Stage 4   Catastrophic Coverage Stage: Follows the Coverage Gap

  • The Coverage Gap begins after you and your plan have spent $4,660 for covered drugs.
  • The Coverage Gap ends when your yearly out of pocket drug costs reach $7,400 for covered drugs.
  • In this stage you will pay 25% of the plan's cost for Brand drugs & 25% for Generics.

               All PDP Plans use a Drug Formulary.

   A Formulary is a list of all the prescription drugs covered on a medical plan. Prescription drugs not listed on the plan's formulary typically will not be covered. 

Stage 2   Initial Coverage Stage: Shared Costs With Insurance Company

  • Plans are a 1-year contract with Medicare.
  • Plan Costs and Prescription Coverage (Formulary) can change annually.
  • Prior Authorization may be required before a drug will be covered.
  • Step Therapy allows a lower cost drug to be used before higher cost drugs.
  • Prescription Drug Costs can vary greatly between MAPD & PDP Plans.
  • Make sure ALL your prescriptions are covered when changing plans.
  • The amount you pay for medication costs before the plan pays its share.
  • Some plans do not have a deductible.
  • Both you and your plan pay medication costs until the shared total equals $4,660 (2023)
  • You are generally responsible for copays and coinsurance during this stage.

Stage 1   Deductible Stage: You Pay 100%                  

Stage 3   Coverage Gap Stage: (Donut Hole)


  • Begins when you reach the $7,400 Coverage Gap Limit
  • In this stage you will pay $10.35 for Brand drugs $4.15 for Generics, or 5% whichever is greater.

The Prescription Drug Coverage Stages

Prescription Drug Plan Takeaways:

Prescription Drug Plan Tiers:

   Tier 1: Preferred Generics

   Tier 2: Non-Preferred Generics

   Tier 3: Preferred Brand

   Tier 4: Non-Preferred Brand

   Tier 5: Specialty Drugs

     Medicare Prescription Drug coverage is available to everyone who has Medicare Part A and/ or Medicare Part B. Medicare Prescription Drug coverage is only offered through private insurance companies.  Prescription Drug Plans are a one- year contract between private companies and Medicare. Benefits and costs change from year to year. Since these plans change annually, an individual's prescription drug costs can change drastically from one year to the next.

Many Medicare beneficiaries get their Prescription Drug coverage through their Medicare Advantage Prescription Drug plan. Individuals enrolled in Original Medicare typically get their prescription drug coverage through a stand- alone Prescription Drug Plan (PDP). Beneficiaries choose the drug plan that covers all their their prescriptions at the lowest annual cost.

Prescription Drug Plans have a monthly premium, and most plans have a deductible that must be met before coverage begins. These deductibles are typically on the higher cost prescription drugs located on the higher Tiers*.

If a beneficiary decides not to enroll in a drug plan when they are first eligible, they may be required to pay a penalty if they choose to join at a later date.