Medicare Part D
The voluntary Medicare outpatient prescription drug benefit offered through private plans since 2006.
Overview
Created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Part D is delivered by private insurers through standalone drug plans or bundled into Medicare Advantage plans, each with its own formulary, pharmacy network and cost sharing tiers. Enrollees who delay joining without other creditable drug coverage face a permanent late enrollment penalty. The original design included the notorious coverage gap known as the donut hole, which was narrowed under the Affordable Care Act. The Inflation Reduction Act of 2022 eliminated the gap, capped annual out-of-pocket drug spending at 2,000 dollars starting in 2025 with later indexing, and began Medicare price negotiation for selected high cost drugs.
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