Medicare Part D is prescription drug coverage, and while it is not mandatory, most people with Medicare need it to avoid high pharmacy costs and a permanent penalty. This guide explains how Part D works in 2026, how your costs change throughout the year, and what to check before choosing a plan if you live in Orange, Los Angeles, San Diego, or Riverside County.
Two ways to get Part D
You can get drug coverage two ways: by adding a stand-alone Part D plan to Original Medicare, or by choosing a Medicare Advantage plan that includes drug coverage (known as MA-PD). You cannot have both at the same time — a stand-alone Part D plan generally cannot be paired with a Medicare Advantage plan that already includes drug coverage.
Each insurer offering Part D publishes its own formulary — the list of covered drugs, organized into cost tiers. The same medication can cost very differently depending on the plan, so comparing the specific formulary against your own medication list matters more than comparing the monthly premium alone.
How your costs change during the year
Part D plans structure your out-of-pocket costs in phases across the calendar year. There may first be an annual deductible (some plans have none), followed by an initial coverage phase where you pay a copay or coinsurance for each prescription based on its formulary tier.
Once your out-of-pocket costs reach the annual maximum Medicare sets for that year, you enter the catastrophic coverage phase and stop paying for your covered drugs for the rest of the calendar year. The exact deductible and annual cap amounts are set by Medicare each year and can change, so it is always worth confirming the current figure for the specific plan and year you are considering.
If you would rather not pay the highest costs at the pharmacy early in the year, the Medicare Prescription Payment Plan lets you spread your Part D out-of-pocket costs into monthly payments across the year, at no extra cost to participate. Enrollment is optional and requested directly through your plan.
The late enrollment penalty
If you go 63 or more days in a row without Part D or other creditable drug coverage after your Initial Enrollment Period ends, Medicare generally adds a permanent penalty to your monthly Part D premium. That penalty is calculated based on how many full months you went without coverage and, in most cases, applies for as long as you have Part D.
If you are still working and have creditable employer drug coverage, you can typically delay Part D without a penalty, as long as you enroll within two months of losing that coverage. Confirm with your HR department whether your current coverage counts as creditable before making that decision.
How to choose the right plan for you
Part D plan availability varies by county, so the options in Orange, Los Angeles, San Diego, and Riverside counties are not always the same. Before choosing, make a complete list of your medications with exact dosages and compare it against each plan's formulary, not just the general drug name.
Also check whether your preferred pharmacy is a preferred network pharmacy for the plan, since copays are usually lower there than at a standard network pharmacy. Ask whether any of your medications require prior authorization, step therapy, or have a quantity limit, because those rules can delay your prescription if you do not know about them ahead of time.
Availability, cost, benefits, and eligibility vary by person, product, contract, and insurance company, as well as by your service area. Guarantees are subject to the claims-paying ability of the issuing insurance company. Karla Arámburo is not affiliated with or endorsed by Medicare or the federal government.
If your income is limited
If your income and resources are limited, the Extra Help program can reduce or eliminate your Part D premium, deductible, and copays. This program has its own eligibility rules, separate from Medicare's enrollment periods, and can be combined with Medi-Cal in some cases. You can read more on our frequently asked questions page.
A bilingual, local resource in Southern California
Karla Arámburo is a bilingual, licensed insurance agent serving Southern California, and comparing your Part D options with her costs nothing and comes with no pressure to enroll. You can call or text (619) 321-8733, review our guide on Medicare Advantage vs. Original Medicare or our guide on Medigap to understand how Part D pairs with each type of coverage, or explore our Medicare services. This page is general education, not individualized advice or an enrollment recommendation.
Frequently asked questions
Is Medicare Part D mandatory?
It is not mandatory, but if you go without Part D or other creditable drug coverage (such as employer coverage), you will generally pay a permanent late enrollment penalty once you do enroll.
Can I have Part D together with Medicare Advantage?
Most Medicare Advantage plans already include drug coverage (MA-PD). If your Advantage plan does not include drug coverage, you generally cannot add a stand-alone Part D plan separately; check your specific plan's rules.
What happens if my drug is not on the plan's formulary?
You can ask your doctor to request a formulary exception, switch to a similar covered medication, or compare other Part D plans available in your area during the Annual Enrollment Period.
How much will I pay for my drugs once I reach the annual cap?
Once your out-of-pocket costs reach the annual Part D cap, you enter the catastrophic coverage phase and pay nothing more for covered drugs for the rest of the calendar year.
Can I pay for my prescriptions in monthly installments?
Yes. The Medicare Prescription Payment Plan lets you spread your Part D out-of-pocket costs into monthly payments across the year instead of paying it all at the pharmacy. Enrollment is optional and requested through your plan.
What is the difference between a stand-alone Part D plan and an MA-PD plan?
A stand-alone Part D plan is added on top of Original Medicare. An MA-PD plan combines hospital, medical, and drug coverage into a single Medicare Advantage plan. You can only have one or the other, not both at once.
Can I qualify for help if my income is low?
Yes. The Extra Help program can reduce or eliminate your Part D premium, deductible, and copays based on your income and resources. We can review whether you qualify.