When comparing Medicare Part D prescription drug plans, premiums and formularies matter—but there is one number worth remembering: $2,400. This is the annual out-of-pocket cap for covered Part D drugs. After your spending on covered prescriptions reaches that limit, you pay nothing more for covered Part D drugs for the rest of the calendar year.
Let me type that again – once you have spent $2,400 on covered pharmacy prescriptions, your drugs are covered at $0 for the rest of the year. However, you must continue to make your Part D drug premium.
When you review stand alone Part D drug plan premiums, there will be several plans where the annual premiums are greater than your $2,400 maximum out of pocket (MOOP) amount. It makes no financial sense to pay a high premium if your drugs or generic or you expect to hit the MOOP before the end of year.
Look Beyond the Monthly Premium
A low premium does not automatically make a plan the best value, and a high premium does not necessarily mean better coverage. What is important is that your current prescriptions are covered. In other words, they are included on the plans drug formulary list.
Use the Medicare Plan Finder at medicare.gov to enter your prescriptions, compare annual premiums and estimated drug costs, and confirm that your medications and preferred pharmacies are covered.
A Practical Way to Compare Plans
- Estimate the full-year premium.
- Review each prescription’s projected cost.
- Check the formulary, pharmacy network, and restrictions.
- Compare the total expected annual cost—not the premium alone.
The best plan is the one that covers your medications at the lowest reasonable total annual cost.
One More Consideration
Independent agents receive no commission for enrolling clients in most of the standalone Part D plans. In California, none of the Part D plans are offering any commission to me as an agent. That does not prevent an agent from helping, but it makes medicare.gov an especially important comparison tool.
Plan details and availability can change, so verify current information before enrolling.
YouTube video on Part D max out of pocket.
