Medicare Part D: Prescription Drug Coverage

How Part D works

Medicare Part D is prescription drug coverage, and like the rest of Medicare’s private options it’s sold by insurance companies approved by Medicare. You can get it two ways: as a standalone drug plan (a PDP) that sits next to Original Medicare, or built into a Medicare Advantage plan that already includes medical coverage.

Each plan has a formulary — its list of covered drugs, sorted into pricing tiers — and a pharmacy network. Two plans can cover the same medication very differently, so the plan that’s cheapest for your neighbor may be expensive for you. The drugs you actually take are what determine which plan is the best value.

What Part D costs in 2026

A few standard 2026 figures shape every plan:

• Premium. You pay a monthly premium that varies by plan; the national base figure for 2026 is $38.99. A higher income adds a Part D IRMAA surcharge on top.
• Deductible. Plans can charge a deductible before coverage begins, up to a maximum of $615 for 2026.
• Out-of-pocket cap. This is the big one: once your out-of-pocket spending on covered drugs reaches $2,100 in 2026, you pay nothing more for covered drugs for the rest of the year.

The late-enrollment penalty

Part D works on a use-it-or-lose-it timing rule. If you go 63 days or more in a row without creditable drug coverage — coverage at least as good as Part D, such as from an employer plan — after your initial enrollment window, you can be charged a permanent late-enrollment penalty. It’s calculated as 1% of the national base premium for each month you went without, and it’s added to your premium for as long as you have Part D.

That permanence is why many people enroll in an inexpensive plan as soon as they’re eligible, even if they take few or no medications today.

Do you need Part D if you don’t take drugs?

Technically Part D is optional — but skipping it is a gamble in two directions. First, prescriptions you don’t take now can become ones you do, and you’d have to wait for an enrollment period to get covered. Second, going without creditable coverage is exactly what triggers the lifelong penalty above. Enrolling in a low-cost plan keeps you protected on both fronts.

If you have drug coverage through an employer, union, or the VA, check whether it counts as creditable before deciding — that’s what determines whether you can safely wait.