Medicare Part D is prescription drug coverage for Medicare beneficiaries. It's confusing by design — the coverage phases, formulary tiers, and annual changes make it one of the most complex parts of the healthcare system. This guide breaks it all down for 2026 and shows you how to minimize what you pay. For non-Medicare savings strategies, see our prescriptions without insurance guide.
Part D has four coverage phases. Here's what they look like after the Inflation Reduction Act changes:
You pay 100% of drug costs until you've spent $590. Some plans waive the deductible for certain drug tiers (especially Tier 1 generics). If your plan covers generics without a deductible, you skip this phase for those drugs.
After the deductible, you pay copays or coinsurance for your drugs. The exact amount depends on your plan's formulary tier:
| Tier | Drug Type | Typical Copay |
|---|---|---|
| Tier 1 | Preferred generics | $1-$10 |
| Tier 2 | Non-preferred generics | $10-$20 |
| Tier 3 | Preferred brands | $35-$50 |
| Tier 4 | Non-preferred brands | 25-50% coinsurance |
| Tier 5 | Specialty drugs | 25-33% coinsurance |
This is the biggest change from the Inflation Reduction Act. Once your out-of-pocket spending reaches $2,000 in a calendar year, you pay $0 for all covered drugs for the rest of the year. Previously, there was no cap, and patients with expensive drugs could pay $10,000+ annually.
Starting in 2025, Medicare beneficiaries can spread their out-of-pocket costs evenly across the year. Instead of paying $2,000 in the first few months (when expensive drugs hit the deductible), you can opt into monthly installments. This is essentially an interest-free payment plan for your drug costs.
The Inflation Reduction Act capped insulin copays at $35/month for all Medicare Part D plans. This applies to all covered insulin products, regardless of formulary tier. For insulin-dependent patients, this is a significant savings — some were previously paying $100+ per month in copays.
Medicare Open Enrollment runs October 15 - December 7. This is your annual opportunity to switch to a plan that better covers your medications. Use the Medicare Plan Finder tool (medicare.gov/plan-compare) to enter your specific drugs and find the lowest-cost plan.
This single step can save hundreds per year. Plans change their formularies and copays annually, so a plan that was cheapest last year may not be cheapest this year.
If your income is below 150% of the federal poverty level (~$22,590 for individuals in 2026) and your assets are below $17,220, you may qualify for Extra Help — a federal program that dramatically reduces Part D costs:
Apply through Social Security (ssa.gov) or your state Medicaid office. An estimated 2 million eligible beneficiaries don't apply.
For cheap generics, the cash price at Walmart ($4) or Costco ($2-4) may be lower than your Part D copay. You can pay cash for some drugs and use Part D for expensive drugs. However, cash payments don't count toward your $2,000 cap.
Read our insurance vs. cash price guide for the full analysis.
If your medication is on a high copay tier, your doctor can request a "tier exception" — asking the plan to cover it at a lower tier. This requires medical justification (e.g., you've tried lower-tier alternatives and they didn't work).
The Inflation Reduction Act gave Medicare the power to negotiate prices on select drugs for the first time. The first 10 drugs subject to negotiation (starting in 2026) include Eliquis, Jardiance, Xarelto, Januvia, and others. Negotiated prices are expected to be 25-60% lower than current prices.
This is just the beginning — Medicare will negotiate prices on 15 additional drugs in 2027, 15 more in 2028, and 20 per year starting in 2029.
For more on how these drugs are priced and what alternatives exist, see our most expensive prescriptions guide.
Can you use GoodRx or SingleCare as a Medicare beneficiary? Yes — but with important caveats:
The strategic approach: Use Part D for expensive medications (to hit the $2,000 cap quickly), and consider cash/discount cards for cheap generics where Part D copays are higher. Check our discount card comparison.
For the health science context behind many commonly prescribed Medicare drugs, Health Britannica covers senior health and supplement options.
Many manufacturer PAPs exclude Medicare patients, but some offer separate programs. Additionally, non-profit foundations like PAN Foundation, HealthWell Foundation, and Good Days provide copay assistance specifically for Medicare beneficiaries. See our PAP guide for details.
The traditional "donut hole" (coverage gap) has been effectively eliminated by the $2,000 annual out-of-pocket cap. Previously, beneficiaries would hit a coverage gap where they paid a higher percentage of drug costs. Now, once you reach $2,000 in out-of-pocket spending, all covered drugs cost $0 for the rest of the year.
Yes, but discount card purchases don't count toward your Part D deductible or $2,000 out-of-pocket cap. Use discount cards only for cheap generics where the cash price is lower than your Part D copay. For expensive drugs, always use Part D to reach the $2,000 cap.
Use the Medicare Plan Finder at medicare.gov/plan-compare. Enter your medications (drug name, dose, quantity) and pharmacy preference. The tool calculates your estimated annual cost under each available plan, including premiums, deductibles, and copays. Do this every year during Open Enrollment (Oct 15 - Dec 7) because plan costs and formularies change annually.
Plan changes, new negotiated prices, and enrollment reminders.