Key Takeaways
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Medicare Part D can help reduce prescription drug costs, but it doesn’t eliminate all out-of-pocket spending.
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Understanding the Part D coverage stages and how to manage your medications can prevent unexpected financial strain.
Why You Still Pay for Prescriptions With Part D
Enrolling in Medicare Part D provides crucial prescription drug coverage, but it’s not a blanket pass on all costs. Part D plans, offered through private companies approved by Medicare, include structured cost-sharing responsibilities. These include monthly premiums, annual deductibles, copayments or coinsurance, and out-of-pocket thresholds.
Even though the 2025 Medicare changes have improved affordability—such as capping out-of-pocket drug spending—prescription costs can still add up quickly depending on your medication needs and how your plan handles them.
Understanding the Four Coverage Stages
Every standard Medicare Part D plan includes four coverage stages. Knowing how these stages work is essential to anticipating and budgeting for your costs throughout the year.
1. Deductible Stage
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In 2025, plans can charge up to $590 for the annual deductible.
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Until you meet this deductible, you typically pay the full cost of your prescriptions.
2. Initial Coverage Stage
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After the deductible is met, your plan begins sharing the cost.
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You pay a copayment or coinsurance for each drug, depending on its formulary tier.
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This stage continues until your total drug costs reach $5,030 in 2025.
3. Catastrophic Coverage Stage
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As of 2025, this stage has been replaced with a $2,000 cap on out-of-pocket prescription drug costs.
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Once your out-of-pocket costs hit $2,000, your plan covers the full cost of your medications for the rest of the year.
This is a major improvement over past years, where beneficiaries had to pay 5% of drug costs even after reaching catastrophic coverage.
4. Coverage Remainder (No More Donut Hole)
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The coverage gap or “donut hole” has effectively been closed.
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Now, all expenses beyond the $2,000 cap are covered, providing better financial protection.
What You Still Have to Budget For
Although the new cap helps, several other costs remain in place:
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Monthly Premiums – You still pay a monthly amount to maintain Part D coverage, which varies by plan.
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Deductible – Plans can require up to $590 before coverage kicks in.
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Tiered Copays – Depending on your medications, copays can vary significantly. Generic drugs cost less than brand-name or specialty medications.
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Non-Formulary Drugs – If your prescription isn’t on your plan’s formulary, you may need to pay full price or file an exception request.
How High Drug Costs Can Still Catch You Off Guard
Even with Medicare Part D, you can still encounter situations that increase your expenses:
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Taking Multiple Brand-Name Medications – These are often placed on higher cost-sharing tiers.
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Needing Specialty Drugs – These are among the most expensive and usually come with coinsurance rather than a flat copay.
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Switching Plans or Formularies – Plans can change drug formularies each year, so a medication covered this year might not be covered next year.
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Out-of-Network Pharmacies – Using a pharmacy outside your plan’s network can increase your costs.
How to Minimize Your Drug Spending
Taking control of your prescription costs starts with strategy. A few proactive measures can significantly reduce your overall spending:
Review Your Plan Annually
Every year during the Medicare Open Enrollment Period (October 15 through December 7), you have the opportunity to review and switch your Part D plan.
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Compare plan formularies to ensure your medications are still covered.
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Evaluate the plan’s pharmacy network and preferred cost-sharing arrangements.
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Consider whether you reached the $2,000 out-of-pocket cap in the previous year—if so, it’s worth assessing other options.
Use Generics Whenever Possible
Generic drugs are chemically identical to their brand-name counterparts and usually cost much less.
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Ask your doctor if a generic version is available.
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If you’re prescribed a brand-name drug, inquire about lower-tier alternatives.
Stick to Preferred Pharmacies
Part D plans often have preferred pharmacy networks. Using these pharmacies can significantly lower your costs.
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Check your plan’s list of preferred pharmacies.
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Some plans offer home delivery services, which may also reduce cost.
Apply for Extra Help If You Qualify
If your income and resources are limited, you may be eligible for Medicare’s Extra Help program, which can cover:
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Monthly premiums
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Annual deductibles
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Coinsurance and copayments
In 2025, the eligibility thresholds have slightly increased, allowing more people to qualify. Applying could save you thousands annually.
Ask Your Doctor for 90-Day Prescriptions
Filling a 90-day supply of medication instead of 30 days may lower your copayments and reduce the number of trips to the pharmacy.
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This option works especially well for long-term maintenance medications.
Track Your Spending With the Medicare Prescription Payment Plan
Starting in 2025, Medicare offers a new option: the Medicare Prescription Payment Plan. This allows you to spread out-of-pocket drug costs over the calendar year instead of paying them all at once.
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Enrollment is optional but helpful if your drug costs spike early in the year.
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The plan lets you pay monthly installments, reducing financial pressure.
Planning Matters More Than Ever in 2025
While Medicare has improved drug coverage by eliminating the coverage gap and capping out-of-pocket spending, planning ahead is still essential. You don’t want to be surprised by expenses that could’ve been prevented with a bit of foresight.
Here’s what to keep in mind:
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Review your Annual Notice of Change letter each fall.
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Make sure your current medications are still covered next year.
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Budget for monthly premiums and the upfront deductible.
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Use the Medicare Plan Finder tool to compare costs.
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Reach out for professional help if you’re unsure how to evaluate your options.
When Costs Add Up, You’re Not Alone
Many Medicare beneficiaries still find drug costs burdensome despite being enrolled in Part D. The structure of the program requires ongoing decision-making, and your plan from last year might not be the best fit for this year.
Whether it’s navigating the deductible, managing a chronic condition, or responding to changing health needs, it’s important to remember that support is available. The system is designed with some flexibility, but that also means you need to actively manage your coverage.
Drug Costs May Be Capped—But Managing Them Is Still Your Job
Medicare Part D in 2025 is more protective than ever before, but it’s not perfect. Out-of-pocket costs can still be significant, especially if your plan’s formulary or network isn’t aligned with your needs. That’s why it’s important to stay informed, review your plan annually, and explore all cost-saving opportunities available to you.
If you’re unsure where to begin or need help comparing your options, speak with a licensed agent listed on this website. Getting personalized advice can help ensure your coverage works for you—not against you.
