How Medicare Part D Works When You're Under 65

Medicare Part D covers prescription drugs, but you can only enroll if you're already on Medicare through disability, ESRD (end-stage renal disease), or ALS

Part D is the prescription drug coverage piece of Medicare. If you're under 65 and on Medicare because of disability, ESRD, or ALS, you can choose a Part D plan during your enrollment window. If you're under 65 but not yet on Medicare, Part D is not available to you — you'll use your employer plan, marketplace plan, or Medicaid instead.

Part D plans are run by private insurance companies, not Medicare directly. Each plan has its own list of covered drugs, its own copays and coinsurance amounts, and its own pharmacy network. Two people on the same Medicare plan can pay different amounts for the same medication depending on which Part D plan they chose.

The main reason to understand Part D now is that the rules around switching plans, the timing of enrollment, and the penalties for late enrollment are strict. Missing a deadline or choosing the wrong plan can cost you money for a full year.

Key Takeaways

• Part D is only available to people under 65 who are on Medicare through disability, ESRD, or ALS — not to people with employer or marketplace coverage.
• You enroll in Part D during your Initial Enrollment Period (usually 3 months before, during, and after the month you turn 65 or first become may be able to access for Medicare), and you can switch plans once per year during Open Enrollment in October and November.
• Each Part D plan has different drugs on its formulary and different costs, so comparing plans before you enroll can save hundreds of dollars per year on medications you actually take.
• If you go without Part D coverage when you're supposed to have it, you may owe a late enrollment penalty added to your premium for as long as you have Part D.
• Extra Help (also called the Low-Income Subsidy) can reduce your Part D costs to nearly zero if your income and resources are below the limit, and you apply through Social Security.

When you can enroll in Part D and when you can switch plans

Your first chance to enroll in Part D is your Initial Enrollment Period. For most people under 65 on Medicare, this is the 3-month window that starts the month before you become may be able to access for Medicare and ends 3 months after. If you miss this window, you can only enroll during the annual Open Enrollment Period from October 15 through December 7 each year, and your coverage starts January 1.

If you miss your Initial Enrollment Period and don't enroll during Open Enrollment, you cannot get Part D coverage until the next Open Enrollment arrives — which could be many months away. During that time, you'll have no prescription drug coverage through Medicare, and you'll owe a late enrollment penalty if you eventually sign up.

Once you're enrolled, you can change Part D plans only during Open Enrollment (October 15 through December 7). You cannot switch plans at other times of year unless you have a may have access to life event — moving to a different state, losing other drug coverage, or a change in your income that makes you newly may be able to access for Extra Help. Even then, you usually have 60 days to make the switch.

How to compare Part D plans and what the costs actually mean

Every Part D plan publishes a formulary, which is the list of drugs it covers. Before you enroll, you need to check whether your current medications are on the formulary of each plan you're considering. A drug might be covered by one plan but not another, or covered at different cost-sharing levels.

Part D plans charge costs in several layers. You pay a monthly premium (the base cost of the plan). When you fill a prescription, you pay a copay (a flat amount like $5 or $15) or coinsurance (a percentage of the drug's cost). These out-of-pocket costs count toward your deductible — the amount you have to spend before the plan starts paying its share. Once you've spent enough out-of-pocket to hit your deductible, the plan begins to cover more of the cost.

Medicare's official tool is called Medicare Plan Finder, available at Medicare.gov. You enter your medications, and it shows you which plans cover them and what you'd pay under each plan for a year. This is the most concrete way to compare — not by premium alone, but by total out-of-pocket cost for the drugs you actually take.

The coverage gap and what happens if you reach it

Part D has a coverage gap, sometimes called the "donut hole." Once your total drug costs (what you paid plus what the plan paid) reach a certain amount in a year, you enter the gap. In the gap, you pay a higher percentage of the cost of brand-name and generic drugs until your out-of-pocket spending reaches a second threshold. Then catastrophic coverage kicks in and you pay a small copay or coinsurance for the rest of the year.

The exact dollar amounts change each year. The gap exists because of how Medicare Part D was structured, and it affects people who take many medications or expensive medications. If you take chronic medications, ask the plan directly whether you'll hit the gap in a typical year, and what your costs will be in the gap for your specific drugs.

Some people avoid the gap by choosing a plan with no deductible or a low deductible, which spreads costs more evenly across the year. Others choose a plan that covers certain high-cost drugs at a lower rate even in the gap. The right choice depends on your specific medications and how much you typically spend.

Extra Help: reducing Part D costs if your income is low

Extra Help (officially the Low-Income Subsidy program) reduces or eliminates Part D premiums, deductibles, and copays if your income and resources fall below the limit. The income limit varies by state but is roughly 150% of the federal poverty level — for a single person in 2024, that's around $1,800 per month, though you should verify the current limit for your state.

You apply for Extra Help through Social Security, not through Medicare or your Part D plan. You can apply online at ssa.gov, by phone at 1-800-772-1213, or in person at your local Social Security office. Social Security will tell you whether you may have access to and how much your costs will be reduced. If you may have access to, the reduction applies automatically when you enroll in a Part D plan.

If your income changes during the year and you become newly may be able to access for Extra Help, you can apply at any time and the benefit will start the month after Social Security approves you. You don't have to wait for Open Enrollment.

Late enrollment penalties and what they cost

If you're supposed to have Part D coverage (because you're on Medicare) and you don't enroll during your Initial Enrollment Period or during Open Enrollment, Medicare charges you a late enrollment penalty. The penalty is 1% of the national average Part D premium for each month you were without coverage. In 2024, that's roughly $0.80 per month of delay, but the amount changes yearly.

The penalty is added to your Part D premium every month for as long as you have Part D. If you delay enrolling for 12 months, you'll owe about $9.60 extra per month permanently — not just for one year, but for the rest of your time on Part D. The only way to avoid the penalty is to enroll during your Initial Enrollment Period or during Open Enrollment, or to have a may have access to life event that lets you enroll outside those windows.

The exception is if you had other creditable drug coverage (like an employer plan or Medicaid) during the time you weren't on Part D. If you can prove you had coverage, you won't owe a penalty. Keep documentation of any other drug coverage you had, just in case.

What to do if your medications aren't covered or are too expensive

If your Part D plan doesn't cover a drug you need, or covers it only at a very high cost, you have options. First, ask your doctor whether there's a similar drug on the plan's formulary that might work for you. Many conditions have multiple treatment options, and switching to a covered drug might be medically reasonable.

Second, you can ask your doctor or pharmacist to submit a formulary exception request (also called an appeal) to the Part D plan. The plan will review the request and may agree to cover the drug anyway, or to cover it at a lower cost tier. This process takes a few days to a few weeks, so don't wait until you're out of medication.

Third, if the plan denies the exception or the drug is still unaffordable, you can switch to a different Part D plan during Open Enrollment. This is one of the main reasons to compare plans every year — your needs change, and a plan that worked last year might not work this year.

Frequently Asked Questions

Do I have to take Part D if I'm under 65 and on Medicare?

No, Part D is optional. But if you don't enroll when you're supposed to and you later want coverage, you'll owe a late enrollment penalty for the rest of your time on Medicare. If you have other drug coverage (employer plan, Medicaid, VA), you may not need Part D, but check whether that coverage is as good as Part D before you decline.

Can I use Part D at any pharmacy?

No, each Part D plan has a network of pharmacies where you pay the plan's copay or coinsurance. If you use an out-of-network pharmacy, you'll pay more or the plan won't cover the drug at all. Check whether your preferred pharmacy is in the plan's network before you enroll.

What if I can't afford my Part D copays even with a plan I chose?

If your income is low, apply for Extra Help through Social Security — it can reduce your copays to $1 to $4 per prescription. If your income is too high for Extra Help but you still can't afford your medications, ask your doctor about patient assistance programs run by drug manufacturers, or talk to a social worker about other resources in your area.

Can I change my Part D plan if my health changes during the year?

Not unless you have a may have access to life event — moving to a different state, losing other coverage, or becoming newly may be able to access for Extra Help. A change in your health alone is not a may have access to event. This is why choosing carefully during Open Enrollment matters: you're locked in for a full year.

What happens to my Part D coverage if I move to a different state?

Your current Part D plan may not be available in your new state. When you move, you have 60 days to enroll in a new Part D plan in your new state. Contact your current plan or Medicare to find out what plans are available where you're moving, and switch before your move if possible so there's no gap in coverage.