Medicare Part D Plan Comparison

How to use this Medicare Part D Plan Comparison Calculator

This calculator helps you compare the estimated yearly cost of two Medicare Part D prescription drug plans using a simplified cost model. It is designed for quick side-by-side comparisons based on your expected drug spending and each plan’s basic cost-sharing features.

To get started, gather the Summary of Benefits or Evidence of Coverage for the two plans you want to compare. Then enter:

• Your estimated annual retail drug spending — the total before insurance, based on the list prices of your medications.
• Monthly premium for each plan — what you pay each month to be enrolled in the plan.
• Annual deductible for each plan — the amount you pay out of pocket before the plan starts paying its share for most covered drugs.
• Coinsurance percentage after the deductible — the share of drug costs you pay once the deductible is met.
• Annual out-of-pocket cap (optional) — if the plan advertises a maximum on what you pay for covered drugs in a year, you can enter it here. Leave it at zero if there is no such cap or you are unsure.

After you enter these numbers for both plans and run the calculation, the tool estimates your total yearly cost under each plan and highlights which option appears less expensive under the stated assumptions.

How the calculator estimates annual Part D costs

The calculator uses a straightforward formula to estimate your yearly out-of-pocket cost for each plan. It does not model all Medicare Part D coverage phases, but it gives a rough comparison based on your total drug spending and the plan’s key cost-sharing features.

For each plan, it calculates:

1. Annual premiums = monthly premium × 12.
2. Deductible paid = the lesser of your drug spending and the plan’s deductible.
3. Coinsurance amount on spending above the deductible.

In simplified form, the medical (drug) cost portion is:

where:

• S = your estimated annual retail drug spending
• D = the plan’s annual deductible
• C = coinsurance rate as a decimal (for example, 25% = 0.25)
• O = estimated out-of-pocket spending on drugs (excluding premiums)

The calculator then adds premiums and optionally applies any out-of-pocket cap you enter:

• Total annual premium = monthly premium × 12.
• Estimated drug cost share = O from the formula above.
• Estimated annual out-of-pocket = total annual premium + estimated drug cost share, limited by any cap you provide.

Interpreting your comparison results

When you run the calculator, you will see estimated yearly totals for both Plan A and Plan B. Use these numbers as a directional guide, not as an exact bill:

• If one plan has a lower total estimated annual cost, it is likely more cost-effective under the spending and assumptions you entered.
• A plan with a higher premium but lower coinsurance may cost less overall if your drug spending is high.
• A plan with a low or zero deductible may be attractive if you want more predictable costs early in the year.
• The optional out-of-pocket cap, if entered, can prevent extremely high total estimates and may favor plans that protect you at very high spending levels.

Because the same drug spending is applied to both plans, differences you see are driven by premiums, deductibles, coinsurance rates, and any cap you include.

Worked example

Suppose you expect about $3,000 per year in retail drug spending. You are comparing:

• Plan A: $20 monthly premium, $545 deductible, 25% coinsurance, no cap.
• Plan B: $45 monthly premium, $0 deductible, 18% coinsurance, no cap.

Using the calculator’s simplified method:

Plan A

• Annual premiums: $20 × 12 = $240.
• Deductible paid: min($3,000, $545) = $545.
• Spending above deductible: $3,000 - $545 = $2,455.
• Coinsurance: 25% of $2,455 = 0.25 × 2,455 = $613.75.
• Estimated drug cost share: $545 + $613.75 = $1,158.75.
• Total estimated annual out-of-pocket: $240 + $1,158.75 = $1,398.75.

Plan B

• Annual premiums: $45 × 12 = $540.
• Deductible paid: min($3,000, $0) = $0.
• Spending above deductible: $3,000 - $0 = $3,000.
• Coinsurance: 18% of $3,000 = 0.18 × 3,000 = $540.
• Estimated drug cost share: $0 + $540 = $540.
• Total estimated annual out-of-pocket: $540 + $540 = $1,080.

Under these assumptions, the calculator would show Plan B with a lower total estimated annual cost than Plan A, even though Plan B has the higher monthly premium. The lower coinsurance and zero deductible outweigh the higher premium when your drug spending is $3,000 per year.

Side-by-side comparison of key plan features

The actual calculator results section will summarize both plans, but here is an example of how two plans can differ:

Your own results will differ based on the values you enter, but the pattern will be similar: the tool compares premiums, deductibles, and coinsurance against your expected spending to highlight which combination may be more favorable.

Assumptions and limitations

This calculator is a simplification and has important limitations, especially for Medicare Part D, which can be complex. It is intended for educational estimates only.

• No detailed Part D phases: The tool does not separately model the deductible phase, initial coverage, coverage gap (donut hole), and catastrophic coverage. Instead, it applies one deductible and one coinsurance rate to your total annual spending.
• Same drugs under both plans: It assumes the same medications, quantities, and retail prices under each plan. In reality, formularies, tiers, and preferred pharmacies can cause significant differences.
• Single coinsurance rate: Many plans use a mix of copays and coinsurance that varies by drug tier. Here, you enter one average coinsurance rate to approximate your overall cost share.
• Even spending over the year: The model effectively spreads your drug spending across the year and does not try to time when you hit the deductible or any coverage thresholds.
• Out-of-pocket cap is optional: Medicare Part D rules on true out-of-pocket (TrOOP) costs are complex. The optional cap here is simply a user-entered limit for this estimate, not a formal TrOOP calculation.
• No Extra Help or other assistance: The calculator does not adjust for Low-Income Subsidy (Extra Help), state pharmaceutical assistance programs, manufacturer assistance, or employer/union coverage.
• Geographic and pharmacy differences: Actual costs may vary by region, plan service area, pharmacy network, and mail-order vs. retail use.

Because of these limitations, you should treat the results as a high-level comparison. Always verify plan details with the official Medicare Plan Finder, each plan’s Summary of Benefits, or a licensed insurance professional.

When a higher premium plan might still save you money

It is common to focus on the lowest monthly premium, but that plan is not always the cheapest overall. You might prefer a plan with a higher premium if:

• You take many brand-name or specialty drugs, and a lower coinsurance rate significantly reduces your share of the cost.
• You want a low or zero deductible so that your coverage starts right away.
• You value more predictable costs during the year instead of larger bills early in the year.

This calculator lets you explore how different combinations of premiums, deductibles, and coinsurance affect your total annual cost for various spending levels. You can adjust your estimated spending up or down to see how the more cost-effective plan might change if your medication needs increase or decrease.

Important disclaimer

This tool is for general education and illustrative estimates only. It does not provide official Medicare premium or benefit information, is not affiliated with or endorsed by the Centers for Medicare & Medicaid Services (CMS), and does not replace the Medicare Plan Finder or advice from a licensed insurance professional.

Your actual costs will depend on your specific medications, pharmacies, plan rules, and eligibility for financial assistance. Before enrolling in or changing a Medicare plan, review the plan’s official documents and consider speaking with Medicare, a State Health Insurance Assistance Program (SHIP) counselor, or a licensed agent.

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

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:

1. Deductible phase. You pay the negotiated price for drugs until the deductible is met.
2. Initial coverage. You pay copays or coinsurance defined by the plan. The plan pays the rest.
3. 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.
4. 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.