Medicare Part D Prescription Drug Plans (PDP)

Congress enacted the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which became effective January 1, 2006. Medicare Prescription Drug Plans (PDPs) are offered through a partnership between the federal government and private insurance carriers.

Insurance carriers receive payment from both the federal government and, in many cases, the beneficiary through a monthly premium. PDP premiums can range from $0 to more than $200 per month depending on the plan selected, the formulary, deductible structure, and geographic area.

Higher income earners may be subject to an Income Related Monthly Adjustment Amount (IRMAA). In 2026, the highest income earners may pay an additional $91.90 monthly in addition to their Part D premium. Lower income beneficiaries may qualify for “Extra Help” (LIS), which can significantly reduce premiums, deductibles, and copays/coinsurance.

It’s important to enroll in a Medicare Part D plan when first eligible. Failure to maintain creditable prescription drug coverage for more than 63 consecutive days may result in a lifetime Late Enrollment Penalty (LEP).

Seniors discussing prescription details at home
Health Insurance and Medical Care Concept.

How Medicare Part D Formularies Work

Each year, the Centers for Medicare & Medicaid Services (CMS) reviews and approves the carrier’s formulary (drug list) to help ensure:

  • Required drug classes are covered 
  • There are enough drugs in each therapeutic category 
  • Formularies are not discriminatory 
  • Tier placement and utilization management rules meet CMS requirements 
  • Protected drug classes are appropriately covered 

 

The two biggest factors impacting the cost of a PDP plan are:

  1. Whether the plan applies the full annual deductible ($615 in 2026) 
  2. The formulary of covered medications 

In many cases, higher premium plans may cover more expensive or newer brand-name medications. It’s important to compare your specific prescriptions across all available carriers to confirm:

  • The drugs are on the formulary 
  • The pharmacy network is acceptable 
  • Prior authorization or quantity limits apply 
  • Your estimated annual out-of-pocket costs 

For 2026, the maximum annual out-of-pocket cost for covered Part D drugs is generally capped at $2,100, assuming the medications are included on the plan’s formulary unless a formulary exception is approved.

2 Ways to Get Medicare Drug Coverage

1. Standalone Medicare Part D Prescription Drug Plans (PDP)

These plans add prescription drug coverage to:

  • Original Medicare 
  • Certain Medicare Cost Plans 
  • Some Medicare Private Fee-for-Service (PFFS) Plans 
  • Medicare Medical Savings Account (MSA) Plans 

You must have Medicare Part A and/or Part B to enroll in a standalone PDP plan.

2. Medicare Advantage Prescription Drug Plans (MAPD / Part C)

These plans combine:

  • Medicare Part A 
  • Medicare Part B 
  • Medicare Part D prescription drug coverage 

You must have both Part A and Part B to enroll in a Medicare Advantage Plan. Not all Medicare Advantage plans include prescription drug coverage.

In either case, you must:

  • Live within the plan’s service area 
  • Be lawfully present in the United States 
gettyimages-1719533789-2048x2048

When Can You Enroll
in a PDP Plan?

Initial Enrollment Period (IEP)

When turning 65, Medicare provides a 7-month Initial Enrollment Period:

  • 3 months before your 65th birthday month 
  • Your birthday month 
  • 3 months after 

If your Medicare Part B becomes effective at age 65, you can generally enroll in a PDP plan:

  • Up to 3 months before Medicare begins 
  • Effective the same date your Medicare starts 

Special Enrollment Period (SEP)

If you delay Medicare Part D enrollment because you have creditable prescription drug coverage through an employer plan, you may qualify for a Special Enrollment Period (SEP) when that coverage ends.

To avoid a Late Enrollment Penalty (LEP), you generally must enroll in a PDP plan within:

  • The month your creditable coverage ends, plus 
  • 2 additional full months 

Practically speaking, this is about a 63-day window without creditable coverage before an LEP may apply.

Carriers We Represent

  • Anthem Blue Cross (Elevance)

  • Aetna

  • Alignment Health Plan

  • Beam

  • Blue Shield of CA

  • Cigna

  • Delta Dental

  • Health Net

  • HealthSpring

  • Humana

  • Kaiser

  • Imperial Health Plan of California

  • LA Care

  • Medico/Wellabe

  • Molina

  • SCAN

  • Sutter Health

  • UCLA Health Medicare Advantage

  • United Concordia

  • UnitedHealthcare / AARP

  • VSP

  • WellCare / Centene

Need Help Comparing Medicare Drug Plans?

Choosing the right Medicare Part D plan involves more than simply comparing premiums. Formularies, deductibles, pharmacy networks, and your specific prescriptions can dramatically impact your total annual costs.

We’ll do the heavy lifting by comparing your medications and helping you determine:

  • Which plans cover your drugs 
  • Estimated annual costs 
  • Whether your pharmacy is preferred 
  • Whether you may qualify for Extra Help/LIS

Call BenefitPackages.com Insurance Agency at (818) 999-3595 for assistance with Medicare Part D and Medicare Advantage prescription drug coverage options.