Medicare Part D coverage helps pay for your prescription drugs

Medicare Part D helps pay for the prescription drugs you use. This coverage is not automatic — you decide whether or not to enroll in a private Medicare Part D plan. You can buy a separate policy just for drugs, called a Prescription Drug Plan (PDP), or you can get your Medicare Part D coverage through a Medicare Advantage plan (most include health and prescription benefits). Understanding how the Medicare Part D benefits work will help you pick the right plan for you.

The 3 phases of coverage work like this in 2025:

Phase 1: Yearly Deductible Phase

You begin this payment phase when you fill your first prescription of the year. You pay the total cost of your drugs until you've met your plan's annual deductible, if applicable.

Phase 2: Initial Coverage

Once you've met your annual deductible, you move into the INITIAL COVERAGE phase. During this phase, you share costs with the plan – through copays or coinsurance. You remain in this payment phase until the shared total (what you AND Blue Cross pay) reaches a combined total of $2,000.

Phase 3: Catastrophic Coverage

Once your total out-of-pocket costs reach $2,000, you move into the CATASTROPHIC coverage phase. If you reach this phase, there is no cost sharing and Blue Cross pays all drug costs.

Also, NEW in 2025, the Medicare Prescription Payment Plan 

The Medicare Prescription Payment Plan (M3P) is a new payment option that is designed to help manage your out-of-pocket drug costs by spreading them across the calendar yar (January - December). Because drug costs are spread out over the remaining months in the year, those with high drug costs early in the year may benefit the most from this option. This payment option might help you manage your monthly expenses, but it doesn't save you money or lower your drug costs. Learn More >