Key Takeaways

• Medicare Part D costs can add up quickly, but there are strategies to reduce your out-of-pocket expenses and maximize your savings.

• Understanding how different coverage phases work in 2025 helps you make informed decisions when choosing or using your Medicare Part D plan.

How Medicare Part D Works in 2025: Understanding the Basics

Medicare Part D covers prescription drugs, but that doesn’t mean all costs are covered upfront. In 2025, Medicare Part D consists of three coverage phases: the deductible phase, the initial coverage phase, and the catastrophic coverage phase. Once you reach the out-of-pocket spending cap of $2,000, your plan covers 100% of your prescription drug costs for the rest of the year. This major change eliminates the previous coverage gap (donut hole), providing better financial protection.

Even with this improvement, you still have costs to manage before hitting the $2,000 cap. Here’s how you can reduce your out-of-pocket expenses and make sure you’re getting the best drug coverage.

1. Choose the Right Medicare Part D Plan During Open Enrollment

You might think that sticking with the same plan each year is the best option, but Medicare Part D plans can change their premiums, drug formularies, deductibles, and copays every year. Open Enrollment, which runs from October 15 to December 7, is your chance to review and switch plans if necessary.

What to Consider When Comparing Plans

• Premiums and Deductibles: While you should avoid focusing only on monthly premiums, consider how a plan’s deductible and cost-sharing impact your total expenses.

• Formulary (Drug List): Each plan has a formulary that determines which drugs are covered and at what cost. Make sure your prescriptions are included.

• Pharmacy Network: Some plans have preferred pharmacies where you pay lower copays, while others allow you to get medications by mail for added convenience.

If you don’t review your plan, you could end up paying more than necessary for your medications in the new year.

2. Take Advantage of Extra Help and Savings Programs

For those who qualify, Medicare offers the Extra Help program, which significantly reduces premiums, deductibles, and copayments for prescription drugs. In 2025, the eligibility requirements remain the same, meaning your income and resource limits determine whether you qualify.

Other Savings Options

• State Pharmaceutical Assistance Programs (SPAPs): Some states offer additional support to lower drug costs.

• Manufacturer Discounts: Certain brand-name medications may have discount programs, which could lower your out-of-pocket spending.

Checking your eligibility for these programs can help you keep your drug costs manageable throughout the year.

3. Use Generic and Lower-Cost Medications Whenever Possible

Brand-name medications often come with higher copayments, even under Medicare Part D. To cut costs, ask your doctor or pharmacist if a generic alternative is available for your prescription.

How Much Can You Save?

• Generic drugs often cost significantly less than brand-name counterparts.

• Medicare Part D plans place generic drugs in lower tiers, meaning your copayments will be lower.

• Some plans offer tiered pricing, allowing you to pay less for preferred generics over non-preferred options.

By switching to generics, you could keep more money in your pocket without sacrificing treatment quality.

4. Stay Within Your Plan’s Pharmacy Network

Not all pharmacies charge the same price for the same medication, even within Medicare Part D. Your plan has preferred and standard network pharmacies, and choosing a preferred one could mean lower copays.

Benefits of Using a Preferred Pharmacy

• Lower copayments and coinsurance for covered drugs

• Discounted rates on commonly prescribed medications

• Mail-order options that deliver a 90-day supply at a reduced price

Before filling your prescription, confirm whether your pharmacy is in your plan’s preferred network to avoid unnecessary extra costs.

5. Use the Medicare Prescription Payment Plan to Spread Costs

New for 2025, Medicare offers a Prescription Payment Plan that allows you to spread your out-of-pocket drug costs over the year. If you reach the $2,000 cap early, you won’t have to pay it all at once. Instead, this program divides your costs into monthly payments, making budgeting easier.

Who Can Enroll?

• Any Medicare Part D enrollee with out-of-pocket costs reaching the $2,000 threshold

• Individuals who prefer predictable monthly payments rather than large lump sums

This program ensures that expensive medications don’t create financial hardship all at once.

6. Plan Your Prescriptions to Maximize Savings

One often-overlooked strategy to reduce out-of-pocket costs is planning how and when you fill your prescriptions.

Strategies to Reduce Costs

• Request a 90-Day Supply – Many Medicare Part D plans offer discounts for mail-order prescriptions or bulk fills.

• Time Your Refills – Avoid hitting coverage phases too early in the year by strategically filling expensive medications when your plan covers the most.

• Split Doses (If Safe) – Some medications allow for tablet splitting, effectively cutting your costs in half. Always check with your doctor first.

By carefully planning your prescription fills, you can avoid unnecessary expenses and make your Part D benefits last longer.

Getting the Most Out of Your Medicare Part D Coverage

Medicare Part D provides essential prescription drug coverage, but managing costs is crucial to ensuring you’re not overpaying. By reviewing your plan annually, considering savings programs, using generics, sticking to preferred pharmacies, and utilizing cost-spreading options, you can keep expenses under control in 2025.

If you’re unsure about your Medicare Part D options, a licensed agent listed on this website can provide guidance on selecting a plan that best meets your medication needs.