How do Medicare Part D prescription drug plans work?

Who is this for?

Learn more about Medicare Part D prescription drug coverage.

If you have a Part D prescription drug plan, you might need help understanding how it works. This information explains the different stages of coverage and how you move through them.

Part D prescription drug coverage has three stages:

  1. Initial coverage stage
  2. Coverage gap (also known as the gap or the donut hole)
  3. Catastrophic coverage stage

Not everyone will have all the stages. For example, you might not have a coverage gap because you get Extra Help paying for your prescription drugs.

So how do you know which stage you're in? It depends on how much you've spent on prescription drugs. The table below can help you figure that out.

How to know which stage you're in
Duration Initial coverage stage Coverage gap Catastrophic coverage stage
How long you're in the stage Until your drug costs reach $3,750 When your drug costs are between $3,750 and $5,000 When your drug costs are over $5,000

It’s important to know what stage you're in because it affects what you pay for your prescription drugs. The same drug could cost less in the initial coverage stage, more in the coverage gap and then much less in the catastrophic coverage stage.

To learn more about each stage, click one of the links below.

Not sure which stage you're in?

Your monthly prescription drug explanation of benefits statements can help. They tell you what stage you're in and how much you've spent on prescription drugs to date.