Which Items Are Generally Covered Under Medicare Part D?

Medicare Part D offers an outpatient prescription drug benefit through private insurance companies contracted with Medicare. It helps individuals manage prescription drug costs.

General Scope of Part D Coverage

Medicare Part D plans must cover a broad array of outpatient prescription drugs. These plans must include at least two drugs in most therapeutic categories and classes to ensure beneficiaries have options for various conditions.

Plans must cover all or substantially all drugs within six specific “protected classes.” These categories are critical for treating severe conditions and include immunosuppressants, antidepressants, antipsychotics, anticonvulsants, antiretrovirals used for HIV/AIDS, and antineoplastics for cancer treatment.

Beyond these categories, Part D also covers most vaccines not typically under Medicare Part B, including common immunizations like the shingles vaccine. For adult vaccines recommended by the Advisory Committee on Immunization Practices, plans must cover them without a deductible or cost-sharing.

Covered Part D drugs must be FDA-approved for sale in the U.S., available only by prescription, medically necessary, and used for a medically accepted indication. This framework ensures that covered drugs meet established safety and efficacy standards.

Specific Drugs and Services Not Covered by Part D

While Part D covers many prescription drugs, certain categories are explicitly excluded by law. These exclusions prevent plans from covering medications used for specific purposes deemed non-medical or already covered under other Medicare parts.

Drugs for cosmetic purposes or hair growth are not covered, with exceptions for conditions like acne, psoriasis, or vitiligo. Drugs for anorexia, weight loss, or weight gain are generally excluded, except for wasting conditions related to diseases like AIDS. Fertility drugs and those for erectile dysfunction are also not covered, unless prescribed for an FDA-approved medical condition other than sexual dysfunction.

Over-the-counter (OTC) medications, even if prescribed by a physician, are not covered by Part D. This also applies to most prescription vitamins and minerals, though prenatal vitamins and fluoride preparations are exceptions. Medications solely for cold or cough relief are also excluded.

A significant exclusion involves drugs already covered under Medicare Parts A or B. For instance, medications administered during an inpatient hospital stay fall under Part A, while certain injectable or infusible drugs given by a medical professional in an office setting are typically covered by Part B. If a drug could be covered by Part A or B in a specific situation, Part D will not cover it, preventing duplicate coverage.

Additionally, Part D does not cover drugs for which the manufacturer mandates that associated testing or monitoring services be purchased exclusively from them or their designee. Drugs identified as less than effective by the Drug Efficacy Study Implementation (DESI) program are also excluded from Part D coverage. These stipulations ensure adherence to specific regulatory and efficacy standards.

How Medicare Part D Plans Determine Coverage

Each Medicare Part D plan maintains its own list of covered drugs, known as a formulary. This formulary specifies which prescription medications the plan will cover, and these lists can differ significantly between plans. While Medicare sets general guidelines for formulary content, the exact drugs included and their placement can vary.

Formularies typically organize drugs into different “tiers,” which dictate the beneficiary’s out-of-pocket costs. Lower tiers generally include generic drugs, which have the lowest copayments. Higher tiers may consist of preferred brand-name drugs, non-preferred brand-name drugs, and specialty drugs, with costs increasing at each successive tier.

Part D plans also use utilization management tools to promote cost-effective and appropriate medication use. Prior authorization requires the plan’s approval before certain drugs are covered, ensuring medical necessity. Step therapy mandates that beneficiaries try a less expensive, often generic, drug before a more costly alternative is covered.

Quantity limits restrict the amount of a drug that can be dispensed over a specific period. These tools help manage costs and encourage the use of clinically appropriate medications. Plans must adhere to these policies consistently, applying them to covered drugs on their formulary.

If a drug a beneficiary needs is not on the plan’s formulary, or if a utilization management tool prevents access, an exception can be requested. A formulary exception asks the plan to cover a non-formulary drug, while a tiering exception requests a lower cost-sharing level for a drug on a higher tier. For either type of exception, the beneficiary’s prescriber must provide a statement supporting the medical necessity of the requested drug, explaining why alternatives are not suitable.

Costs for Covered Prescription Drugs

Beneficiaries enrolled in Medicare Part D plans incur various out-of-pocket costs, even for covered prescription drugs. These costs typically include monthly premiums, an annual deductible, and either copayments or coinsurance. Each plan sets its own specific amounts for these costs, which can influence the overall expense for a beneficiary.

The deductible is the initial amount a beneficiary must pay for covered prescriptions before the plan begins to share costs. For 2025, the maximum deductible a Part D plan can charge is $590, though some plans may offer lower or even zero-dollar deductibles. After the deductible is met, beneficiaries enter the initial coverage phase.

During the initial coverage phase, the plan pays a portion of the drug cost, and the beneficiary pays a copayment (a fixed amount) or coinsurance (a percentage of the drug cost). For example, beneficiaries might pay 25% of the cost during this phase. This phase continues until the combined amount spent by the beneficiary and the plan on covered drugs reaches a specific limit.

A significant change for 2025 is the elimination of the coverage gap, often referred to as the “donut hole.” This means beneficiaries no longer face a period where they pay a higher percentage of drug costs after the initial coverage limit is reached. The Inflation Reduction Act brought about this change, simplifying the cost structure.

Once a beneficiary’s total out-of-pocket spending on covered Part D drugs reaches a certain threshold, they enter the catastrophic coverage phase. In 2025, this threshold is $2,000. During this phase, beneficiaries pay nothing for covered Part D drugs for the remainder of the calendar year, providing substantial financial protection for high prescription drug costs.