If you are approaching Medicare eligibility or already enrolled, prescription drug costs are likely one of your biggest concerns. Medicare Part D is the program that helps cover those costs — but it comes with its own rules, phases, and pitfalls that catch many Missouri beneficiaries off guard.

This guide breaks down everything you need to know about Part D coverage, from how it works day-to-day to how to avoid the penalties that can follow you for years.

What Is Medicare Part D?

Medicare Part D is the prescription drug benefit within Medicare. It is offered exclusively through private insurance companies that have been approved by Medicare — you cannot get Part D coverage directly from the federal government.

Part D plans are available in two forms:

• Standalone Prescription Drug Plans (PDPs): Paired with Original Medicare (Parts A and B) or a Medicare Supplement (Medigap) plan.
• Medicare Advantage Prescription Drug Plans (MA-PDs): Bundled into a Medicare Advantage plan that already includes hospital and medical coverage.

Most people who want drug coverage will choose one of these two paths. If you are on Original Medicare with a Medigap plan, you will need a standalone PDP. If you are on Medicare Advantage, your drug coverage is typically built in.

How Part D Coverage Works: The Four Phases

Part D coverage is structured in four distinct phases. Understanding each one helps you anticipate your out-of-pocket costs throughout the year.

1. Deductible Phase

Many Part D plans charge an annual deductible before coverage kicks in. In 2026, the maximum allowable deductible is $590. Some plans waive the deductible entirely for certain drug tiers — particularly generics — so it pays to read the plan details carefully.

2. Initial Coverage Phase

Once you have met your deductible, you enter the initial coverage phase. During this phase, you pay a copay or coinsurance for each prescription, and your plan pays the rest. Your costs depend on which "tier" your drug falls into on the plan's formulary (more on that below).

3. Coverage Gap (The "Donut Hole")

The coverage gap — commonly called the donut hole — begins once your total drug spending (what you and your plan have paid combined) reaches a set threshold. In 2026, that threshold is $5,030.

Thanks to the Inflation Reduction Act, the donut hole is significantly less painful than it once was. You now pay no more than $2,000 out of pocket in a calendar year before catastrophic coverage kicks in. This cap is a major improvement for beneficiaries who take expensive specialty medications.

4. Catastrophic Coverage Phase

After your out-of-pocket costs reach $2,000, you enter catastrophic coverage. At this point, Medicare covers the vast majority of your drug costs for the rest of the year. For many beneficiaries on high-cost medications, reaching this phase provides significant financial relief.

Understanding Formularies

A formulary is your plan's list of covered drugs. Every Part D plan has one, and they vary considerably from plan to plan. Drugs are organized into tiers, with lower tiers generally costing less:

Tier	Typical Drug Type	Your Cost
Tier 1	Preferred generics	Lowest copay
Tier 2	Non-preferred generics	Low copay
Tier 3	Preferred brand-name	Moderate copay
Tier 4	Non-preferred brand-name	Higher copay
Tier 5	Specialty drugs	Highest cost (often coinsurance)

Key point: A drug covered on one plan's formulary may not be covered on another — or may be placed on a higher, more expensive tier. Before enrolling, always verify that your specific medications are covered and at what tier.

Formularies can also change from year to year. Each fall during the Annual Enrollment Period (AEP), review your plan's updated formulary to make sure your drugs are still covered at a cost you can manage.

Preferred Pharmacies: A Hidden Source of Savings

Most Part D plans have a network of preferred pharmacies where you pay lower cost-sharing than at standard in-network pharmacies. In Missouri, major chains like Walgreens, CVS, Walmart, and Schnucks are commonly included in preferred networks — but which pharmacies are preferred varies by plan.

Using a preferred pharmacy can save you a meaningful amount over the course of a year, especially if you take multiple medications. When comparing plans, check not just the premium and formulary, but also whether your regular pharmacy is in the preferred network.

Mail-order pharmacy options are another way to save. Many plans offer a 90-day supply through mail order at a lower per-dose cost than picking up a 30-day supply at a retail pharmacy each month.

The Late Enrollment Penalty: A Mistake That Follows You

One of the most consequential — and avoidable — mistakes Missouri Medicare beneficiaries make is failing to enroll in Part D on time.

If you do not sign up for a Part D plan when you are first eligible and you go 63 or more consecutive days without creditable drug coverage, you will owe a late enrollment penalty for as long as you have Medicare.

The penalty is calculated as 1% of the national base beneficiary premium for every month you went without coverage. In 2026, the base premium is $36.78. That means:

• 12 months without coverage = ~12% penalty = ~$4.41/month added to your premium
• 24 months without coverage = ~24% penalty = ~$8.83/month added to your premium

These amounts may seem small, but they compound over years and decades of Medicare enrollment. A two-year gap could cost you hundreds of dollars in extra premiums over a 20-year retirement.

Creditable coverage — drug coverage from an employer, union, VA, or other source that is at least as good as Medicare's standard — does not trigger the penalty. If you have creditable coverage, keep documentation of it in case you need to prove it later.

Choosing the Right Part D Plan in Missouri

With dozens of plans available in Missouri, the comparison process can feel overwhelming. Here is a practical framework:

Step 1: List Your Medications

Write down every prescription drug you take, including the exact name (generic or brand), dosage, and how often you take it. This is the foundation of any meaningful plan comparison.

Step 2: Use Medicare's Plan Finder

Medicare's online Plan Finder tool at Medicare.gov allows you to enter your drugs and compare plans based on your total estimated annual cost — including premiums, deductibles, and copays. This is the most accurate way to compare plans side by side.

Step 3: Check Pharmacy Networks

Confirm that your preferred pharmacy — or a convenient alternative — is in the plan's preferred network. If you use mail order, verify that option is available.

Step 4: Review the Star Rating

Medicare rates Part D plans on a 1–5 star scale based on customer service, drug pricing accuracy, and member experience. Plans with 4 or 5 stars are generally more reliable. You can switch to a 5-star plan at any time during the year — not just during AEP.

Step 5: Consider the Full Picture

The lowest premium is not always the best value. A plan with a $0 premium but a high deductible and unfavorable formulary placement for your drugs may cost you far more than a plan with a modest premium and lower cost-sharing.

When Can You Enroll or Change Plans?

• Initial Enrollment Period (IEP): The 7-month window around your 65th birthday (3 months before, the month of, and 3 months after).
• Annual Enrollment Period (AEP): October 15 – December 7 each year. Changes take effect January 1.
• Medicare Advantage Open Enrollment Period: January 1 – March 31. If you are on a Medicare Advantage plan, you can switch to a different MA plan or return to Original Medicare (and add a PDP) during this window.
• Special Enrollment Periods (SEPs): Triggered by qualifying life events such as losing employer coverage, moving out of a plan's service area, or qualifying for Extra Help.

Extra Help: Lower Costs for Qualifying Missourians

If your income and resources are limited, you may qualify for the Low Income Subsidy (LIS), also called Extra Help. This federal program significantly reduces Part D premiums, deductibles, and copays for eligible beneficiaries.

In 2026, individuals with income up to about $22,590 and limited assets may qualify. Missouri also has the MO HealthNet for the Aged, Blind, and Disabled (MHABD) program, which can provide additional assistance for qualifying residents.

If you think you might qualify, it is worth applying — the savings can be substantial.

Working With an Independent Medicare Broker

Navigating Part D on your own is possible, but the stakes are high. A wrong choice can mean paying hundreds more per year for the same medications, or discovering mid-year that a drug you depend on is not covered.

As an independent Medicare broker serving the St. Louis area, I work with multiple carriers to find the plan that fits your specific drug list, preferred pharmacy, and budget — at no cost to you. My compensation comes from the insurance companies, not from you.

If you would like a no-pressure review of your current Part D coverage or help choosing a plan during the Annual Enrollment Period, I am happy to help.

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James Hughes is a licensed independent Medicare insurance broker serving St. Louis and the surrounding Missouri area. He can be reached at 314-229-6146 or James@HughesMedicare.com.