Medicare Part D, Prescription drug plans

There are two ways to insure prescription drugs under Medicare:

• Standalone Part D plan (PDP). Added on to Original Medicare or to a Medigap setup.
• Bundled Part D inside Medicare Advantage (MAPD). Part D is included inside the Medicare Advantage plan itself.

You cannot have a standalone Part D plan at the same time as most Medicare Advantage plans. That combination is prohibited by CMS rules. The exceptions are MSA plans and some PFFS plans without built-in Part D.

The formulary is the list of drugs a Part D plan covers. Every plan has its own. The same prescription can cost $0 on one plan, $15 on another, and $80 on a third.

Drugs on the formulary are placed in tiers (pricing levels). A typical structure:

• Tier 1. Generic drugs, lowest cost.
• Tier 2. Preferred generics.
• Tier 3. Preferred brands.
• Tier 4. Non-preferred brands.
• Tier 5. Specialty drugs, highest cost.
• Tier 6. Supplements.

The lower the tier, the lower the patient's share. The same drug can sit on tier 2 in one plan and tier 4 in another, which drastically changes the yearly cost.

If a drug isn't on the plan's formulary, you can file a formulary exception, a request for the plan to cover it anyway. The prescribing doctor must justify medical necessity. A tier exception works similarly, a request to move a drug to a lower-cost tier. The process exists but is cumbersome. We'd rather pick a plan where your parent's drugs are already on good tiers.

This is the biggest change to Part D in a decade. It comes from the federal Inflation Reduction Act (IRA).

The cap applies only to drugs covered by your parent's Part D plan, whether standalone or bundled into MAPD. It doesn't include Part B drugs (administered in a doctor's office) or drugs not on the plan's formulary.

Also new since 2025: the Medicare Prescription Payment Plan (M3P). Annual drug costs can be spread out into monthly payments instead of paid all at once at the pharmacy. For families with parents on expensive specialty drugs, this can be a real cash-flow help.

The "donut hole" has been eliminated. Part D used to have four cost phases: deductible, initial coverage, coverage gap (donut hole), and catastrophic. The current structure is simpler: deductible, initial coverage, and catastrophic, with the $2,100 cap on top.

Low-income beneficiaries with limited assets may qualify for Extra Help (also called Low-Income Subsidy or LIS). It's a federal program that covers most or all Part D costs.

With Extra Help:

• Monthly Part D premium reduced or eliminated.
• Deductible eliminated.
• Drug costs cut to a few dollars per prescription.
• Late-enrollment penalty waived.

For many Polish-American families (especially parents who worked off-the-books and now collect smaller Social Security benefits), Extra Help can be life-changing. It's worth checking eligibility.

Applications go through Social Security (ssa.gov). Or call us and we'll help fill out the form in Polish. We know the current income thresholds.

If your parent doesn't enroll in Part D during their enrollment window, and they don't have comparable drug coverage from another source (employer plan, VA benefits, etc.), they pay a lifetime penalty.

Practical example. If they delayed enrollment 24 months, the penalty is 24% of the base premium. If the base premium is around $35, that's roughly $8.40/month extra. Over 10 years, more than $1,000.

How to avoid it:

• Enroll in Part D during the Initial Enrollment Period (IEP), the seven-month window around your parent's 65th birthday.
• Or maintain creditable coverage, drug coverage comparable to Part D, from an employer, union, the VA, etc. Keep the written confirmation of creditable coverage in case it's ever needed as proof.

If a penalty has already been assessed and you think it's wrong, your parent can file a reconsideration request. We help clients through that process.

Our standard process has five steps:

• Full medication list. We write down every drug your parent takes regularly, the dose, and the frequency. We also note seasonal or as-needed drugs.
• Their pharmacies. Part D pharmacies are split into preferred, standard, and out-of-network. The same drugs can cost different amounts at different pharmacies within the same plan.
• Check each plan's formulary. Which plan has their drugs on the best tiers, at their pharmacy?
• Annual cost math. Not just monthly. Some plans have a high monthly premium and low drug costs; others are the reverse.
• Check Extra Help eligibility. If income suggests they might qualify.

Every year, plans change their formularies, tiers, and prices. So the best plan this year may not be the best next year. We recommend a Part D review during AEP (October 15 to December 7) for every client, every year.

Part D and travel. Medicare generally doesn't cover prescriptions filled outside the U.S. If your parent is heading to Poland for an extended stay, call us. Before the trip, a pharmacy may be able to dispense up to about a 100-day supply if the plan allows it.

Part D is often the biggest cost difference between Medicare options, and the easiest to optimize. A review of your parent's medication list takes about 30 minutes and can mean savings in the hundreds or thousands of dollars per year.

Jakub Słomczewski Licensed Insurance Agent Send us your parent's drug list and we'll find the plan that runs cheapest across the year.

Working with our agency costs your family nothing. Agents are paid directly by the insurance carriers.