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Part D Plan Costs: Premiums & the Donut Hole

If you have Part D coverage, you may have to pay premiums, donut hole drug costs, and other out-of-pocket costs like deductibles.

If you have Part D coverage, you may have to pay premiums, "donut hole" drug costs, and other out-of-pocket costs like deductibles.

Your Part D plan premiums will depend on the type of plan you enroll in and the insurance company you choose. The average Part D plan premium will be $47.59 in 2022.1

You can compare Part D plans available where you live and enroll in a Medicare prescription drug plan online in as little as 10 minutes when you visit

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Enroll in Medicare Part D at


How much do Medicare Part D drug plans cost in 2022?

You also may have to pay out-of-pocket costs before using your Part D coverage.

Some Medicare Part D plans came with a deductible of up to $480 in 2022, which you may have to meet before your plan covers anything.

Some Part D plans feature $0 premiums.

In addition to a deductible, your plan may charge you coinsurance or a copayment for filling individual prescriptions.

The "donut hole" is another source of Part D plan costs.

It is a coverage gap that you may fall into if you and your plan spend over a certain amount on your drugs during a calendar year. While in the donut hole, you may have to pay higher out-of-pocket costs for prescription drugs.

Doctor gives her patient a prescription

What is the Part D income-related adjustment amount (IRMAA)?

If your yearly income is above a certain level, you must pay a monthly adjustment amount in addition to your plan premium. This is called a Part D income-related monthly adjustment amount (Part D-IRMAA).

You must pay the Part D-IRMAA directly to Medicare, not your Part D plan provider. Most people have the extra amount removed from their Social Security checks.

Your monthly adjustment is based off your tax returns from 2 years ago (2018). The chart below shows the details for 2020:

If you filed an individual 2018 tax return If you filed a joint 2018 tax return If you filed a married & separate 2018 tax return Your 2020 monthly costs
$88,000 or less $176,000 or less $88,000 or less Your Part D plan premium
$88,001 - $111,000 $176,001 - $222,000 N/A $12.30 + your Part D plan premium
$111,001 - $138,000 $222,001 - $276,000 N/A $31.80 + your Part D plan premium
$138,001 - $165,000 $276,001 - $330,000 N/A $51.20 + your Part D plan premium
$165,001 - $499,999 $330,001 - $749,999 $88,000 - $411,999 $70.70 + your Part D plan premium
$500,000 or above $750,000 or above $412,000 or above $77.10 + your Part D plan premium

How much is the Part D late enrollment penalty?

If you wait to enroll in a Part D plan, you may face a late enrollment penalty. This may apply if you miss your Initial Enrollment Period (IEP) and have a period of 63 days or more in a row when you do not have Part D coverage or another form of creditable prescription drug coverage.

Your late enrollment penalty amount depends on how long you went without creditable prescription drug coverage after you became eligible for Medicare.

Your Medicare Part D plan will notify you if you owe a penalty. If you do, you may have to pay this penalty for as long as you have Part D coverage.

What are Part D out-of-pocket costs?

Part D plans have several out-of-pocket costs including yearly deductibles, copayments, and coinsurance.

Part D yearly deductibles are the amount you must pay before your plan starts covering its portion of prescription medication. Each Part D plan may have a different deductible, and some plans have no deductible.

Part D copayments and coinsurance are the amount you pay for each prescription drug after you have met your yearly deductible.

A copayment is a set amount for all prescription drugs in a specific formulary tier.

A formulary is the list of covered drugs for a given plan, including how much the drugs cost. For example, a Tier 1 prescription drug may have a $10 co-payment.

Coinsurance is a payment based on a percentage of the drug’s total cost. For example, if your co-insurance is 20%, a $25 drug would cost you $5.

The pharmacy you use may affect your Part D plan’s co-payments and co-insurance depending on whether it is an in-network pharmacy. Our Part D benefits page has more information about network pharmacies.

Part D plan drug tiers

Medicare Part D plans typically split up their covered drugs into different tiers.

Generic, low-cost drugs might be grouped together in a lower tier, while more expensive brand-name drugs may be grouped together in a higher tier. The copayment or coinsurance requirements will often differ for each tier. 

A typical tier breakdown may look something like the following chart.

Tier 1 (generic drugs) Tier 2 (preferred drugs) Tier 3 (non-preferred drugs) Tier 4 (specialty drugs)
May include generic drugs and select brand-name drugs May cover brand-name drugs that have proven to be the most effective May include brand-name drugs that have not proved to be the most effective, and may include some specialty drugs. Typically the most expensive drugs classified as brand-name, specialty and non-preferred.

The Part D "donut hole"

Most Part D plans have a temporary coverage gap, which is often called the "donut hole". The Part D donut hole is a period where you have to pay higher out-of-pocket costs for your prescription drugs.

The donut hole is one level, or phase, of Part D plan coverage. Each coverage phase is detailed below.

Phase 1: Deductible 

Most (but not all) Part D plans carry a deductible, which represents the amount you must pay out-of-pocket before the plan coverage kicks in.

In 2022, the average deductible for Part D plans is $367.80.2 If your plan does not require a deductible, your plan coverage begins in phase two.

Phase 2: Initial coverage

After the deductible has been met (if applicable), you will enter the initial coverage phase.

During this period, you will typically pay copayments or coinsurance for covered drugs, and your plan will pay the rest of the cost for each drug.

Plan copays and coinsurance costs may vary.

Phase 3: Donut hole coverage gap

For most plans in 2020, you enter the donut hole once you and your plan have combined to pay $4,430 for covered prescription drugs.

Once you’re in the donut hole, you may be required to pay copayments or coinsurance up to:

  • 25 percent of the cost for brand-name drugs
  • 25 percent of the cost of generic drugs in 2020  

Phase 4: Catastrophic coverage

Once you have paid $7,050 in out-of-pocket costs for covered drugs in 2022, you will exit the donut hole and enter catastrophic coverage.

During this period, you’ll pay significantly lower costs for your drugs for the remainder of the year. 

Read additional medicare costs guides to learn more about Medicare costs and how they will affect you.

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About the author

Christian Worstell is a senior Medicare and health insurance writer with He is also a licensed health insurance agent. Christian is well-known in the insurance industry for the thousands of educational articles he’s written, helping Americans better understand their health insurance and Medicare coverage.

Christian’s work as a Medicare expert has appeared in several top-tier and trade news outlets including Forbes, MarketWatch, WebMD and Yahoo! Finance.

Christian has written hundreds of articles for that teach Medicare beneficiaries the best practices for navigating Medicare. His articles are read by thousands of older Americans each month. By better understanding their health care coverage, readers may hopefully learn how to limit their out-of-pocket Medicare spending and access quality medical care.

Christian’s passion for his role stems from his desire to make a difference in the senior community. He strongly believes that the more beneficiaries know about their Medicare coverage, the better their overall health and wellness is as a result.

A current resident of Raleigh, Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism.

If you’re a member of the media looking to connect with Christian, please don’t hesitate to email our public relations team at

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