Cutting Prescription Drug Costs on Medicare

If prescription costs are squeezing your budget, you have more options than you might think. The biggest savings usually come from three places: making sure you are in the drug plan that covers your medicines most cheaply, asking about lower-cost versions of the drugs you take, and applying for help programs such as Extra Help if your income is limited. Medicare's drug benefit has also changed in recent years, including a yearly cap on what you pay out of pocket for covered drugs, so it is worth understanding how your plan works today.

How Medicare Drug Costs Work Now

Medicare drug coverage, called Part D, comes either as a stand-alone drug plan alongside Original Medicare or built into a Medicare Advantage Plan. According to Medicare's page on how much Medicare drug coverage costs, what you pay depends on your plan's premium, its deductible, and the copayments or coinsurance you pay at the pharmacy.

Coverage generally moves through three stages during the calendar year:

1. Deductible stage. If your plan has a deductible, you pay the full cost of covered drugs until you meet it. Medicare says no drug plan may have a deductible higher than $615 in 2026, and some plans have no deductible at all.
2. Initial coverage stage. After the deductible, you pay 25% of the cost as coinsurance for generic and brand-name drugs.
3. Catastrophic coverage. Once your out-of-pocket spending on covered Part D drugs reaches $2,100 in 2026, you automatically move into catastrophic coverage and pay nothing out of pocket for covered Part D drugs for the rest of the year. Medicare lists that threshold as $2,400 in 2027.

That annual cap is a real protection for people who take expensive medicines. But it only applies to drugs your plan covers, which is why choosing the right plan still matters.

Each month after you fill prescriptions, your plan sends an Explanation of Benefits. It shows what you paid, what the plan paid and which coverage stage you are in. Reading it is a simple way to track how close you are to the cap.

Shop Your Plan Every Fall

Drug plans change their premiums, deductibles and lists of covered drugs (called formularies) every year. A plan that was a good fit last year may cost more next year, even if you take exactly the same medicines.

During the Open Enrollment Period, which runs October 15 to December 7 according to Medicare's page on joining a health or drug plan, you can switch drug plans, and the change takes effect January 1. Medicare recommends entering all the prescription drugs you take regularly into the Medicare Plan Finder to get the most accurate monthly and yearly cost estimate for each plan.

When you compare, look beyond the monthly premium:

• Is each of your drugs on the plan's formulary, and at what tier?
• Does the plan have a deductible?
• Are your preferred pharmacies in the plan's network, and do some pharmacies charge less?
• Is mail order available, and is it cheaper for drugs you take long term?

If you would like a person to walk through the comparison with you, your State Health Insurance Assistance Program (SHIP) offers free one-on-one counseling, and SHIPs are not connected to any insurance company.

Ask About Generics and Lower-Cost Alternatives

One of the simplest questions to ask your doctor or pharmacist is whether a generic or a cheaper brand-name drug would work for you. Medicare's page on help with drug costs lists this as one way to lower your costs, along with checking mail-order pharmacies.

Some people worry that generics are not as good. The U.S. Food and Drug Administration's generic drug facts page explains that FDA-approved generic medicines work in the same way and provide the same clinical benefit and risks as their brand-name counterparts. A generic must match the brand-name drug in dosage, safety, strength, quality and the way it is taken.

Never stop or switch a medicine on your own to save money. Bring a complete list of your prescriptions to your doctor or pharmacist and ask, "Is there a less expensive option that would be safe for me?" Pharmacists can also tell you whether a 90-day supply or a different pharmacy would cost less under your plan.

Extra Help: Medicare's Program for Limited Incomes

Extra Help is a Medicare program that helps people with limited income and resources pay Part D premiums, deductibles, coinsurance and other costs. People who get Extra Help also do not pay a Part D late enrollment penalty.

You get Extra Help automatically if you have full Medicaid coverage, get help from your state paying your Part B premium through a Medicare Savings Program, or receive Supplemental Security Income (SSI). Everyone else can apply. Social Security's page on applying for Part D Extra Help notes that you can apply any time, before or after you enroll in Part D.

Medicare lists the 2026 limits as follows:

Limits are different in Alaska and Hawaii and can go up each year, so check Medicare.gov for the current figures. Even if you think you are slightly over, it may be worth applying, because Medicare explains what counts toward income and resources and not everything you own is counted. When you apply for Extra Help, Social Security also sends your information to your state to start a Medicare Savings Program application unless you tell them not to.

If you qualify for Extra Help or Medicaid but are not yet in a drug plan, Medicare's Limited Income Newly Eligible Transition program, called LI NET, gives temporary drug coverage. You can call LI NET at 1-800-783-1307.

Other Programs That Can Help

• State Pharmaceutical Assistance Programs. Some states help pay drug plan premiums or cost sharing. Contact your state or your SHIP to find out what is available where you live.
• Manufacturer assistance programs. Some drug companies offer programs to help people with Medicare drug coverage pay for their medicines. Each company has its own eligibility rules, so contact the maker of your drug directly.
• The Medicare Prescription Payment Plan. Medicare's page on the Medicare Prescription Payment Plan explains that this free, voluntary option spreads your out-of-pocket drug costs across the calendar year in monthly bills from your plan. It can make large costs early in the year easier to handle, but Medicare is clear that it doesn't save you money or lower your drug costs.

Watch out for anyone who calls, texts or emails offering to lower your Medicare drug costs in exchange for your Medicare number or bank details. Use official channels: Medicare.gov, Social Security, your plan's member services number or your SHIP.

Your Next Steps

1. Make a medication list with each drug's name, dose and how often you take it.
2. Check your current plan in the Medicare Plan Finder and compare it with others each fall.
3. Ask your doctor or pharmacist about generics, lower-cost brands, 90-day supplies and mail order.
4. See whether you qualify for Extra Help and apply through Social Security if you might.
5. Ask your SHIP about state programs and help comparing plans.
6. Call 1-800-MEDICARE (1-800-633-4227) with questions; TTY users can call 1-877-486-2048.

Small savings on each prescription add up over a year. Pair them with everyday savings such as the senior discounts worth asking for, and keep your overall retirement picture in mind, including when to claim Social Security.