Part D — Medicare's prescription drug coverage — has a reputation for being confusing. Premiums, deductibles, coverage stages, formulary tiers: it can feel like a different cost structure than any other insurance you've bought. The good news is that a major reform took effect in 2025 that made Part D noticeably simpler and more predictable. Here's how the costs actually break down.
The four pieces of a Part D cost
Every standalone Part D plan — and every Medicare Advantage plan that bundles in drug coverage (MAPD) — is built from the same basic cost structure, even though the exact dollar amounts vary by plan and carrier:
- Monthly premium. What you pay to keep the plan active, regardless of whether you fill a prescription that month. Premiums vary widely from plan to plan and carrier to carrier.
- Annual deductible. The amount you pay out of pocket for covered drugs before the plan starts sharing the cost. Not every plan charges a deductible, and the amount, if any, is capped by Medicare each year.
- Copays or coinsurance. Once you're past the deductible, you pay a copay (a flat dollar amount) or coinsurance (a percentage of the drug's cost) for each prescription, depending on which "tier" the drug falls into on the plan's formulary.
- Annual out-of-pocket cap. A yearly ceiling on what you'll spend on covered drugs. Once you hit it, your out-of-pocket costs for covered prescriptions stop for the rest of the plan year.
Whatever happened to the "donut hole"?
For years, Part D had a much-discussed coverage gap nicknamed the donut hole: after you and your plan spent a certain amount together, you'd temporarily pay a higher share of your drug costs until you reached catastrophic coverage. It was a frequent source of sticker shock for people managing multiple prescriptions.
That gap has effectively been eliminated. Since 2025, Medicare replaced the old multi-stage structure with a simpler model: a deductible stage, an initial coverage stage, and then a hard annual out-of-pocket cap on covered drug costs. Once you hit that cap for the year, you don't pay anything more out of pocket for covered prescriptions through the rest of the plan year. There's no more "gap" where your cost-sharing temporarily jumps back up.
This is a meaningful change for anyone on several ongoing medications, because it makes annual drug spending far more predictable than it used to be. Exact dollar thresholds for the deductible cap and the annual out-of-pocket cap are set by Medicare and adjusted periodically — we walk clients through the current figures and how they apply to their specific plan and medications.
What actually drives your Part D bill
Because the overall structure is now standardized, the biggest cost differences between plans come down to a few plan-specific details rather than the coverage stages themselves:
The formulary
Each plan maintains its own list of covered drugs, organized into tiers — generic, preferred brand, non-preferred brand, and specialty, typically. The same medication can sit in a low-cost tier on one plan and a high-cost tier on another. This is usually the single biggest driver of your real annual cost.
The pharmacy network
Plans often have "preferred" pharmacies where your copay is lower. Filling a prescription outside the preferred network — even if the pharmacy technically accepts the plan — can mean paying more per fill.
Whether it's a standalone plan or bundled into Medicare Advantage
If you have Medicare Advantage, your drug coverage is usually already built into the plan (MAPD). If you have Original Medicare and a Medigap policy, you'll need a separate standalone Part D plan, since Medigap doesn't cover prescriptions. We cover the broader Part D landscape on our Part D plans page.
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Get my free drug cost comparisonHow to keep Part D costs down
- Re-shop every Annual Enrollment Period. Formularies and pharmacy networks change every year, even if your premium looks similar. A plan that was cheap for your medications last year may not be this year.
- Ask about generics. Where a generic equivalent exists, it's almost always a lower-tier, lower-cost option than the brand-name version.
- Check for manufacturer or state assistance programs. Some higher-cost specialty drugs have separate assistance programs worth asking your doctor or pharmacist about.
- Confirm your pharmacy is "preferred." Two pharmacies that both "accept" your plan can charge very different copays depending on network status.
How Honorbrook helps
Part D pricing only makes sense when it's checked against your actual medications — not a generic premium comparison. We run your specific drug list through the plans available in your area, flag which formulary tier each medication falls into, and show you the total expected annual cost, not just the monthly premium. It's free, and we're licensed in Virginia, Maryland, Georgia, Texas, Michigan, North Carolina, South Carolina, Alabama, Louisiana, Indiana, and West Virginia.
This article is general information, not advice. Plan structures, deductible and out-of-pocket amounts, and formularies vary by plan, carrier, and year — a licensed agent will help you review your specific situation.
Medicare help in your state
Honorbrook is licensed in the 11 states below. Plan availability, costs and some rules vary by state and county, so call us at (571) 354-0146 for what applies where you live.