Drug costs, simplified
Medicare prescription drug costs
What you actually pay for prescriptions under Medicare. Tiers, deductibles, the coverage gap, and how to compare.
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The four cost stages
- Deductible. You pay 100% of drug costs up to the plan's deductible (varies by plan).
- Initial coverage. You pay a copay or coinsurance until total drug costs hit a threshold set by Medicare.
- Coverage gap (donut hole). Historically a phase where you paid more — modern plans have largely closed this, but it still affects high-cost drugs.
- Catastrophic coverage. Once you reach a cap, your share drops significantly for the rest of the year.
What tier each drug is on
Most plans use 4–5 tiers. Tier 1 (preferred generics) is cheapest. Tier 4–5 (specialty drugs) can be much more expensive — sometimes coinsurance instead of a flat copay.
Always check each drug on the plan's formulary BEFORE you switch plans. See our Part D guide.
How to lower drug costs
- Switch to generic equivalents when available
- Use the plan's preferred pharmacy network
- Ask about 90-day mail-order pricing
- Check manufacturer assistance programs for specific drugs
- If you qualify, apply for Extra Help (Low Income Subsidy)
Related guides
More plain-language guides from Medicare Plan Path.