Part D is Medicare prescription drug coverage you get through either:

• • A stand-alone Part D plan
  • Part of your Medicare Advantage Plan

The cost of your Medicare Part D-covered drugs may change throughout the year. If you notice that your drug prices have changed, it may be because you are in a different phase of Part D coverage. There are four different phases—or periods—of Part D coverage.

Deductible Period: Until you meet your Part D deductible, you are in the deductible period. During this time, you will pay the full negotiated price for your covered prescription drugs. While deductibles can vary from plan to plan, no plan’s deductible can be higher than $545 in 2024, and some plans have no deductible. You begin each new calendar year in the deductible.

Initial Coverage Period: After you meet your deductible, your plan will help pay for your covered prescription drugs. This is your initial coverage period. Your plan will pay some of the cost, and you will pay a copayment or coinsurance.

Coverage Gap: You enter the coverage gap when your total drug costs—including what you and your plan have paid for your drugs—reaches a certain limit. In 2024, that limit is $5,030. While in the coverage gap, you are responsible for 25% of the cost of your drugs. The coverage gap is also sometimes called the donut hole.

Catastrophic Coverage: In all Part D plans, you enter catastrophic coverage after you reach $8,000 in out-of-pocket costs for covered drugs. As of 2024, during this period, you owe no cost-sharing for your covered drugs for the remainder of the year. This changes the catastrophic phase of coverage to a hard cap your spending, where you previously had a 5% cost share.

But what counts as an out-of-pocket cost? The out-of-pocket costs that help you reach catastrophic coverage include:

• Your deductible
• What you paid during the initial coverage period
• Almost the full cost of brand-name drugs (including the manufacturer’s discount) purchased during the coverage gap
• Amounts paid by others, like family members, most charities, and other persons on your behalf
• Amounts paid by State Pharmaceutical Assistance Programs (SPAPs), AIDS Drug Assistance Programs, and the Indian Health Service

Costs that do not help you reach catastrophic coverage include monthly premiums, what your plan pays toward drug costs, the cost of non-covered drugs, the cost of covered drugs from pharmacies outside your plan’s network, and the 75% generic discount.

Your plan should keep track of how much money you have spent out of pocket for covered drugs and your progression through coverage periods. This information should appear in your monthly statements.

Beginning in 2025, your out-of-pocket maximum for your Part D-covered prescription drugs will be reduced to $2,000. You will also have the option to pay out-of-pocket Part D costs in monthly payments spread over the year.

Contact your ASR Licensed Insurance Agent, local SHIP, or visit Medicare.gov for more information.