Phases of Part D coverage

The cost of your Medicare Part D-covered drugs may change throughout the year. If you notice that prices have changed, it may be because you are in a different phase of Part D coverage.

There are three different phases—or periods—of Part D coverage:

• Deductible period: Until you meet your Part D deductible deductible The deductible is the amount you must pay for health care expenses before your health insurance begins to pay. Deductible amounts can change every year. , you will pay the full negotiated price for your covered prescription drugs. Once you have met the deductible, the plan will begin to cover the cost of your drugs. While deductibles can vary from plan to plan, no plan’s deductible can be higher than $590 in 2025, and some plans have no deductible.
• Initial coverage period: After you meet your deductible, your plan will help pay for your covered prescription drugs. Your plan will pay some of the cost, and you will pay a copayment copayment A copayment, also known as a copay, is a set amount you are required to pay for each medical service you receive (like $35 for a doctor’s visit). or coinsurance coinsurance The coinsurance is the portion of the cost of care you are required to pay after your health insurance pays. Usually, it is a percentage of the approved amount or negotiated amount. In Original Medicare, the coinsurance is usually 20% of Medicare’s assignment. . In 2025, the initial coverage period ends after you have accumulated $2,000 in total drug costs. The out-of-pocket costs out-of-pocket costs Out-of-pocket costs are health care costs that you must pay because Medicare or other health insurance does not cover them. that help you reach the $2,000 cap include:
  • Your deductible
  • What you paid during the initial coverage period
  • Amounts paid by others, including family members, most charities, and other persons on your behalf
  • Amounts paid by Extra Help, State Pharmaceutical Assistance Programs (SPAPs), AIDS Drug Assistance Programs, and the Indian Health Service
  • Some amounts paid by an enhanced Part D plan
  • Costs reimbursed by other insurance, like job-based insurance
• Catastrophic Coverage: You enter catastrophic coverage after you reach $2,000 in out-of-pocket costs for covered drugs. During this period, you pay $0 for covered drugs. 

Your Part D plan should keep track of how much money you have spent out of pocket for covered drugs and your progression through coverage periods—and this information should appear in your monthly statements.

Under certain circumstances, your plan can change the cost of your drugs during the plan year. Your plan is required to alert you if such changes are made. Your plan cannot change your deductible or premium premium A premium is an individual’s monthly payment to a Medicare or other health insurance plan for coverage. during the plan year.