Medicare Prescription Drug Program (Part D)

Last updated October 2024

Medicare Part D Prescription Drug Program started January 1, 2006 by the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003. It is a voluntary program and private insurance companies’ market qualified Part D plans using a standard benefit design.

Medicare Part D is available to everyone who has Medicare, regardless of income or health status. In California, there are 18 Part D drug plans to choose from in 2025. Plans range in price from around $1.80 to $183.50 per month. If you have a limited income, you may receive “Extra Help” to cover prescription drugs for little or no cost. To find out if you are eligible for extra help, visit: https://www.ssa.gov/medicare/part-d-extra-help or call Social Security at 1-800-772-1213.

Like with Medicare Part B, higher income seniors may be charged an “adjustment” amount if they enroll in a Part D drug plan in addition to the plan premium. The amount is based upon the extent modified adjusted gross income exceeds $106,000 ($212,000 for married couples filing jointly). This is called the Income Related Monthly Adjustment Amount or IRMAA. Please click here to the view 2024 IRMAA income chart. (As of this writing the 2025 IRMAA amounts have not been released).

In addition to a monthly premium, you will also have a share of costs determined by the plan you select. Companies have some flexibility with the drugs they choose to cover under their plan (called a drug formulary) and the pharmacies they contract with, but there are some minimum standards that are strictly enforced. Plans run for a calendar year at which point they can be renewed for another calendar year or replaced with another plan during Annual Enrollment Period (AEP). The AEP begins on October 15 and runs through December 7 of each year. Though this is a voluntary program, you may be penalized if you do not enroll when you are first eligible but enroll at a later time, and you haven’t carried equivalent coverage from another source.

The Inflation Reduction Act contains a number of changes to Medicare Part D that will be phased in over time starting in 2023. The most significant change occurs in 2025 when a new $2,000 cap on one’s out-of-pocket costs will begin. In the standard Part D framework, after the initial deductible is met, plan members will pay 25% of drug costs until the $2,000 cap is reached; at which point members will have no further costs the rest of the calendar year for covered medications. Note: plan premiums are not included in this cap. See the graph below of the standard framework.

Note: Plans can choose to have a smaller deductible and co-insurance than the standard framework.

OnlyHealthInsurance does not represent, sell or market Medicare Part D drug plans, and receives no compensation from carriers. We have found the best way we can assist clients to provide objective and personalized service is as an advisor. 

To review plans on your own, visit Medicare’s web site at www.medicare.gov. Medicare’s Part D Drug Plan Finder allows you to enter your personal prescription drug information and other preferences, evaluate plans and enroll online. You can also call Medicare for assistance with Medicare Part D: 1-800-633-4227.

Note: It is very important to discuss your particular circumstances with an insurance professional. By enrolling in a Prescription Drug Plan, you may “void” your current medical insurance. If you are unsure about your eligibility contact Medicare or Social Security.             

Give us a call today at 1-800-924-1411 and we’ll send you our complimentary Part D Facts Kit.