Drug coverage provided by Medicare Part D is an important part of retiree health insurance, and there are many options available for those with stand-alone Part D plans. Since these plans change every year (sometimes dramatically), you can potentially save a lot of money by switching plans.
Plan features can vary, including premiums, deductibles, copays, pharmacy network, and even which drugs are covered. So a plan that works for you in 2025 may not be the best choice in 2026.
During Medicare's fall open enrollment period (October 15-December 7 each year), enrollees can review their coverage and switch plans if needed.
How does drug coverage fit into Medicare?
Navigating health insurance can be complicated. Original Medicare covers hospitalization and medical coverage, but not prescription drugs. You can get drug coverage in a variety of ways, but two are the most common. First, you can choose a Medicare Advantage plan—an alternative to original Medicare that often includes certain forms of drug coverage. Or, second, you can stay with Original Medicare and choose your own stand-alone Part D plan. About one-third of beneficiaries choose the latter option, so they are the ones who can decide to switch each year.
Choose a stand-alone Part D plan
Since insurance companies offer different levels of drug coverage, it often pays to shop around. The Medicare Plan Finder tool on medicare.gov makes this process easier. You can log in to save your information, or browse options without logging in. The search process only takes a few steps:
- You first need to enter your zip code.
- Next, add any medications you are currently taking: name, dosage, and frequency of use. This factor is the most important when choosing the right plan because your costs can vary greatly depending on your medications.
- Next, add the name of your preferred pharmacy. Part D plans often give preference to pharmacies with potentially lower deductibles.
- The tool will then provide you with a list of available drug plans and provide monthly plan premiums, total deductibles, and projected total annual costs for all prescription drugs and premiums.
You can click into Plan Details and explore how estimated costs are calculated. Are your medications covered? How much does the monthly premium change? How much should you pay out of pocket each month? Make sure the plan you choose isn't based solely on the cost of the monthly premium. Total cost including copays is more informative.
Once you decide on a plan, you can sign up directly from the website. You may be asked to provide your Medicare number, information about your other health insurance, and when the change will take effect (January 1, 2026 for those switching during the fall open enrollment period).
Why go through all this trouble?
If you already have a Part D plan, you may be tempted to stick with your current plan. But costs and coverage change every year.
For example, each year, any plan may change its list of covered drugs by adding or removing options, moving them to a higher or lower-cost tier, or adding new restrictions (such as prior authorization). Plans can also raise or lower monthly premiums, deductibles, and copays, which means your projected costs may change even if your medications are the same.
Additionally, every year new plans enter the market and old plans exit. Checking out your alternatives ensures you don't get stuck with an outdated or overpriced plan.
Finally, if you are taking any new prescriptions, review your options. You may be able to find a new plan that covers your new drug at a lower overall cost.
I have worked with people to explore their options, often resulting in cost savings, sometimes as much as $600 per year, depending on their situation and medications. According to KFF data, nearly half of beneficiaries who switched Part D plans saw a decrease of at least 5% in the second year.
Even if your prescriptions stay the same, reviewing your plan during open enrollment can ensure your drugs are covered and may be more cost-effective. A quick check on the Medicare website could make a real difference to your costs next year.
Luke Delorme, CFP® is the Director of Financial Planning at Tableaux Wealth in Great Barrington, MA (www.tableauxwealth.com), reachable luke@tableauxwealth.com. To stay up to date on the Squared Away blog, join our free email list.
This blog post is for informational and educational purposes only and should not be construed as financial advice. Please consult a qualified professional for advice specific to your situation.
