Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.
Part D Basics
Medicare Part D covers prescription drugs — something Original Medicare does not cover (except in limited cases). These plans are offered by private insurers but regulated by the federal government.
How It Works
There are several stages of Part D plans. First is the deductible. Until you have met your deductible, you pay 100% of drug costs. After that, you will be in the initial coverage stage. At this point, you pay a co-pay or co-insurance based on your drug’s tier. If you continue to spend, you may reach catastrophic coverage. Catastrophic coverage now serves as an out-of-pocket maximum. Once you reach this spending threshold, the plan covers the rest of your covered drug costs for the year.
Enrollment Window
The Annual Enrollment Period (AEP) is October 15 – December 7 each year. During this time, you can join, drop, or switch Part D plans. It’s important that you always review your plan and other options, as benefits may have changed and new (and possibly better) plans may be available.
Late Enrollment Penalty
You also want to avoid the Part D late enrollment penalty. If you go 63 days or more without creditable drug coverage, you’ll incur a lifetime penalty added to your Part D premium. This is 1% of the national base beneficiary premium for each month you are without Part D. This gets added to your monthly premium forever, so make sure you do not have a gap in coverage!
2026 Part D Changes
There are changes to Part D every year, and this year promises some of the biggest changes ever!
Costs
As always, the national base beneficiary premium has increased. It is $38.99 in 2026 (up from $36.78 in 2025, a 6% increase). Remember, this doesn’t necessarily reflect your plan’s premium — actual plan costs may vary widely!
The deductible for 2026 has also increased. It is $615 in 2026 (up from $590 in 2025). And of course, the out-of-pocket maximum (catastrophic coverage) has also increased. It is $2,100 in 2026 (up from $2,000 in 2025). But this is still an improvement. It is only recently that catastrophic coverage has been a true out-of-pocket cap — once you reach it, you pay $0 for covered drugs.
Drug Price Negotiations
The biggest change in 2026 surrounds the drug price negotiations. Starting in 2026, Medicare can directly negotiate prices for certain high-cost drugs. In 2026, those drugs include:
- Januvia
- Fiasp
- Farxiga
- Enbrel
- Jardiance
- Stelara
- Xarelto
- Eliquis
- Entresto
- Imbruvica
But more drugs will be added to the list in the years to come!
Prescription Drug Tiers
When choosing a Part D plan, you must understand the medication tiers. These can vary from plan to plan. Generally speaking, plans operate on a 4–6 tier system. The higher the tier, the higher the co-pay or co-insurance. Although tier structures and drug placement vary by plan, here is an example of a typical 5-tier system:
- Tier 1: Preferred Generic – lowest cost
- Tier 2: Non-Preferred Generic
- Tier 3: Preferred Brand
- Tier 4: Non-Preferred Brand
- Tier 5: Specialty Medications – highest cost
The cost of your medication is directly related to its tier, so make sure to compare when looking at plans.
Using Medicare.gov
If you are going to use Medicare.gov, you can compare up to three plans at once. Make sure to enter your medications and dosages accurately for the best results. Also, add local and mail-order pharmacies for comparison.
You’ll need to compare more than just your monthly premium. Make sure to compare the deductible, formulary coverage, and pharmacy network to get a better idea of your total annual cost.
Expensive Medications
If your brand medication isn’t covered, we highly recommend you look into generic alternatives. This can significantly reduce total costs! If that is not an option, check GoodRx or other similar programs for coupons or discounts. You may also need to look into state pharmaceutical assistance programs or manufacturer discount programs.
