Medicare’s open enrollment period has begun. Now through December 7, millions of Americans will be reviewing their current Medicare plans or enrolling in coverage for the very first time.
While there are several parts to Medicare and various plans to choose from, it’s crucial to pay extra attention to your prescription drug coverage plan, or Part D, because failing to do so could come at a significant cost.
Each year, insurers adjust copays, premiums, formularies (the list of medications covered by your insurance), preferred pharmacies and in-network providers. They can also adjust the way medications are grouped and priced.
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Drugs are grouped into tiers that each carry a different cost. For example:
- Tier 1 consists of generic drugs and has the lowest copay
- Tier 2 includes preferred brand-name drugs with a moderate copay
- Tier 3 is for nonpreferred brand-name drugs and typically come with a higher copay
- Tiers 4 and 5 are for specialty drugs and carry the highest cost
Depending on the insurer, they may choose to move one drug from Tier 1 to Tier 2, or drop coverage on the medication entirely, which could significantly change how much you pay. If you’re unaware of the change, you will miss out on finding a better plan and could end up spending more than you can afford.
This is the first step
With so much to consider, it can be difficult to know how to review your plan. The first step is to head to Medicare.gov‘s Plan Finder, where you can review plans for 2026. Make a list of your medications and look for plans that cover them.
You’ll also want to make sure your provider and pharmacy are still in-network to minimize out-of-pocket costs.
It’s also important to look beyond the plan’s premiums. A plan that looks less expensive at first may actually cost you a lot more over the course of the year once you factor in copays/coinsurance, deductibles and medication tiers.
A Part D plan may have a low monthly premium, but if you take brand-name or specialty drugs, the copays/coinsurance could be much higher.
For example, let’s say you’re comparing two plans: Plan A and Plan B. Plan A has a monthly premium of $10, with a $40 copay for your main medication. With this plan, your annual premium is $120.
Assuming you’re paying $40 each month for your medication, you’re out-of-pocket costs for the year total $480. This brings your total annual cost to $600.
Plan B, on the other hand, has a monthly premium of $35 and a $5 copay for your medication. With this plan, the annual premium is $420, and the out-of-pocket cost for your medication is $60. This brings your total annual cost to $480, comparatively.
Changes to Medicare in 2026
At the federal level, there are some changes ahead for Medicare in 2026. For example, out-of-pocket expenses for drugs covered under Part D are capped at $2,100 per year.
Once the threshold is reached, beneficiaries will not pay any copayments or coinsurance for the remainder of the calendar year.
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All Medicare Part D plans must also cap monthly insulin copayments at $35.
Enhancements will also be made to the Medicare Prescription Payment Plan. The plan, which allows beneficiaries to spread their drug costs evenly throughout the year, will also offer automatic renewals to simplify the process.
Due to inflation, the maximum deductible for Part D plans will increase from $590 in 2025 to $615 in 2026.
Medicare’s open enrollment period is more than just an opportunity to enroll in coverage. For new and existing beneficiaries, it’s an opportunity to review coverage options and make any necessary changes, specifically when it comes to Part D.
If you’re taking medications, shop for different Part D plans and don’t forget to look beyond the plan’s premium.
If you’re concerned about enrolling in coverage, visit the State Health Insurance Assistance Program, or talk with your financial adviser.
