Medicare Advantage drug tiers and drug payment stages

Whether you have a Medicare Advantage Prescription Drug plan (MAPD) or have simply chosen to enroll in Part D coverage on its own, it’s important to understand the costs and coverage stages of prescription drug benefits.  

For most Part D plans, you’ll start in the Annual Deductible Stage, which is the part of your prescription drug coverage where you’re only required to pay for costs up to your deductible.

 

What is the initial coverage limit? 

The initial coverage stage is the part of your Part D coverage where you’ll pay a copay or coinsurance for covered Part D prescriptions until you’ve reached a certain threshold. This is known as your out-of-pocket threshold for Part D drugs and, in 2026, the limit is $2,100.

After reaching the $2,100 limit, you’ll enter a third Part D coverage stage called the Catastrophic Coverage stage. In this stage, you won’t have to pay for covered Part D drugs for the rest of the calendar year.

 

What are drug tiers?  

Another piece of Part D coverage that may impact your prescription drug costs is which tier your prescription falls under. Drug tiers represent the different drugs covered by your plan generally arranged by cost. So, a drug in a lower tier usually costs less than a drug in a higher tier.  

One example of a drug tier list could look like this, but you should check your plan to see how it differs: 

• Tier 1 - Preferred Generic: Generic drugs that are available at the lowest cost share for the plan
• Tier 2 - Generic: Generic drugs that the plan offers at a higher cost to you than Tier 1 Preferred Generic drugs
• Tier 3 - Preferred Brand: Brand-name drugs that the plan offers at a lower cost to you than Tier 4 Non-Preferred drugs 
• Tier 4 - Non-Preferred Drug: Generic or brand-name drugs that the plan offers at a higher cost to you than Tier 3 Preferred Brand-name drugs 
• Tier 5 - Specialty Tier: High-cost drugs used to treat complex or chronic conditions.

You should check your plan’s formulary—their list of covered drugs—to see which of your prescriptions are under which tier.  

 

How do drug tiers impact my plan coverage?  

As long as your prescription is listed in your plan’s formulary, it will generally be covered. However, your coinsurance or copay for that drug may vary based on its tier. Sometimes, plans may change their formularies or move drugs to different tiers which may impact your expected costs.

If your prescription is not listed in your plan’s formulary, then it may not be covered. Check your plan’s out-of-pocket benefit information to understand how much you may have to pay to continue that drug. If you and your doctor agree you should remain on a prescription not listed in your plan’s formulary, you can request a formulary exception, and you may be able to file an appeal if the request is denied.

 

Can I get help paying coinsurance during the initial coverage stage or for higher tier drugs?  

Yes, you can apply for Extra Help, a financial assistance program through Social Security (SSA) that helps pay for some of your prescription drug costs. You can apply for Extra Help online if you meet the following:  

• You are entitled to Medicare Part A and/or enrolled in Part B 
• You live in one of the 50 States or the District of Columbia 
• Your combined savings, investments, and real estate are not worth more than $36,100, if you are married and living with your spouse  

OR 

• $18,090 if you are not currently married or not living with your spouse. (Do NOT count your home, vehicles, personal possessions, life insurance, burial plots, irrevocable burial contracts or back payments from Social Security or SSI.)  

Please note that if you are enrolled in Medicare and also have Supplement Social Security (SSI) or Medicaid, you will not need to apply for Extra Help because you will automatically qualify for Extra Help.