Part D Prescription Drug Plans
May 20, 2026
Part D drug coverage, explained.
How standalone Part D works, what to compare, and the late enrollment penalty most people don't know about.
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Do I need Medicare Part D?
If you have Original Medicare and take any prescription drugs, now or later, most people enroll in a Part D plan to avoid the permanent late-enrollment penalty. If you have creditable drug coverage from another source (some employer or VA plans), you can delay.
What is the Part D late enrollment penalty?
If you go 63 or more days without creditable drug coverage after you are first eligible, Medicare adds a permanent monthly amount to your Part D premium for as long as you have Part D. The penalty is 1% of the national base premium per month you went without.
How do Part D plan tiers work?
Most plans group drugs into 4 or 5 tiers. Tier 1 (preferred generics) has the lowest copay; specialty tiers (4 or 5) have the highest. The tier each of your drugs sits on matters more than the headline premium.
What changed for Part D in 2025 and 2026?
Starting in 2025, Part D enrollees have a $2,000 annual out-of-pocket maximum on covered drugs, which continues in 2026. The "donut hole" coverage gap was eliminated. Enrollees can also opt into a monthly payment plan to spread their drug costs across the year.
What Part D is
Part D is Medicare prescription drug coverage, sold by private insurers and regulated by Medicare. You can get Part D as a standalone plan that pairs with Original Medicare (often alongside a Medigap) or as part of a Medicare Advantage plan that bundles drug coverage.
What to compare
- Each of your drugs on the plan's formulary
- What tier each drug is on (changes your copay)
- Whether your preferred pharmacy is in-network
- Plan deductible and copay structure
- How the coverage gap affects your specific drugs this year
The late enrollment penalty
If you go 63+ days without "creditable" drug coverage after you are first eligible, you can be charged a permanent monthly late enrollment penalty when you eventually enroll. The fix: keep creditable coverage, or sign up for a Part D plan when you are first eligible, even if you take no medications today.