How to compare Part D plans is one of the most important Medicare skills you can learn — and one of the least understood. Most people pick a plan based on the monthly premium and assume the cheapest one is the best deal. It’s not. The plan with the lowest premium can easily cost you hundreds more per year at the pharmacy if your medications land on higher tiers or your pharmacy isn’t in the preferred network.
This guide walks you through how to compare Part D plans the right way — looking at every factor that actually affects what you pay, not just the number on the premium line.
In this guide
Why the cheapest premium isn’t the cheapest plan Understanding drug tiers (where the real costs hide) What a formulary is and why it matters The preferred pharmacy trap The coverage gap (donut hole) explained Step-by-step: how to compare Part D plans yourself Real example: 3 plans, same medications, wildly different costs The 5 most common Part D mistakes When to ask for helpWhy the cheapest premium isn’t the cheapest plan
When you learn how to compare Part D plans, the first thing you discover is that the monthly premium is the least important number. Here’s why:
A Part D plan with a $0 premium might put your blood pressure medication on Tier 3 (preferred brand) with a $47 copay. A different plan with a $12 monthly premium might have the exact same medication on Tier 1 (preferred generic) with a $3 copay. Over 12 months, the “$0” plan costs you $564 at the pharmacy. The “$12” plan costs you $180 in premiums plus $36 at the pharmacy — $216 total.
The $0 plan costs you $348 more per year. And that’s just one medication. If you take three or four prescriptions, the differences compound fast.
This is the fundamental mistake most people make: they compare premiums when they should be comparing total annual cost — premiums plus what you actually pay at the counter for your specific drugs at your specific pharmacy.
Understanding drug tiers: where the real costs hide
Every Part D plan organizes its covered medications into numbered tiers. Lower tiers cost less. Higher tiers cost more. Understanding how to compare Part D plans means understanding tiers, because this is where most of your money goes.
Here’s the critical thing: the same medication can be on different tiers depending on which plan you choose. One plan might put Eliquis on Tier 3, another on Tier 4. That’s the difference between a $47 copay and a $100 copay — for the same pill, at the same pharmacy, on the same day.
This is why you can’t compare Part D plans by premium alone. You have to check where each of your specific medications falls on each plan’s tier list.
What a formulary is and why it matters
A formulary is the complete list of medications a Part D plan covers. Think of it as the plan’s menu. If your drug isn’t on the formulary, the plan doesn’t cover it at all — you’d pay full retail price.
Every Part D plan has a different formulary. They all cover a minimum set of drugs required by Medicare, but beyond that, each plan negotiates its own deals with pharmaceutical companies. Those negotiations determine which drugs make the formulary and which tier they land on.
Formularies change every year. A drug that was covered this year might be dropped or moved to a higher tier next year. This is why reviewing your Part D plan annually — during the Annual Enrollment Period (October 15 – December 7) — is so important. The plan that was cheapest last year may not be cheapest this year for your medications.
Some plans also put restrictions on certain medications: prior authorization (the plan must approve it before covering it), step therapy (you must try a cheaper drug first), or quantity limits (the plan only covers a certain number of pills per month). When you learn how to compare Part D plans, you need to check for these restrictions on any medications you take.
The preferred pharmacy trap
This is the factor almost nobody checks — and it can double your costs overnight.
Every Part D plan has two levels of pharmacy: preferred and standard (non-preferred). If you fill your prescriptions at a preferred pharmacy, you get the lower copay. If you fill them at a non-preferred pharmacy, you pay more — sometimes dramatically more.
Real example: A Tier 1 generic might cost $3 at a preferred Walgreens but $12 at a non-preferred CVS — for the exact same drug on the exact same plan. The only difference is which pharmacy you walked into. Multiply that across 4 prescriptions and 12 months, and the wrong pharmacy costs you an extra $432/year.
Before choosing a Part D plan, check whether your preferred pharmacy — the one you actually go to — is in the plan’s preferred pharmacy network. If it’s not, either switch pharmacies or choose a different plan.
Mail-order pharmacies are worth considering. Most Part D plans offer 90-day supplies through mail-order at the preferred pharmacy price. This is especially useful if you take the same medications every month, and it’s a lifesaver if you’re a snowbird splitting time between states — your medications arrive wherever you are.
The coverage gap (donut hole) explained
The Part D coverage gap — often called the “donut hole” — is the phase of coverage where your costs change. In 2026, it works like this:
Phase 1: Deductible. You pay the first $590 of your drug costs out of pocket before the plan starts paying. (Some plans have no deductible, or a lower deductible for generic drugs.)
Phase 2: Initial coverage. After the deductible, you pay your normal copays or coinsurance, and the plan pays the rest. This continues until the combined total spent by you and the plan reaches $5,030.
Phase 3: Coverage gap. Once you hit $5,030, you enter the donut hole. Thanks to the Inflation Reduction Act, your out-of-pocket costs in the coverage gap are now capped at $2,000 per year in 2026. This is a significant improvement from previous years when the donut hole was a major financial hit.
Phase 4: Catastrophic coverage. After you’ve spent $2,000 out of pocket, you pay $0 for covered drugs for the rest of the year.
The $2,000 annual cap means that when you compare Part D plans, the maximum you’ll pay out of pocket for drugs (beyond premiums) is $2,000. This makes the comparison clearer: total annual cost = premiums + up to $2,000 in pharmacy costs, depending on how expensive your medications are.
Step-by-step: how to compare Part D plans yourself
1 Make your medication list
Write down every prescription medication you take. Include the exact name (generic if you take generic), the dosage (e.g., 20mg, 500mg), and how often you take it (once daily, twice daily, etc.). This is the foundation of the entire comparison. If you miss a medication, your cost estimate will be wrong. Check your medicine cabinet, not your memory.
2 Identify your pharmacy
Which pharmacy do you use? Walgreens, CVS, Walmart, a local independent, mail-order? Write down the name and location. If you use more than one, note all of them. Remember: the same plan can have wildly different copays depending on whether your pharmacy is “preferred” or not.
3 Go to Medicare Plan Finder
Visit Medicare.gov Plan Finder. Enter your ZIP code, then add each of your medications one at a time. Select your pharmacy. The tool will show you every Part D plan available in your area, ranked by estimated annual cost.
4 Compare total annual cost — not just premium
Medicare Plan Finder shows an “estimated annual drug cost” for each plan. This is the number that matters — it includes your premium, your deductible, and your estimated copays for your specific medications at your specific pharmacy. Sort by this number, not by premium. The plan at the top of this list is usually your best option.
5 Check for restrictions
Click into each plan you’re considering. Look at each of your medications and check for any icons or notes indicating prior authorization, step therapy, or quantity limits. If one of your medications has a restriction, it means the plan won’t automatically cover it — you or your doctor would need to go through an extra approval process.
6 Verify your pharmacy is preferred
Inside the plan details, check your pharmacy’s status. You want to see “preferred” next to your pharmacy name. If it says “standard” or “non-preferred,” the copays shown are the higher non-preferred amounts — and the estimated annual cost could be lower with a different pharmacy or a different plan.
7 Consider the deductible
Some plans have a $0 deductible for generics, or no deductible at all. Others have the full $590 deductible. If you take mostly generics, a plan with no deductible and slightly higher premiums might save you money in the first few months of the year when you’d otherwise be paying full price out of pocket.
Real example: 3 plans, same medications, wildly different costs
Here’s what learning how to compare Part D plans looks like in practice. Let’s say you take three common medications: Lisinopril 10mg (blood pressure), Metformin 500mg (diabetes), and Atorvastatin 20mg (cholesterol) — all generics, all once daily. You fill them at Walgreens.
| Plan A | Plan B | Plan C | |
|---|---|---|---|
| Monthly premium | $0 | $12.40 | $27.80 |
| Deductible | $590 | $0 (generics) | $0 |
| Lisinopril tier | Tier 2 — $10 | Tier 1 — $1 | Tier 1 — $3 |
| Metformin tier | Tier 2 — $10 | Tier 1 — $1 | Tier 1 — $3 |
| Atorvastatin tier | Tier 2 — $10 | Tier 1 — $2 | Tier 1 — $5 |
| Walgreens status | Standard (non-preferred) | Preferred | Preferred |
| Annual premiums | $0 | $148.80 | $333.60 |
| Annual drug costs | $950* | $48 | $132 |
| Total annual cost | $950 | $196.80 | $465.60 |
*Plan A: $590 deductible paid first (full price for all 3 drugs), then Tier 2 copays for remaining months, plus non-preferred pharmacy markup. Amounts are illustrative.
The “$0 premium” plan costs nearly $754 more per year than the $12.40/month plan. This is why knowing how to compare Part D plans beyond the premium matters so much.
The 5 most common Part D mistakes
Mistake #1: Choosing by premium alone. As the example above shows, a $0 premium can be the most expensive option. Always compare total annual cost.
Mistake #2: Not checking your pharmacy. Preferred vs. non-preferred pharmacy status can change your copay by 2x or 3x. Verify before you enroll.
Mistake #3: Not reviewing your plan every year. Formularies change annually. Your plan could drop your medication, move it to a higher tier, or change your pharmacy’s preferred status. Review during AEP every fall.
Mistake #4: Ignoring restrictions. Prior authorization and step therapy requirements can delay your access to medication. If a plan requires prior auth for a drug you take daily, that’s a red flag.
Mistake #5: Assuming your doctor’s recommendation is enough. Your doctor knows medicine. They don’t know Part D formularies. The drug they prescribe might be on Tier 4 with one plan and Tier 1 with another — same clinical effect, vastly different cost. That’s your job (or your advisor’s job) to catch.
When to ask for help
You absolutely can learn how to compare Part D plans yourself using Medicare Plan Finder. For someone on one or two generic medications, the process takes about 20 minutes and the right answer is usually obvious.
It gets harder when you take four or more medications, when some are brand-name or specialty drugs, when you use multiple pharmacies, or when you’re balancing Part D with a Medicare Advantage plan that bundles drug coverage. At that point, the interactions between tiers, formularies, deductibles, and pharmacy networks create hundreds of possible combinations — and the cost difference between the best choice and a mediocre one can be $50 to $100 per month.
That’s when it makes sense to have someone who does this every day look at your specific medications and run the comparison for you. It takes me about 15 minutes to do what might take you an hour or two — and I’ve seen patterns and pitfalls that the Plan Finder tool doesn’t flag.
You can send me your medication list here and I’ll run the comparison for you. Or just bring your list to our call and we’ll do it together.
Want someone to compare every Part D plan for your exact medications? It’s free.
Book Your Free Part D Review →Cindy Kowalski · Licensed Independent Medicare Advisor · Eligry LLC · NPN 21601670
We do not offer every plan available in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options. Not affiliated with or endorsed by the U.S. government or the federal Medicare program.