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Medicare Part D Cost Sharing

How Medicare Part D Cost Sharing Works

Medicare Part D has different stages of cost sharing until you reach a set limit on out-of-pocket costs for the year. The limit is $4,020 in 2020. After that, your plan pays most of the cost of your drugs for the rest of the year.

Co-pays, co-insurance amounts and your plan deductible, if any, count as out-of-pocket costs. Premium payments do not.

Part D cost-sharing stages are explained below. The costs shown are for 2020. You may not go through every stage in any given year. If you get Extra Help from Medicare for Part D costs, the coverage gap stage doesn’t apply to you.

Annual Deductible:

  • You pay for your drugs until you reach the deductible amount set by your plan.
  • Not all Part D plans have a deductible.
  • If your plan does not have a deductible, your coverage starts with the first prescription you fill.

Initial Coverage:

  • You pay a copay or coinsurance and the plan pays the rest.
  • You stay in the stage until your total drug costs reach $4,020 in 2020.

Coverage Gap (Donut Hole):

  • You pay 25% of the costs for generic and brand name drugs in 2020.
  • You stay in the stage until your total out-of-pocket costs reach $6,350 in 2020.

Catastrophic Coverage:

  • You pay a small copay or coinsurance amount.
  • You stay in this stage for the rest of the plan year.

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