Updated: May 22, 2024
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Medicare Part D is the part of Medicare providing prescription drug coverage. It’s a voluntary benefit you can purchase as a stand-alone plan or as part of a Medicare Advantage policy.
The Centers for Medicare and Medicaid Services (CMS) estimates Medicare Part D 2023 cost is approximately $31.50 per month. This projection is 1.8% lower than the 2022 Medicare Part D premium of $32.08 per month.
Medicare Part D can be bought as a stand-alone policy or part of a Medicare Advantage policy.
Medicare Part D cost for 2023 is estimated at $31.50 per month, a 1.8% decrease from 2022.
Medicare Part D enrollment for coverage starting January 1 is from October 15 to December 7 of the prior year.
Like other health insurance policies, Part D Medicare costs vary depending on the premium, deductible and out-of-pocket max of a given plan. Part D policyholders may owe copayments and coinsurances, an initial coverage period, a coverage gap (donut hole) and other associated out-of-pocket max and catastrophic coverage costs.
Medicare Part D has four phases — a deductible period, an initial coverage period, a coverage gap and catastrophic coverage. Each period affects the cost of your Medicare Part D. You may notice your costs changing over time.
Actual rates will depend on what tier the prescription falls in. Tier one offers the cheapest generic drugs, while higher tiers include specialty drugs. Some plans allow you to get lower rates through donut hole coverage and discounts.
Difference in Part D Costs from 2022-2023
Medicare Part D rates vary per year. CMS calculates its projections based on submitted plan bids. An estimated average basic rate is released before the upcoming benefit year. The year’s estimate may change before the start of the coverage.
The average Medicare Part D cost for 2023 is $31.50 per month. This is nearly 2% lower than the 2022 average rate. Policy premiums may increase with income.
The maximum deductible for 2023 is $505, an increase from 2022’s $480. The yearly deductible is the amount you must pay for prescriptions before Medicare pays its share.
The maximum out-of-pocket cost is up from $7,050 in 2022 to $7,400 in 2023. The MOOP is what you pay out-of-pocket for prescription drugs in a stand-alone Part D plan.
The initial coverage limit for Medicare Part D in 2023 before the donut hole is $4,660, up from $4,430 in 2022. The donut hole, or coverage gap, kicks in after you reach the initial coverage limit. During this phase, a temporary limit applies for drug coverage.
The out-of-pocket expense cap for those who aren’t eligible for donut hole discounts is up from $10,516 in 2022 to $10,516 in 2023.
Beneficiaries eligible for donut hole discounts will have an out-of-pocket expense limit of $11,206 in 2023. This is slightly higher than the $10,690 maximum in 2022.
The minimum cost-sharing under the catastrophic coverage is up from $3.95 in 2022 to $4.15 for generic drugs or preferred drugs. All other drugs are up from $9.84 in 2022 to $10.35 in 2023.
Catastrophic coverage is the period after you reach the coverage gap limit. This phase ensures a low cost of covered drugs for the rest of the year.
There are two ways to enroll in Medicare Part D coverage. You can get it as a stand-alone plan, or you can get coverage as part of your Medicare Advantage policy. You can enroll in Parts A and B through Original Medicare or Medicare Advantage.
If you choose Original Medicare, you can add Part D at Medicare.gov. Find Medicare Part D providers and contact them directly, or fill out a paper enrollment form. You can also opt to call 1-800-MEDICARE.
Note that Medicare Open Enrollment for coverage beginning January 1 runs from October 15 to December 7 of the previous year. You can also enroll during the three months before and after your 65th birthday.
Review your policy if you’re enrolled in Medicare Advantage (Part C). You may already have Part D coverage. Although some beneficiaries have it, not all of these plans automatically include it.
If you don’t enroll in Medicare Part D when you’re first eligible, you will face premium penalties. A permanent penalty of 1% of the national base beneficiary premium is charged for every month of missed coverage. This will be attached to your Part D premium.
For instance, if you sign up for Medicare Part D 20 months after becoming eligible, your penalty will be 20%. That means your monthly premium will be 20% higher.
If you have prescription coverage elsewhere and don’t need Part D coverage, you have to provide proof to avoid the penalty. If you lose the coverage, you’ll have 63 days to enroll in Medicare Part D to avoid a penalty.
Medicare Part D helps you cover the cost of your prescription medications. We’ve answered common questions about how it works, which can help you maximize its benefits.
Generally, you are eligible for Medicare Part D if you are 65 or older. If you already have a Medicare plan, you’re also eligible for prescription drug coverage.
Medicare Part D covers some of the costs of prescription drugs, including brand-name and generic medications.
Medicare Part D plans have a list of prescription drugs called a formulary. That means covered drugs may vary, but it should include at least two drugs for each category and class.
About Mark Fitzpatrick
Mark Fitzpatrick has analyzed the property and casualty insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. Currently, he leads P&C insurance content production at MoneyGeek. Fitzpatrick has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.
Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.
