All about Medicare Part D prescription coverage in 2026

Patrice King Brown: Whether you’re new to Medicare, exploring your options, or just want keep up with the latest in Medicare news, we've got you covered.

Stacy Smith: No fluff. No jargon. Just real conversations to help you navigate Medicare with confidence. I’m Stacy Smith.

Patrice King Brown: And I’m Patrice King Brown. Welcome to Medicare for the Record brought to you by UPMC for Life.

Stacy Smith: Welcome to this episode of “Medicare for the Record.” We’re pleased to have you with us, and today we have a special guest and that is Lauren Zandier, director of Clinical Pharmacy of UPMC Health Plan. Now, Lauren’s going to talk a lot about the changes coming to Part D of the Medicare plan, but first, before we hear that, tell us a little bit about yourself.

Lauren Zandier: Yeah. So as you said, my name’s Lauren. I’m a pharmacist. I am the director of clinical pharmacy at UPMC Health Plan. I’ve worked at the Health Plan for over 17 years. I work with a really, really amazing team of other pharmacists. They have a lot of expertise on everything that you would expect a pharmacist to know about—so what drugs do, what diseases they’re used to treat, but also the team is really, really good at understanding health insurance, how drug coverage works. Through the years in my career, I’ve really seen a lot of patients who, when they get a new diagnosis or they’re trying to manage a lot of diseases, how overwhelming that can be. So add on top of that that you have to understand how your drug coverage works. How much do I have to pay for this? Is it covered? Those things are, again, things I never thought a pharmacist would really be involved in, but I found a lot of value in helping patients with those kinds of questions. And so I’m really excited to be here today to talk about Medicare Part D for prescription drug coverage and to hopefully answer some of your questions.

Stacy Smith: Lauren, thank you for joining us. There’s so much to talk about with Part D of Medicare. It’s one of the ones that is going to go through some of the most changes coming up. And so I think all of us probably take some sort of medication, one shape or another form. So how does Part D work for Medicare, especially Medicare Advantage?

Lauren Zandier: So the Part D program—just basics, is the part of Medicare that helps to pay for prescription drugs, like you said. Part D plans are provided by private insurance companies. Those can be in the form of a standalone plan, a plan that only really provides coverage for prescription drugs through Part D. Part D can also be part of a Medicare Advantage plan. And a Medicare Advantage plan, if you don’t know what that is, it is a Medicare plan—again, offered by a private insurance company that really rolls a lot of a patients’ coverage under Medicare into one plan. And so it may include part D coverage, but also medical services would be covered through a Medicare Advantage plan, hospitalizations, things like that. So any plan that offers Part D coverage, whether it’s one of those standalone plans or a Medicare Advantage plan, will have what’s called a formulary. And probably people have heard the word formulary before, but basically what a formulary is, is a list of the drugs that Part D plan covers. And so this formulary document can be accessible on a plan’s website. Patients can also call their plan directly to get a copy of the formulary to ask drug questions. But the formulary is really important because it not only tells people what drugs are covered on that Part D plan, but it also shows how those drugs are covered. So what tier the drug is on, are there any limitations to the coverage of that drug. So again, really an important document for patients to be aware of.

Stacy Smith: So when you—excuse me, Patrice—when you talk about tiers, what do you mean by that?

Lauren Zandier: Yeah, so a tier, every drug on the formulary will be associated with a specific tier and it’s a tier number. And then the tier number is really your key to what your copay or co-insurance will be for every drug that’s on that tier. So any drug on Tier 2 might be associated with a certain copay. A drug on Tier 3 might have a co-insurance. And if you’re not familiar with the terms copay and co-insurance, a copay is a set dollar amount that a patient would pay when they go to fill their prescription. A co-insurance is a percentage of the drug costs that a patient would pay when they fill a prescription.

Patrice King Brown: When you mentioned that the tiers again, are they ever interchangeable in Medicare Advantage plans? Do sometimes they change tiers?

Lauren Zandier: So you typically won’t see a drug change in tier during a benefit year—really can’t change negatively during a plan year—but you may see drugs change tiers year over year. So maybe on one tier in 2025 and a different tier in 2026. And that change in tier—like we talked about—it may actually mean that there’s a different cost share for that patient. So it could be more, could be less depending on the tier that it moves from and goes to. Every year, patients who are in a Medicare Advantage plan will receive what’s called an Annual Notice of Changes document, and this document will walk through a lot of the changes that will be happening for that year starting on Jan. 1, so received at the end of September, telling you what’s going to happen on Jan. 1 if you stay in the plan that you’re currently in. So when someone’s picking a plan during open enrollment season that they know what to expect. It’s not like a bait and switch.

Patrice King Brown: That’s a good way to look at it. It’s not a bait and switch. Lauren, can you explain what the stages are of the drug costs throughout the year?

Lauren Zandier: Yeah, so it’s a really good question, A really timely question because in 2025, we’re actually seeing quite a lot of changes to those stages in coverage. And those changes are a result of the Inflation Reduction Act, which is an act that was signed into law by President Biden in 2022, and really represents some of the biggest changes that we’ve seen to the Part D program since it started in 2006. And so the stages of coverage—many Medicare members who have had Medicare plans for a long time may be used to how those stages worked in the past, but they’ve definitely changed in 2025. And so in 2025, there are really three stages of coverage that a patient could experience, the first being a deductible stage. The second is an initial coverage stage, and the third is catastrophic coverage stage.

Lauren Zandier: And so if a patient is in a plan that has a deductible for Part D, and the plan deductible for Part D could apply to all Part D drugs, it could apply to only certain Part D drugs. If they have that deductible, that will be the first stage that they would experience in the year. So starting on Jan. 1, they would go to fill the prescription for a drug that’s subject to this deductible. And what would happen is that patient would end up having to pay actually the full cost of that drug until they have paid to the point where they’ve reached that deductible amount. And so once they’ve reached that deductible amount, that drug that was subject to the deductible, that’s when those copays and co-insurances we were talking about will start to kick in. So they’ll start to pay the copays and co-insurances based on the tier that the drug is on. They’ll pay those copays and co-insurances through the second stage of coverage, which is the initial coverage stage, until they reach what’s called a cost cap for that drug or for all their drugs. And in 2025, that cap is $2,000. And so basically what that means is with a deductible, all their copays and co-insurances that they’re paying for their drugs, they would never actually pay more for Part D drugs during that year than $2,000. In 2026, that number is $2,100. Once they’ve hit that cap, they move into this third stage of coverage that I talked about, the catastrophic stage—which sounds kind of scary, but it’s actually, at this point, patients would not pay anything for the drugs for the remainder of the year for the Part D drugs. So kind of move through those stages of the benefit throughout the year. Some patients will never actually reach the third stage because they won’t reach that cap. Some patients will reach that third stage very early in the year. So it really just depends on the drugs the patient’s taking, how much those drugs cost, how they move through or cycle through those different stages.

Patrice King Brown: So that’s an individual thing? Individual plan.

Lauren Zandier: Yeah, so that cap that I talked about, that is consistent across all of Medicare plans. Some plans will have that deductible, some plans don’t. Some plans have the deductible on some drugs and not other drugs. We like to make it complicated, but yeah, that’s basically how it works.

Stacy Smith: That’s what I was going to ask is that, you can get a plan that does not have a deductible, is that right?

Lauren Zandier: Deductibles right now we’re seeing in the market actually is that most plans do have Part D deductibles. Deductibles on Part D have actually been around for a long time, but many plans didn’t have a deductible in the past. But really in 2025, it seems that the majority of plans do have some sort of a deductible in part D.

Stacy Smith: The reason I’m asking is because there are Tier 1 and there’s Tier 2 and then 3—and then I don’t know what the other tiers are, but some of the plans offer Tier 1 and Tier 2 drugs at zero cost to the patient. So is there a deductible involved in those?

Lauren Zandier: So many times those drugs will actually not count towards the deductible. They won’t be a part of the deductible is actually how I should say it. So those you would pay your copays and your co-insurance or your co-insurance—those would be a copay of $0 the whole way through the year. So those drugs on Tier 1 and 2 with no cost, you would still pay the copay. And for some plans, the deductible may only apply to certain tiers. So potentially a plan may have a deductible that doesn’t actually apply to Tier 1 or Tier 2. And in that case, you would pay your copay for that drug the whole way through the year.

Stacy Smith: And generic drugs, are they more on the Tier 1 and Tier 2?

Lauren Zandier: Yeah, so Tier 1 and Tier 2—it depends on the plan really. Every plan is designed a little bit differently, of course, but Tier 1 and Tier 2 are generally generic tiers. The way to tell actually what makes up each tier—what the name of the tier is for the formulary that your plan has—is to actually look at the formulary document that we were talking about before, or call the plan, of course. But yes, so many times those generics are on those lower tiers and typically the lower tiers are associated with a lower amount of cost share or lower copay or co-insurance for the patient. You will sometimes find generics on higher tiers, but that’s why it’s, again, really important to look at that formulary when you’re choosing a plan or when you’re in a plan just to understand how the drugs are covered that you’re taking.

Patrice King Brown: So what are the stages again?

Lauren Zandier: So it’s the deductible stage. Again, that’s where if your plan has a deductible, the deductible phase is where you would be paying the full cost of the drug up to that deductible amount. The second stage is the initial coverage stage. And again, this is where you would be paying your copays and your co-insurances. And then that catastrophic phase is where you end up if you do meet that cap on the total cost across the year for Part D prescription drugs. In 2026, that cap will be at $2,100. In 2027 and beyond 2027, there’ll probably be adjustments to that cap just based on inflation. So something to look for in future years, too. Another change that’s happening in 2026 is, you may hear it in the news about price negotiation. So, drug price negotiation. This is the government actually working with drug manufacturers or drug makers to negotiate the costs of certain brand-name drugs. So these are brand-name drugs—it’s a set list of brand-name drugs that a lot of Medicare members actually use. And so what does this mean for a patient? How does that actually impact a patient? It’s really two things: So one, if a patient is taking one of those drugs, depending on how their plan’s designed, you can see how complicated it gets. They may save a little bit of money on those drugs if they’re taking them, especially if they have a co-insurance because they’re paying a percentage of that drug cost, especially if they don’t hit that $2,100 max. The other thing that this drug price negotiation does is it says that, OK, all these drugs that are on this list, all these brand-name drugs, every part D plan has to cover those drugs. And so of course, what that means for patients who take those drugs is regardless of what plan they join, those drugs will be covered. They’ll have access to them.

Stacy Smith: So Medicare decides what drugs are going to be in the formulary, is that correct? And then it’s up to the insurance plan to decide what tier those drugs are going to be in?

Lauren Zandier: So the plan actually decides how they want to design their formulary. There are a lot of stipulations around that—a lot of requirements that they need to meet, different tier structures that they can have, all sorts of things like that. And so every year the plan puts together what they think their formulary should be, what they want to do with their formulary, and they submit that to CMS, which is the government agency I was talking about earlier. And then CMS has a whole process to review and approve. So any plan that is offering Part D coverage would have to be approved by CMS through their processes each year. So again, yeah, the plan really tries to determine the formulary, but then CMS must review and approve that.

Stacy Smith: A lot of people are diabetic. What about medications they take for diabetes?

Lauren Zandier: One thing that’s not changing in 2026 is—so, currently for patients who use insulin, insulins are $35 per month. They’ll never be more than $35 for a patient every month. That will continue. There’s no indication that that will change in the near future. That’s good for patients who take insulin. For other diabetic patients, it just really depends on the formulary of the plan that they’re in. But there are requirements from CMS that really tell us that plans have to cover at least a couple drugs in each drug class in a preferred position. But in general, a plan will be covering medications for diabetes.

Stacy Smith: Does the $35 for insulin each month apply toward the $2,000 for the year, or is it a separate cost?

Lauren Zandier: No, it does apply towards that $2,000. Yeah, anything that a patient pays for their part D prescription drugs will count towards that out-of-pocket.

Patrice King Brown: One of the things—there’s so many people taking so many different medications that—and for many it’s very difficult. We’ve heard horror stories of some people who have to decide on food or medicines or whatever. So are there programs? What if someone needed help to take care of their Medicare costs?

Lauren Zandier: Yeah, so there are a lot of programs available. It really just takes kind of looking into them, investigating if a patient is eligible. So there’s what’s called “Extra Help” through Medicare, and this Extra Help—there are multiple programs that can help patients to pay for their premiums for their plan, for those part D deductibles we talked about, copays and co-insurances. What we’ve kind of seen over the years too is that sometimes patients actually qualify for Extra Help, but they don’t realize that they qualify for Extra Help. So it does take a patient actually looking into it to see if they qualify. And the way to do that is really pretty easy. Call Medicare directly and they have a very easy-to-remember phone number (1-800-MEDICARE) or to go to the Medicare website, which is medicare.gov. That’s a great place to start to see if they’re eligible for Extra Help. There are some other programs—there’s PACE and PACEnet, which are Pennsylvania programs actually that help older adults to pay for prescription drugs. Again, we just have to make sure that you qualify for those. And many patients might even qualify for Medical Assistance, or Medicaid. Of course, patients who are in the armed forces should definitely look into benefits through the Department of Veterans Affairs, or the VA. So there’s definitely a lot of options to look into if a patient’s having trouble with the cost. Another program that can actually help patients with their prescription drug costs is called the Medicare Prescription Payment Plan. We often hear that referred to as M3P as well, because it is quite a mouthful. And this is actually a plan that really—or program—that really won’t reduce a patient’s drug costs or total drug costs throughout the year. They’re still going to have that same cap we keep talking about. But what this program does is actually spreads the cost out through the year. And so when we were talking about those stages of coverage, it’s probably obvious that for many patients who are on high-cost drugs, they’ll have higher costs for their drugs at the beginning of the year before they hit that cap. And so that can be really problematic for patients who have a budget that they have to stick to or they’re on a fixed income or something like that. And so this program really attempts to help spread those costs out. So what it does is, instead of a patient paying their normal deductible, copay, co-insurance at the pharmacy, it spreads the costs out in monthly installments. So instead of paying that copay when they pick up their prescription, instead they won’t pay anything at the pharmacy, but instead they’ll receive a monthly bill, and that bill they’ll receive every month through the end of the year. And the M3P program is a voluntary program, so a patient would have to elect to enroll in it by calling their plan. But really any patient who has Part D coverage through a standalone plan or a Medicare Advantage plan could enroll in this program. So any plan will have this Medicare prescription payment plan in place. One thing to mention about this is that, of course, there are patients that this really wouldn’t benefit. So patients who are on drugs that aren’t subject to a deductible, patients who won’t ever reach that $2,100 cap in 2026. For those patients, they have relatively stable costs already on a monthly basis. So really this plan, which was established through the Inflation Reduction Act, is meant to help with exactly that scenario. So exactly the scenario I was talking about where drug costs are high at the beginning of the year and low at the end of the year. So really just spreading it out throughout that year.

Stacy Smith: Lauren, you’ve been very informative today. Thank you so much for joining us for “Medicare for the Record.” A lot has been packed into this.

Patrice King Brown: A lot in this. Yeah, there is a lot, but you clarified a lot of things too, and that’s important for us. I didn’t even know about [or] think about the stages and tiers and some of the differences. So thank you very much, Lauren.

Lauren: Sure.

Patrice King Brown: We do have three things we want you to be able to walk away with from this.

Patrice King Brown: Changes that have been made to the Part D program this year mean that Medicare Advantage plans now have three stages of coverage that are going to help consumers manage their prescription drug costs.

Stacy Smith: And upcoming changes for the year 2026 will be shared with you in the plan’s Annual Notice of Change, which should be arriving by Oct. 1 this year.

Patrice King Brown: And if you need help paying for your prescriptions, there are many programs available that can help. Thank you for joining us. We hope you’ll join us next time for “Medicare for the Record.”

Thanks for tuning in to Medicare for the Record brought to you by UPMC for Life. To learn more about your Medicare options, visit: Upmchealthplan.com/fortherecord

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