance, in 2025, beneficiaries generally pay 25% of the cost for covered brand-name and generic drugs while in the coverage gap.

After out-of-pocket spending reaches the catastrophic coverage threshold, beneficiaries enter the catastrophic coverage phase. In this phase, the plan covers nearly all of the remaining drug costs for the rest of the calendar year. As of 2025, there are no out-of-pocket costs for covered Part D drugs once the catastrophic phase is reached. This structure helps limit a beneficiary’s financial liability for very high drug costs.

Enrolling in Part D

Enrolling in a Medicare Part D plan requires understanding specific enrollment periods to ensure timely coverage and avoid potential penalties. The Initial Enrollment Period (IEP) for Part D generally aligns with the IEP for Medicare Part A and Part B, typically a seven-month window. This period includes the three months before the month you turn 65, the month you turn 65, and the three months after you turn 65, allowing new beneficiaries to sign up for a plan without a late enrollment penalty. Individuals who don’t sign up when first eligible might face a permanent late enrollment penalty, which is added to their monthly premium, unless they have creditable prescription drug coverage from another source.

The Annual Enrollment Period (AEP), also known as the Open Enrollment Period for Medicare, runs from October 15 to December 7 each year. During this time, beneficiaries can join, switch, or drop a Medicare Part D plan, with new coverage starting on January 1 of the following year. This period allows individuals to review their current plan’s costs and formulary against other available options to find a plan that best meets their changing needs for the upcoming year.

Special Enrollment Periods (SEPs) exist for specific life events, allowing beneficiaries to make changes to their Part D coverage outside of the IEP or AEP. Examples of qualifying events include moving to a new service area, losing other creditable drug coverage, or qualifying for Extra Help, a Medicare program that helps pay for Part D costs.

When choosing a Part D plan, beneficiaries should compare options based on several factors, including the monthly premium, the annual deductible, and the co-payments or co-insurance for their specific medications. It is also important to check if their preferred pharmacy is in the plan’s network and if all their current medications are on the plan’s formulary. Information about available plans can be found through the Medicare Plan Finder tool on Medicare.gov, or by contacting Medicare directly, or by consulting with state health insurance assistance programs.