How do I choose the right Medicare Part D plan?

Why is the Part D plan with the lowest premium so often the wrong one? Because the premium is the small number. The real cost of a drug plan lives in its formulary, the list of which drugs it covers and on what tier, and two plans with similar premiums can differ by thousands of dollars a year on the exact medications you take.

What Part D is

Part D is Medicare’s prescription drug coverage, sold by private insurers either as a standalone plan alongside Original Medicare or baked into a Medicare Advantage plan. Every plan has a premium, a deductible, and a formulary that sorts your drugs into tiers, with cheaper copays on low tiers and steeper ones up high. Higher earners also pay a Part D surcharge through IRMAA, the income-based add-on tied to your tax return from two years back.

Pick the plan around your drugs, not the premium

Here’s the move almost nobody makes correctly. Don’t shop for the lowest premium. Shop for the lowest total cost on your actual prescriptions.

Take your real list of medications, doses included, and run it through the plan finder on Medicare.gov. It will show you the all-in annual cost, premium plus deductible plus copays, for each plan given your specific drugs. The plan that wins on premium frequently loses badly once your medications hit a high tier or fall off the formulary entirely. A drug that’s tier 2 on one plan and not covered on another can swing your year by thousands.

This is the same trap as every other “cheapest option” in finance. The sticker price is designed to look good. The cost that matters is the one you pay when you actually use the thing.

Reshop every single year

Plans change their formularies and pricing annually, and so do your medications. The plan that was perfect this year can quietly move your key drug to a worse tier next year, or jack the copay. The Annual Election Period each fall is your one clean window to switch with no underwriting. Use it every year, not just once.

Most people set a Part D plan at 65 and never look again. That’s how a plan that fit perfectly drifts into costing you for a drug it used to cover cheaply. Ten minutes in the plan finder each fall is one of the highest hourly-rate chores in retirement.

A note for affluent retirees

If your income is high enough to trigger the Part D IRMAA surcharge, factor that in, but don’t let it distract you from the formulary, which usually swings far more money. And keep an eye on the annual review calendar so the reshop doesn’t slip.

The premium is the bait. The formulary is the bill. Choose on the bill.