Learn about Medicare Part D

Medicare Part D is managed by private insurers and helps cover the cost of prescription drugs. You can add on drug coverage through a stand-alone Part D plan, or you can purchase a Medicare Advantage plan that includes drug coverage through Blue Cross Blue Shield of Michigan.

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How do I enroll in a Part D plan?

You can enroll in a Part D plan during your initial enrollment period or special enrollment period. We recommend enrolling as soon as you’re eligible to avoid Part D late penalties.

You can enroll in a plan directly with a private insurance company, usually over the phone, in person or online. An agent or broker can also help you sign up for a plan. Part D members can change plans yearly during the annual enrollment period from Oct. 15 to Dec. 7.

You'll have to pay a higher monthly premium if you don’t enroll in Part D during your initial enrollment period, unless you qualify for a special enrollment period. This penalty is calculated based on how many months you were eligible for Part D coverage but didn't enroll.

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What does Part D cover?

Your prescription drug coverage will depend on which plan you choose. There's a standard level of coverage that every drug plan must provide, but plans can differ in what prescription drugs they cover and their copays, as well as how they structure the tiers of drugs in their lists, also called drug formularies. Typically, a drug in a lower tier will cost less than a drug in a higher tier.

Drug tiers are how we divide prescription drugs into different levels of cost. They can help you make an educated guess about what you’ll pay.

Here’s a breakdown of each tier. The estimated cost information is for a one-month supply of drugs from an in-network preferred pharmacy.

Tier 1: Preferred generic drugs

These are commonly prescribed generic drugs. For most plans, you'll pay around $1 to $3 for drugs in this tier.

Tier 2: Generic drugs

These are also generic drugs, but they cost a little more than drugs in Tier 1. For most plans, you’ll pay around $7 to $11 for drugs in this tier.

Tier 3: Preferred brand drugs

These are brand-name drugs that don’t have a generic equivalent. They’re the lowest-cost brand-name drugs on the drug list. For most plans, you’ll pay around $38 to $42 for drugs in this tier.

Tier 4: Nonpreferred drugs

These are higher-priced brand-name and generic drugs not in a preferred tier. For most plans, you’ll pay around 45% to 50% of the drug cost in this tier.

Tier 5: Specialty drugs

These are the most expensive drugs on the drug list. Specialty drugs are used to treat complex conditions like cancer and multiple sclerosis. They can be generic or brand name. For most plans, you’ll pay 25% to 33% of the retail cost for drugs in this tier.

Part D prescription drug coverage depends on each insurance company and each plan. You should review the plan’s drug formulary before choosing a plan if you're concerned about a specific drug and its cost.

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How much will my Part D plan cost?

Your Part D insurance provider will help cover part of your drug costs, but you may have to pay a monthly premium, along with other costs, such as an annual deductible.

Some of your prescriptions may require you to pay out-of-pocket costs, too, like a copay or coinsurance.

These terms all describe money you pay toward health care when you have a health insurance plan.

Copay and coinsurance

A copay is a fixed amount of money you pay for a certain service. Your health insurance plan pays the rest of the cost.

Coinsurance refers to percentages.

Our Medicare Advantage plans use copays for most services. You pay 20% coinsurance for most services with Original Medicare. 


A deductible is the amount of money you pay for care before your plan starts paying. For most services, you'll pay the full cost until you reach the deductible. After you reach your deductible, you’ll still have to pay any copays or coinsurance.

Most Medicare Advantage plans have separate medical and pharmacy deductibles. Original Medicare has its own deductibles, but if you have a Medicare Advantage plan, you don't have to worry about them. We pay the Original Medicare deductibles for you.

How they all work together

When you have a Blue Cross plan, we track all the costs you pay – deductible, copays and coinsurance. When you reach a certain amount, we pay for most covered services. This is called the out-of-pocket maximum.

Original Medicare doesn’t have an out-of-pocket maximum. There's no cap on what you pay out of pocket. And if you're in the hospital or a skilled nursing facility, Original Medicare only pays for a certain number of days. After that point, you pay the full amount each day.

A woman talks to her doctor about a prescription.

What's the doughnut hole?

The doughnut hole is another name for the coverage gap in your Part D plan. In all Part D plans, there's a temporary limit on coverage after you and your insurance provider have spent a certain combined amount. When you reach this limit, you enter the coverage gap and will pay more for your drugs. 

For generic drugs, Medicare will help pay part of the cost while you're in the doughnut hole. For brand-name prescription drugs, you’ll pay no more than 25% of the plan’s cost. Once total costs reach a certain amount, you'll exit the gap. After the gap, you enter the catastrophic coverage stage and you’ll pay lower copays for the rest of the year.

Learn more about the coverage gap

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