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You’ll make these payments throughout the year in a Medicare drug plan:
Monthly premium for drug plans
Most drug plans charge a monthly fee that varies by plan. You pay this in addition to the Part B premium. If you’re in a Medicare Advantage Plan (Part C) or Medicare Cost Plan with drug coverage, the monthly premium may include an amount for drug coverage.
Get your premium automatically deducted
Contact your plan (not Social Security or the Railroad Retirement Board (RRB)) if you want your premium deducted from your monthly Social Security or RRB payment.
How much does Part D cost?
Most people only pay their Part D premium. If you don’t sign up for Part D when you’re first eligible, you may have to pay a Part D late enrollment penalty.
If you have a higher income, you might pay more for your Medicare drug coverage. If your income is above a certain limit ($87,000 if you file individually or $174,000 if you’re married and file jointly), you’ll pay an extra amount in addition to your plan premium (sometimes called “Part D-IRMAA”). You’ll also have to pay this extra amount if you’re in a Medicare Advantage Plan that includes drug coverage. This doesn’t affect everyone, so most people won’t have to pay an extra amount. If you have Part B and you have a higher income, you may also have to pay an extra amount for your Part B premium, even if you don’t have drug coverage. The chart below lists the extra amount costs by income.
Social Security will contact you if you have to pay Part D IRMAA, based on your income. The amount you pay can change each year. If you have to pay a higher amount for your Part D premium and you disagree (for example, if your income goes down), use this form to contact Social Security.
If Social Security notifies you about paying a higher amount for your Part D coverage, you’re required by law to pay the Part D-Income Related Monthly Adjustment Amount (Part D IRMAA). If you don’t pay the Part D IRMAA, you’ll lose your Part D coverage.
Employer/Union coverage and Part D IRMAA
Things to remember
Pay your Part D IRMAA bill to Medicare as soon as you get it. Keep your address current with Social Security, even if you don’t get a Social Security check.
Part D premiums by income
The chart below shows your estimated prescription drug plan monthly premium based on your income as reported on your IRS tax return. If your income is above a certain limit, you’ll pay an income-related monthly adjustment amount in addition to your plan premium.
2021
| If your filing status and yearly income in 2019 was | |||
|---|---|---|---|
| File individual tax return | File joint tax return | File married & separate tax return | You pay each month (in 2021) |
| $88,000 or less | $176,000 or less | $88,000 or less | your plan premium |
| above $88,000 up to $111,000 | above $176,000 up to $222,000 | not applicable | $12.30 + your plan premium |
| above $111,000 up to $138,000 | above $222,000 up to $276,000 | not applicable | $31.80 + your plan premium |
| above $138,000 up to $165,000 | above $276,000 up to $330,000 | not applicable | $51.20 + your plan premium |
| above $165,000 and less than $500,000 | above $330,000 and less than $750,000 | above $88,000 and less than $412,000 | $70.70 + your plan premium |
| $500,000 or above | $750,000 and above | $412,000 and above | $77.10 + your plan premium |
Yearly deductible for drug plans
This is the amount you must pay each year for your prescriptions before your Medicare drug plan pays its share.
Deductibles vary between Medicare drug plans. No Medicare drug plan may have a deductible more than $445 in 2021. Some Medicare drug plans don’t have a deductible.
Copayment/coinsurance in drug plans
These are the amounts you pay for your covered drugs after the deductible (if the plan has one). You pay your share and your plan pays its share for covered drugs. If you pay coinsurance, these amounts may vary throughout the year due to changes in the drug’s total cost. The amount you pay will also depend on the tiers level assigned to your drug.
Once you and your plan spend $4,130 combined on drugs (including deductible), you’ll pay no more than 25% of the cost for prescription drugs until your out-of-pocket spending is $6,550, under the standard drug benefit.
Costs in the coverage gap
Most Medicare drug plans have a coverage gap (also called the “donut hole”). This means there’s a temporary limit on what the drug plan will cover for drugs.
Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. Once you and your plan have spent $4,130 on covered drugs in 2021, you’re in the coverage gap. This amount may change each year. Also, people with Medicare who get Extra Help paying Part D costs won’t enter the coverage gap.
Brand-name prescription drugs
Once you reach the coverage gap, you’ll pay no more than 25% of the cost for your plan’s covered brand-name prescription drugs. You’ll pay this discounted rate if you buy your prescriptions at a pharmacy or order them through the mail. Some plans may offer you even lower costs in the coverage gap. The discount will come off of the price that your plan has set with the pharmacy for that specific drug.
Although you’ll pay no more than 25% of the price for the brand-name drug, almost the full price of the drug will count as out-of-pocket costs to help you get out of the coverage gap. What you pay and what the manufacturer pays (95% of the cost of the drug) will count toward your out-out-pocket spending. Here’s a breakdown:
Of the total cost of the drug, the manufacturer pays 70% to discount the price for you. Then your plan pays 5% of the cost. Together, the manufacturer and plan cover 75% of the cost. You pay 25% of the cost of the drug.
There’s also a dispensing fee. Your plan pays 75% of the fee, and you pay 25% of the fee.
What the drug plan pays toward the drug cost (5% of the cost) and dispensing fee (75% of the fee) aren’t counted toward your out-of-pocket spending.
Example:
Mrs. Anderson reaches the coverage gap in her Medicare drug plan. She goes to her pharmacy to fill a prescription for a covered brand-name drug. The price for the drug is $60, and there’s a $2 dispensing fee that gets added to the cost, making the total price $62. Mrs. Anderson pays 25% of the total cost ($62 x 0.25 = $15.50).
The amount Mrs. Anderson pays ($15.50) plus the manufacturer discount payment of $42 ($60 x 0.70 = $42) count as out-of-pocket spending. So, $57.50 counts as out-of-pocket spending and helps Mrs. Anderson get out of the coverage gap. The remaining $4.50, which is 5% of the drug cost ($3) and 75% of the dispensing fee ($1.50) paid by the drug plan, doesn’t count toward Mrs. Anderson’s out-of-pocket spending.
If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan’s coverage has been applied to the drug’s price. The discount for brand-name drugs will apply to the remaining amount that you owe.
Generic drugs
Medicare will pay 75% of the price for generic drugs during the coverage gap. You’ll pay the remaining 25% of the price. The coverage for generic drugs works differently from the discount for brand-name drugs. For generic drugs, only the amount you pay will count toward getting you out of the coverage gap.
Example:
Mr. Evans reaches the coverage gap in his Medicare drug plan. He goes to his pharmacy to fill a prescription for a covered generic drug. The price for the drug is $20, and there’s a $2 dispensing fee that gets added to the cost. Mr. Evans will pay 25% of the plan’s cost for the drug and dispensing fee ($22 x 0.25 = $5.50). The $5.50 he pays will be counted as out-of-pocket spending to help him get out of the coverage gap.
If you have a Medicare drug plan that already includes coverage in the gap, you may get a discount after your plan’s coverage has been applied to the drug’s price.
Items that count towards the coverage gap
Your yearly deductible, coinsurance, and copayments
The discount you get on brand-name drugs in the coverage gap
What you pay in the coverage gap
Items that don’t count towards the coverage gap
The drug plan premium
Pharmacy dispensing fee
What you pay for drugs that aren’t covered
If you think you should get a discount
If you think you’ve reached the coverage gap and you don’t get a discount when you pay for your brand-name prescription, review your next “Explanation of Benefits” (EOB). If the discount doesn’t appear on the EOB, contact your drug plan to make sure that your prescription records are correct and up-to-date.
If your drug plan doesn’t agree that you’re owed a discount, you can file an appeal.
Find your level of Extra Help (Part D)
Extra Help is a program to help people with limited income and resources pay Medicare prescription drug program costs, like premiums, deductibles, and coinsurance. If you get Extra Help but you’re not sure if you’re paying the right amount, call your drug plan. Your plan may ask you to give information to help them check the level of Extra Help you should get.
Documentation
Examples of documents you can send your plan include:
A purple notice from Medicare that says you automatically qualify for Extra Help.
A yellow or green automatic enrollment notice from Medicare.
An Extra Help “Notice of Award” from Social Security.
An orange notice from Medicare that says your copayment amount will change next year.
If you have Supplemental Security Income (SSI), you can use your award letter from Social Security as confirmation that you have SSI.
You can also give your plan any of the documents listed below. Your plan must accept any of these documents as proof that you qualify for Extra Help. If you don’t have or can’t find any of these documents, ask your plan for help.
Proof you have Medicaid and live in an institution or get home- and community-based services
A bill from an institution (like a nursing home). Or, a copy of a state document showing Medicaid paid for your stay for at least a month.
A print-out from your state’s Medicaid system showing you lived in the institution for at least a month.
A document from your state that shows you have Medicaid and are getting home- and community-based services.
Other proof you have Medicaid
A copy of your Medicaid card (if you have one).
A copy of a state document that shows you have Medicaid.
A print-out from a state electronic enrollment file that shows you have Medicaid.
A screen print from your state’s Medicaid systems that shows you have Medicaid.
Any other document from your state that shows you have Medicaid.
Once you give your plan this information, your plan must:
Make sure you pay no more than the LIS drug coverage cost limit.
In 2021, prescription costs are no more than $3.70 for each generic/$9.20 for each brand-name covered drug for those enrolled in the program.
Contact Medicare so we can get confirmation that you qualify, if it’s available. Your request can take anywhere from several days to up to 2 weeks to process, depending on the circumstances.
Costs if you pay a late enrollment penalty
Part D late enrollment penalty
The late enrollment penalty is an amount that’s permanently added to your Medicare drug coverage (Part D) premium. You may owe a late enrollment penalty if at any time after your Initial Enrollment Period is over, there’s a period of 63 or more days in a row when you don’t have Medicare drug coverage or other creditable prescription drug coverage. You’ll generally have to pay the penalty for as long as you have Medicare drug coverage.
Question-answer 
How much is the Part D penalty?
The cost of the late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage.
Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($33.06 in 2021) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.
The national base beneficiary premium may change each year, so your penalty amount may also change each year.
Example. Mrs. Martinez is currently eligible for Medicare, and her Initial Enrollment Period ended on May 31, 2017. She doesn’t have prescription drug coverage from any other source. She didn’t join by May 31, 2017, and instead joined during the Open Enrollment Period that ended December 7, 2019. Her drug coverage was effective January 1, 2020.
2021
Since Mrs. Martinez was without creditable prescription drug coverage from June 2017–December 2019, her penalty in 2021 was 31% (1% for each of the 31 months she didn’t have coverage) of $33.06 (the national base beneficiary premium for 2021), or $10.25 each month. Since the monthly penalty is always rounded to the nearest $0.10, she pays $10.30 each month in addition to her plan’s monthly premium.
Here’s the math:
0.31 (31% penalty) × $33.06 (2021 base beneficiary premium) = $10.25
$10.25 rounded to the nearest $0.10 = $10.30
$10.30 = Mrs. Martinez’s monthly late enrollment penalty for 2021
How do I know if I owe a penalty?
After you join a Medicare drug plan, the plan will tell you if you owe a penalty and what your premium will be. In general, you’ll have to pay this penalty for as long as you have a Medicare drug plan.
What if I don’t agree with the late enrollment penalty?
You may be able to ask for a “reconsideration”. Your drug plan will send information about how to request a reconsideration.
Complete the form, and return it to the address or fax number listed on the form. You must do this within 60 days from the date on the letter telling you that you owe a late enrollment penalty. Also send any proof that supports your case, like a copy of your notice of creditable prescription drug coverage from an employer or union plan.
Do I have to pay the penalty even if I don’t agree with it?
By law, the late enrollment penalty is part of the premium, so you must pay the penalty with the premium. You must also pay the penalty even if you’ve asked for a reconsideration. Medicare drug plans can disenroll members who don’t pay their premiums, including the late enrollment penalty portion of the premium.
How soon will I get a reconsideration decision?
In general, Medicare’s contractor makes reconsideration decisions within 90 days. The contractor will try to make a decision as quickly as possible. However, you may request an extension. Or, for good cause, Medicare’s contractor may take an additional 14 days to resolve your case.
What happens if Medicare’s contractor decides the penalty is wrong?
If Medicare’s contractor decides that all or part of your late enrollment penalty is wrong, the Medicare contractor will send you and your drug plan a letter explaining its decision. Your Medicare drug plan will remove or reduce your late enrollment penalty. The plan will send you a letter that shows the correct premium amount and explains whether you’ll get a refund.
What happens if Medicare’s contractor decides the penalty is correct?
If Medicare’s contractor decides that your late enrollment penalty is correct, the Medicare contractor will send you a letter explaining the decision, and you must pay the penalty.
Your actual drug coverage costs will vary depending on:
Your prescriptions and whether they’re on your plan’s list of covered drugs (formulary).
What “tier” the drug is in.
Which drug benefit phase you’re in (like whether you’ve met your deductible, or if you’re in the catastrophic coverage phase).
Which pharmacy you use (whether it offers preferred or standard cost sharing, is out of network, or is mail order). Your out-of-pocket drug costs may be less at a preferred pharmacy because it has agreed with your plan to charge less.
Whether you get Extra Help paying your drug coverage costs?
Look for specific Medicare drug plan costs. Or call at 616-600-8444 or fill out a “Contact Us” form in the right top of the page or “Get Help Now” in the left corner of the page. We will gladly make Medicare easier for you.
If you have limited income and resources, your state may help you pay for Part A and/or Part B. You may also qualify for Extra Help to pay for your Medicare prescription drug coverage.
Have you a question? Call at 616-600-8444 or fill out a “Contact Us” form in the right top of the page or “Get Help Now” in the left corner of the page. We will gladly make Medicare easy for you.
Information prepared on the basis of medicare.gov materials
For more information:
How to get prescription drug coverage
How Part D works with other insurance
What Medicare Part D drug plans cover