Blog / Part D

What is Medicare Part D?

Part D is Medicare's drug coverage, sold by private insurance companies under federal rules. How it works, what you pay, and why skipping it costs you.

Updated September 3, 2026 · 3 min read · by Gerino Alejos

A sheet of paper reading Medicare Part D under a stethoscope on a wooden desk. — Prescription coverage sold by private companies under federal rules. Every plan has to meet a minimum standard while competing on price and drug lists.

Key points

Part D pays for the drugs you pick up at a pharmacy, and private insurance companies sell the plans under federal rules.
You get it one of two ways, as a drug only plan added to Original Medicare, or built into a Medicare Advantage plan.
Go without drug coverage after you are eligible and a penalty builds every month, then stays on your bill once you sign up.

Part D is the part of Medicare that pays for the drugs you pick up at a pharmacy. Private insurance companies sell the plans under federal rules. Every plan meets a minimum standard, and plans compete on price and on drug lists.

Two ways to get Part D

A standalone Part D plan, a drug only plan you buy by itself and add to Original Medicare, often next to a Medicare Supplement.
Drug coverage built into a Medicare Advantage plan, which most Advantage plans include.

You take one route or the other. Join a standalone Part D plan while you are in an Advantage plan that already covers drugs and you will usually be dropped from the Advantage plan. See which route fits and how to sign up.

The four stages of a plan year

A plan year used to move through four stages, and your share changed at each one. That is why your cost in March can differ from your cost in September for the same medicine.

The deductible, the amount you pay yourself before the plan starts paying. You pay full price until you reach it. Some plans have none, and many skip it on the lower tiers.
Initial coverage. You pay a copay, a flat dollar amount, or coinsurance, a share of the price. The plan pays the rest.
The catastrophic phase, which you reach once your own spending hits the yearly cap. After that, your covered drugs cost you nothing for the rest of the year.

The fourth stage was the coverage gap, which everyone called the donut hole. A hard yearly cap on what you pay has replaced it. See how the cap works.

Why the formulary matters most

Every plan publishes a formulary, its own list of covered drugs, sorted into tiers, which are price groups that set what you pay. Two plans that bill the same each month can price your prescription very differently. See the drugs Part D does not cover.

A low premium, the monthly bill for the coverage, does not make a plan low cost for you. What matters is what your drugs cost on that plan's formulary at your pharmacy. Comparing premiums alone is the most common and most expensive Part D mistake.

What it costs

A monthly premium, the bill for the coverage, which varies widely from plan to plan.
A yearly deductible, which some plans waive on the lower tiers.
Copays or coinsurance, set by the tier your drug sits in.
An IRMAA surcharge, an extra charge for higher earners, billed apart from your plan premium.

See the full cost breakdown.

The penalty for going without

Part D is not required by law. Skipping it costs you later.

Creditable drug coverage means coverage at least as good as Part D. Go without it after you become eligible and a penalty adds up for every full month. Once you sign up, it attaches to your premium and stays there.

This is why people who take no medicine should still usually sign up for something. See whether you need Part D if you take nothing.

Extra Help with the cost

Extra Help, also called the Low Income Subsidy, cuts Part D costs by a lot for people under certain income and asset limits. Plenty of people in South Texas who qualify never claim it. Qualifying for a Medicare Savings Program can sign you up automatically.

See how Extra Help works. List the drugs you take and your pharmacy, then price them against a plan before you enroll. Call our McAllen office at (956) 687 3334, or enter your ZIP code in the plan pricing box on this page.

Common follow-up questions

Is Part D required?

Not by law. But go without creditable drug coverage, meaning coverage at least as good as Part D, and a penalty attaches to your premium and stays. Almost everyone should carry drug coverage of some kind.

Can I get Part D without Part B?

You need Part A or Part B to join a standalone Part D plan, a drug only plan you buy by itself. Most people have both.

Does Part D cover drugs given in a hospital?

No. Those fall under Part A when you are admitted, or Part B in a clinic. Part D covers what you pick up at a pharmacy.

Want this looked at properly?

We are an independent agency in McAllen serving Hidalgo, Cameron and Starr counties. There is no obligation to talk it through.

Call (956) 687 3334

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