What Prescription Drugs Are Covered Under Medicare?

Prescription drug coverage

There are two ways to get prescription drug coverage through the Medicare program.

You can either enroll in a Medicare Advantage plan (Medicare Part C) that includes drug coverage, or you can enroll in a Medicare prescription drug plan (Medicare Part D).

Part C and Part D plans are provided by private health insurers and are regulated by the federal government.

Original Medicare (Parts A & B) does not provide prescription drug coverage.

To compare plans where you live, you can call to speak with a licensed insurance agent. You can also compare plans online for free.

Compare Medicare prescription drug plans online

Compare plans

Or call TTY Users: 711 to speak with a licensed insurance agent. We accept calls 24/7!

You can also compare Part D plans and enroll in a Medicare prescription drug plan online in as little as 10 minutes when you visit MyRxPlans.com.1

Pharmacist assists her customer

Prescription drugs covered under Medicare Part A

Medicare Part A is hospital insurance coverage.

Part A typically helps cover the costs of a qualified inpatient stay at a hospital, skilled nursing facility (SNF) or certain other inpatient facilities, including the cost of drugs administered during a covered stay.

  • Medicare Part A typically does not cover self-administered prescription drugs you receive in an outpatient setting such as an emergency room, surgery center or your doctor's office.

  • Medicare Part A also does not cover prescription drugs at a retail pharmacy.

For prescription drugs like the ones listed above, you'll likely have to pay out of pocket for the entire cost of the drugs, unless they are covered by your Medicare Advantage or Medicare Part D prescription drug plan.

Prescription drugs covered under Medicare Part B

Medicare Part B is medical coverage.

Part B typically covers some drugs that aren't self-administered (for example, injections or infusions) that you may receive in a doctor's office or a hospital outpatient department.

If Medicare Part B covers any of your prescription drug costs, you typically are responsible for paying the Part B deductible ($198 per year in 2020) before Medicare pays any of your covered drug costs.

Here are some examples of prescription drugs that Medicare Part B may cover:

  • Certain vaccinations and shots
    • Flu shots are typically covered by Medicare Part B once per flu season, even if that happens to be twice in the same calendar year
    • Two pneumococcal shots to help prevent infections like certain types of pneumonia, with one shot covered at any time and the second shot covered if it's given a year or more after the first shot
    • Hepatitis B shots are covered for beneficiaries who are at high or medium risk for Hepatitis B (check with your doctor to see if this applies to you)
    • Some other vaccines are covered if they're directly related to treatment you receive for another covered injury or illness

  • Drugs administered through a covered Durable Medicare Equipment (DME) device, such as an infusion pump or a nebulizer

  • Some antigens, if they are prepared and administered by a doctor or another properly instructed and supervised person

  • Injectable osteoporosis drugs, but only if you are a woman and a doctor certifies that your treatment is for a bone fracture related to post-menopausal osteoporosis and that you can't give yourself the injection

  • Erythropoiesis stimulating agents, if you need them to treat End-Stage Renal Disease (ESRD) or anemia.

  • Injectable and infused drugs if they're considered reasonable and necessary for treatment

  • Blood clotting factors if you have hemophilia

  • Immunosuppressive drugs if Medicare covered your organ transplant, with more specific rules for beneficiaries who have ESRD or permanent kidney failure

  • Some cancer drugs taken orally, if the drug is also available in injectible form

  • Oral anti-nausea drugs, if they're taken as part of an anti-cancer chemotherapy regimen and taken within 48 hours before or after chemotherapy

  • Intravenous and tube feeding, also called parenteral and enteral nutrition

  • Intravenous Immune Globulin (IVIG), if a doctor designates that it's medically necessary and appropriate for the IVIG to be given at home (Medicare Part B only pays for the IVIG itself)

Prescription drugs covered under Medicare Part C

All Medicare Advantage plans (Medicare Part C) provide the same coverage as Original Medicare, and some plans may include prescription drug coverage and other benefits.

90% of Medicare Advantage plans offer prescription drug coverage in 2020.2

The covered prescription drugs may include a wide range of commercially available retail prescription drugs.

Each Medicare Advantage plan has its own formulary, which is a list of drugs and brand names the plan will cover. Before enrolling in a particular Medicare Advantage plan, you should check its formulary to see if your particular medications are covered.

If you enroll in a Medicare Advantage plan that does not include prescription drug coverage, you may still be able to enroll in a Medicare Part D plan. However, some Medicare Advantage plans have rules which prohibit you from enrolling in a Part D plan.

Medicare Part D coverage and the Medicare Part D Formulary

A Medicare formulary is the list of prescription drugs that are covered by a particular Medicare Part D or Medicare Advantage plan.

Each plan includes its own formulary that determines which drugs are covered by the plan and how much the drugs cost based on which cost-sharing tier the drug is classified into.

Medicare formularies vary

The drug formulary of one Medicare plan may differ from another plan’s formulary. Medicare drug formularies can feature both generic and name brand drugs.

A Medicare formulary can change throughout the year

Drugs may be added or removed from the market at any time, and therefore drugs may be added or removed from a plan’s formulary. Drugs may also remain for sale on the market but be removed from a plan’s formulary for a variety of reasons.

Some drugs also may be moved to a different cost-sharing tier or experience a change in plan restrictions.

A formulary will feature different tiers of drug costs

Drugs on a Medicare formulary are divided into tiers that determine the cost paid by beneficiaries.

For example, a tier 1 drug might consist of low-cost, generic drugs and require only a small copayment in order to fill a prescription. A tier 4 drug, however, might be a more expensive name brand drug that requires a higher copay.

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 number of drug tiers and the cost breakdown will vary according to each plan.

You may be able to get an exception

Beneficiaries reserve the right to request that a Medicare plan cover a particular drug. You can also request to pay a lower amount for a covered drug.

Each formulary must include certain drugs

All Medicare formularies generally must include coverage for at least two different drugs within most drug categories, and they must include all available drugs for the following categories:

  • HIV/AIDS treatments
  • Antidepressants
  • Antipsychotic medications
  • Anticonvulsive medications to treat seizure disorders
  • Immunosuppressants
  • Anticancer drugs not covered by Medicare Part B

A Medicare formulary won’t include over-the-counter drugs or weight-loss drugs.

All Medicare plans with prescription drug coverage must make sure that members have access to all medically necessary drugs listed on their formulary.

There are restrictions on some drugs on a formulary

Some drugs on a Medicare formulary come with certain types of restrictions, such as:

  • Prior authorization
    Beneficiaries may be required to show that they meet certain criteria for consuming the particular drug.

  • Step therapy
    Beneficiaries must first try a less-expensive form of a drug that has been proven effective before being covered for the more expensive version.

  • Quantity limits
    There may be a restriction on the dosage amount of a drug or the frequency that the prescription may be filled.

  • Opioid safety limits
    Opioids often contain restrictions for coverage, and doctors will usually work with a beneficiary and a pharmacist to determine a safe level of opioid prescription for each patient.

Medicare prescription drug plan costs

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 $42.05 in 2020, according a Kaiser Family Foundation (KFF) report.2

How much do Medicare Part D drug plans cost in 2020?

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 $435 in 2020, which you may have to meet before your plan covers anything.

Some Part D plans feature $0 deductibles.

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.

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
$87,000 or less $174,000 or less $87,000 or less Your Part D plan premium
$87,001 - $109,000 $174,001 - $218,000 N/A $12.20 + your Part D plan premium
$109,001 - $136,000 $218,001 - $272,000 N/A $31.50 + your Part D plan premium
$136,001 - $163,000 $272,001 - $326,000 N/A $50.70 + your Part D plan premium
$163,001 - $499,999 $326,001 - $749,999 $87,000 - $412,999 $70.00 + your Part D plan premium
$500,000 or above $750,000 or above $413,000 or above $76.40 + 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. 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.

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 2020, most Part D plans charge the standard 2020 deductible of $435.2 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 $4,020 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 $6,350 in out-of-pocket costs for covered drugs in 2020, 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. 

Find the right Medicare prescription drug plan for you

To compare Medicare prescription drug plans where you live, you can call to speak with a licensed insurance agent. You can also compare plans online for free.

Compare Medicare prescription drug plans online

Compare plans

Or call TTY Users: 711 to speak with a licensed insurance agent. We accept calls 24/7!