Five Steps to Choose the Right Prescription Drug Plan During Medicare Annual Enrollment Period

As an Original Medicare beneficiary, you have a number of choices to make, but one of the most important can be selecting the right prescription drug plan. The Medicare Annual Enrollment Period—also known as AEP—provides an opportunity for you to look into switching to a Medicare Advantage plan or shop around for a new Medicare Part D plan.

This process might seem overwhelming or intimidating, but that’s where we come in. To get you started, here are five steps you can take to choose the right plan for you.

1. Shop During Medicare Annual Enrollment Period: October 15 to December 7

The Medicare Annual Enrollment Period runs from October 15 to December 7 each year. During AEP, Medicare beneficiaries can evaluate current coverage and make changes. There’s no requirement to take any action at this time, but people often find more affordable options or plans with more coverage. Medicare plan details can change from year to year, so it’s a good idea to compare your options annually to make sure your health and prescription drug needs are covered for the coming year.

2. Check Your Covered Prescription Drugs and Their Costs

Medicare Prescription Drug plans can change their lists of covered drugs—also known as formularies—and the prescription drug costs each year, which can lead to you paying more (or less) for the same medication from one year to another. Your insurance provider is required to send you an Annual Notice of Change, which includes any changes to plan coverage. It’s important to take the time to read through this document, as it will give you an idea of what kind of changes you will need when reevaluating your Medicare plan.

3. Understand Medicare Part D’s Four Phases of Prescription Drug Coverage

Medicare Part D helps Medicare beneficiaries cover the costs of prescription drugs. Out-of-pocket prescription drug costs may change over time depending on which phase you are in. The four phases of Medicare Part D’s prescription drug coverage include:

Phase 1: Medicare Deductible Period

During the deductible period, you’ll be expected to pay the full negotiated amount for your covered prescription drug costs until you meet your Medicare Part D deductible. Deductibles vary from plan to plan, but should not exceed $615¹ in 2026.

Phase 2: Medicare Initial Coverage Period

During the Medicare Initial Coverage Period, your Medicare Part D plan will pay some of the prescription drug costs, while you will pay a copayment (a set dollar amount) or coinsurance (a percentage of the drug’s cost) set by your plan.

Phase 3: Medicare Coverage Gap (Donut Hole) Period

Previously, most Medicare prescription drug plans had a Medicare Coverage Gap period—sometimes referred to as the Donut Hole—where you would pay 25% of the retail cost for both brand-name and generic prescription drugs. As a result of the Inflation Reduction Act, that coverage gap ended after December 31, 2024.As of January 1, 2025, all Medicare plans include a $2,100 cap on out-of-pocket prescription drugs covered by your plan. This means if your out-of-pocket spending on covered drugs reaches $2,100, you’ll automatically receive “catastrophic coverage,” meaning you won’t be responsible for any additional out-of-pocket expenses for covered Part D drugs for the rest of the calendar year.

Phase 4: Medicare Catastrophic Coverage Period

In 2026, the Medicare Catastrophic Coverage period starts once you have reached $2,100 in out-of-pocket prescription drug costs. This means you won’t pay any additional out-of-pocket costs for drugs covered by your plan for the rest of the calendar year.

4. Research Benefits for Those with Lower Income

While Original Medicare is intended to help cover health costs, you may still be required to pay for premiums, deductibles, and copays. To help limit these out-of-pocket expenses, there are savings programs available to Medicare plan beneficiaries with lower incomes.

The Medicare Extra Help Program is intended to help individuals with limited, fixed incomes pay for out-of-pocket costs associated with Medicare Part D. Extra Help is not a replacement for Part D, nor is it a plan on its own. You must be enrolled in a Part D plan to receive Extra Help. Medicare Advantage plans (Part C) can often include drug coverage in lieu of a stand-alone Part D plan.

5. Let SelectQuote help you find Medicare prescription drug plans available to you.

At SelectQuote, we can help you better understand your Medicare plan options. In just minutes, we can compare Medicare Advantage and Medicare Supplement Insurance plan options that may be available in your area. It’s free and there’s no obligation to enroll.

1 https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/yearly-deductible-for-drug-plans

2 https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/costs-in-the-coverage-gap

3 https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/catastrophic-coverage