Medicare Part D Plan Comparison
Compare two Medicare Part D prescription drug plans using a simple annual cost model. Enter each plan’s premium, deductible, and coinsurance plus your estimated retail drug spending.
Part D Is a Puzzle With Real Money Attached
Medicare Part D provides prescription drug coverage through private plans. The challenge is that each plan has its own premium, deductible, formulary tiers, pharmacy networks, and cost‑sharing rules. The cheapest premium is not always the cheapest plan overall, especially if you take expensive medications. Every fall, millions of people face an open‑enrollment decision that is difficult to evaluate without a structured cost comparison.
At its core, Part D cost is a blend of premiums (paid no matter what) and out‑of‑pocket drug spending (paid when you fill prescriptions). Out‑of‑pocket spending follows phases: you pay a deductible, then a share of costs during the “initial coverage” phase. Historically there was a coverage gap (“donut hole”), but recent reforms have reduced and are continuing to reduce that gap. Many plans still differ in how quickly you reach catastrophic coverage and what your share becomes afterward.
This calculator uses a simplified but useful model: it treats your annual retail drug costs as one blended number rather than a per‑drug tier simulation. That makes it broadly accessible and still accurate enough to compare plans when their cost‑sharing structures are similar.
Key Terms You’ll See in Plan Documents
- Premium. What you pay monthly to be enrolled in the plan.
- Deductible. What you pay out of pocket before cost‑sharing begins. Some plans waive it for certain tiers.
- Coinsurance/copay. Your share of drug costs after the deductible. Coinsurance is a percentage; copays are fixed dollar amounts.
- Out‑of‑pocket maximum (catastrophic threshold). A spending level where your cost‑sharing drops substantially. Recent law changes are moving Part D toward a firm cap, but thresholds and timing still vary.
The Cost Model
Let P be annual premium, D be deductible, C be your coinsurance rate, and S be your estimated annual retail drug spending. The simplest annual out‑of‑pocket estimate is:
This model assumes a single coinsurance level for simplicity. To accommodate modern Part D caps, the calculator also allows you to enter an optional annual out‑of‑pocket cap. If your computed out‑of‑pocket exceeds the cap, it is reduced to that cap.
Worked Example
Maria compares two plans for next year. She expects about $3,200 of retail drug spending. Plan A has a $14/month premium, a $545 deductible, and 25% coinsurance after the deductible. Plan B has a $45/month premium, no deductible, and 18% coinsurance. Assume no additional cap for the moment.
Plan A premiums. $14 × 12 = $168.
Plan A out‑of‑pocket. She pays the deductible first: $545. Remaining spending is $3,200 − $545 = $2,655, and she pays 25% of that: $663.75. Total out‑of‑pocket: $1,208.75.
Plan A annual cost. $168 + $1,208.75 = $1,376.75.
Plan B premiums. $45 × 12 = $540.
Plan B out‑of‑pocket. No deductible, so she pays 18% of $3,200: $576.
Plan B annual cost. $540 + $576 = $1,116.
Even though Plan B’s premium is higher, its lower cost‑sharing makes it cheaper overall given Maria’s medication needs.
Comparison Table: When Higher Premiums Win
| Drug Spending Level | Low‑Premium / High Cost‑Share Plan | High‑Premium / Low Cost‑Share Plan | Typical Winner |
|---|---|---|---|
| $0–$500/year | Premium dominates | Premium dominates | Low premium plan |
| $1,000–$3,000/year | Deductible matters | Lower coinsurance helps | Depends on tiers |
| $3,000–$8,000/year | Cost‑sharing dominates | Premium becomes small fraction | Lower coinsurance plan |
| $8,000+/year | Catastrophic/cap rules dominate | Catastrophic/cap rules dominate | Plan with better cap |
How the Part D Coverage Phases Affect Real Bills
Although this calculator uses a blended annual spending estimate, it helps to understand why Part D bills can feel uneven through the year. Most beneficiaries move through phases:
- Deductible phase. You pay the negotiated price for drugs until the deductible is met.
- Initial coverage. You pay copays or coinsurance defined by the plan. The plan pays the rest.
- Coverage gap (donut hole) / transitional phase. Historically, beneficiaries paid a larger share here. Reforms have narrowed this gap and are continuing to reduce cost sharing. Still, the timing of when you reach later phases can matter.
- Catastrophic coverage. After your true out‑of‑pocket spending passes a threshold, your share drops to a small coinsurance or copay, and future reforms are moving toward a hard annual cap.
Plans differ in how they apply deductibles to tiers, how steep their initial coverage copays are, and which pharmacies they treat as “preferred.” Those details can shift your actual costs even if the headline premium looks similar.
Two Practical Planning Tips
Tip 1: Use your current year claims as a base. If you have access to your pharmacy receipts or an online summary, add up retail costs for the year and use that as your spending estimate. Even a rough total is better than guessing from memory.
Tip 2: Re‑check mid‑year if medications change. Starting a specialty drug can move you into catastrophic coverage quickly, making premium less important. Conversely, stopping an expensive drug can make a low‑premium plan more attractive the next open enrollment.
Limitations and Assumptions
Limitations and Assumptions
Part D rules are detailed and evolve. This calculator assumes:
- Your drug spending can be approximated as one blended annual retail amount.
- Coinsurance is roughly consistent across your medications.
- Pharmacy network pricing and manufacturer discounts are not modeled.
- Late enrollment penalties and IRMAA surcharges are not included.
For a final plan selection, confirm that your medications are on the plan’s formulary and note their tiers, preferred pharmacies, and any prior authorization rules. Still, this simplified cost view often identifies the right direction and prevents premium‑only decision mistakes.