Prescription drug costs can be a significant burden for many Medicare beneficiaries. Whether you take a few medications or rely on several each month, the out-of-pocket expenses can add up quickly—especially for those living on a fixed income. Even with Medicare coverage, not all prescription costs are fully covered, and without the right plan or resources, some individuals may find themselves skipping medications, splitting pills, or choosing between their health and other essential needs.
Fortunately, there are ways to lower prescription drug costs through Medicare, especially if you understand how the system works and what options are available to you. With a little research and proactive planning, you can potentially save hundreds—or even thousands—of dollars each year on your medications.
This article will explore two key strategies that can help you reduce your out-of-pocket drug expenses under Medicare:
- Choosing the Right Medicare Part D Plan
- Applying for Extra Help (Low-Income Subsidy)
Understanding these two tools can make a major difference in how much you pay at the pharmacy counter.
Why Prescription Costs Are a Problem for Many Medicare Users
Most Medicare beneficiaries receive drug coverage through Medicare Part D or through a Medicare Advantage Plan that includes drug benefits. While these plans do help cover the cost of medications, they often come with monthly premiums, annual deductibles, co-pays, and coverage gaps that can still leave you paying more than expected.
The costs can vary significantly depending on:
- Which drugs you take
- Whether your prescriptions are on your plan’s formulary (covered drug list)
- What pharmacy you use
- Whether your plan requires prior authorization or step therapy
- Your income and financial eligibility for assistance programs
Because so many variables are at play, it’s essential to take the time to review your drug coverage every year, especially during Medicare’s Open Enrollment Period (October 15 to December 7). Even small changes to your plan’s formulary or cost structure could mean paying significantly more or less for the same medications.
Strategy #1: Choose the Right Medicare Part D Plan
Not all Part D plans are created equal, and choosing the right one can have a major impact on your annual drug expenses. Each plan has its own formulary, tier system, pharmacy network, and pricing structure. Even if you’ve been happy with your current plan, drug prices and coverage details can change every year.
In this article, we’ll show you how to:
- Compare different Part D plans using Medicare’s online tools
- Check how your medications are covered (and what tier they fall under)
- Estimate your yearly costs, including premiums, deductibles, and co-pays
- Avoid surprise charges and coverage gaps like the “donut hole”
By comparing plans carefully and making changes during the annual enrollment period if necessary, you can find a Part D plan that better fits your needs and budget.
Strategy #2: Apply for Extra Help (Low-Income Subsidy)
If your income and assets fall below certain limits, you may qualify for Extra Help, also known as the Low-Income Subsidy (LIS) program. This federal assistance program helps eligible Medicare recipients pay for premiums, deductibles, and co-pays related to their prescription drug coverage.
Extra Help can reduce your out-of-pocket costs dramatically, sometimes to as little as $0 or a few dollars per prescription. Even better, if you qualify, you can enroll in a Part D plan outside of the normal enrollment periods, making it easier to get immediate relief.
We’ll explain:
- Who qualifies for Extra Help
- What documentation you need
- How to apply through the Social Security Administration
- How much you could save if approved
Whether you’re struggling with high drug prices now or simply planning ahead, knowing about Extra Help can provide real financial peace of mind.
By learning how to compare plans and apply for available financial support, you can take real steps toward lowering your prescription drug costs. Let’s take a closer look at each of these strategies—and how to use them to your advantage.
Strategy #1: Choose the Right Medicare Part D Plan
One of the most effective ways to reduce your prescription drug costs under Medicare is by choosing the right Medicare Part D plan. Part D is the portion of Medicare that helps pay for prescription medications, and it’s available either as a standalone plan (for those with Original Medicare) or bundled into a Medicare Advantage plan. But here’s the catch: not all Part D plans are the same.
Every Part D plan has its own formulary (list of covered drugs), pricing structure, network of pharmacies, and rules for how and when medications are covered. This means that the plan that worked best for you last year might not be the best option this year—especially if your medications, plan prices, or the plan’s drug list have changed.
Let’s look at how to choose a plan that can lower your prescription drug costs.
Step 1: Review Your Current Medications
Start by making a list of all the medications you take, including:
- Brand and generic names
- Dosages
- Frequency of use
This list will be essential when comparing plans, as you’ll want to find one that covers all or most of your drugs at the lowest possible cost. Some plans place certain medications on higher tiers, meaning they’ll cost more. Others may exclude your medication altogether, leaving you to pay the full retail price.
Step 2: Use Medicare’s Plan Finder Tool
Medicare’s official website offers a Plan Finder Tool (medicare.gov/plan-compare) that allows you to:
- Enter your medications
- Compare available Part D plans in your area
- Estimate annual out-of-pocket costs
- Check which pharmacies are in-network
- See if your drugs require prior authorization or step therapy
The tool will rank plans by total cost, not just the monthly premium—so you’ll get a clearer picture of what you’ll spend over the year.
Step 3: Consider All Costs—Not Just the Premium
While it might be tempting to choose a plan with the lowest monthly premium, that’s not always the most cost-effective choice. A plan with a higher premium but lower co-pays or better drug coverage might save you more money overall.
Here are the key costs to compare:
- Monthly premium: What you pay just to have the plan
- Annual deductible: What you must pay out-of-pocket before the plan starts covering costs (some plans have $0 deductibles)
- Co-pays/coinsurance: What you pay for each medication after the deductible
- Tier pricing: Lower tiers (Tier 1 or 2) typically have lower co-pays; higher tiers cost more
The right plan for you balances these costs in a way that fits your budget and medication needs.
Step 4: Check Pharmacy Network Participation
Where you fill your prescriptions also impacts how much you pay. Most Part D plans have a preferred network of pharmacies where costs are lower. If you use a pharmacy that’s not in the preferred network, you could end up paying more for the exact same prescription.
Make sure to:
- Confirm your preferred pharmacy is in-network
- Compare prices at preferred vs. standard pharmacies
- Consider switching to mail-order pharmacies, which can offer significant savings on maintenance medications
Step 5: Reevaluate Your Plan Every Year
Even if you’re happy with your current Part D plan, it’s important to review it annually during Medicare’s Open Enrollment Period (October 15–December 7). Plans often make changes to:
- Drug formularies
- Tier placements
- Deductibles and premiums
- Pharmacy networks
A plan that saved you money last year may no longer offer the same benefits. By shopping around each year, you ensure that you’re still enrolled in the most cost-effective plan for your needs.
Final Thoughts on Choosing the Right Plan
Choosing the right Medicare Part D plan requires a bit of research, but it’s well worth the effort. By comparing plans based on your specific medications, pharmacy preferences, and total yearly costs—not just premiums—you can avoid costly surprises and ensure you’re getting the best deal available.
Making an informed choice can result in substantial savings and help keep your health—and your finances—in better shape throughout the year.
Strategy #2: Apply for Extra Help (Low-Income Subsidy)
For Medicare beneficiaries with limited income and resources, one of the most powerful ways to reduce prescription drug costs is through the Extra Help program, also known as the Low-Income Subsidy (LIS). This federal program is designed to make Medicare Part D prescription drug coverage more affordable by significantly lowering or even eliminating out-of-pocket costs.
If you qualify for Extra Help, you could see lower monthly premiums, reduced deductibles, and minimal copayments for your medications—potentially saving thousands of dollars each year.
What Is Extra Help?
Extra Help is a program administered by the Social Security Administration (SSA) in partnership with Medicare. It provides financial assistance to help pay for:
- Monthly Part D premiums
- Annual deductibles
- Prescription drug co-pays or coinsurance
- Costs during the coverage gap (donut hole)
The amount of help you receive depends on your income and resources, but many people who qualify for Extra Help pay no more than $4.50 to $11.20 per prescription (as of 2024), and in some cases even less.
Who Qualifies for Extra Help?
To qualify for Extra Help, your income and resources must fall below certain limits, which change slightly each year. As of 2024, the general eligibility guidelines are:
- Individual income: Less than $22,590 per year
- Married couple income: Less than $30,660 per year
- Resources (savings, investments, real estate, etc.):
- Less than $17,220 for individuals
- Less than $34,360 for couples
Resources do not include:
- Your primary home
- One car
- Household goods and personal belongings
- Burial plots and a small burial fund
Even if your income is slightly above the limit, you may still qualify for partial Extra Help, which still offers significant savings.
How to Apply for Extra Help
Applying is relatively simple and can be done in several ways:
- Online: Visit ssa.gov/extrahelp to apply securely online.
- By Phone: Call the Social Security Administration at 1-800-772-1213 (TTY: 1-800-325-0778).
- In Person: Visit your local Social Security office for help completing the application.
- Through Your State Medicaid Office: Some people are automatically enrolled if they already receive certain types of Medicaid or Supplemental Security Income (SSI).
You’ll need to provide information about your income, bank accounts, investments, and other resources. Once approved, you’ll receive a letter detailing the level of assistance you qualify for and what to expect in savings.
Automatic Qualification
You may be automatically enrolled in Extra Help if you:
- Have full Medicaid coverage
- Are enrolled in Medicare Savings Programs (MSP)
- Receive Supplemental Security Income (SSI)
In these cases, you don’t need to apply separately—the government will notify you if you’re enrolled and help you choose or assign a Part D plan if you don’t already have one.
How Extra Help Impacts Your Medicare Drug Coverage
Once you’re enrolled in Extra Help, your prescription drug coverage becomes more affordable:
- Premiums: You may pay no premium or only a reduced amount, depending on your plan and subsidy level.
- Deductibles: Often reduced or completely eliminated.
- Co-pays: Limited to a small, fixed amount for each covered drug.
- Coverage Gap (Donut Hole): Extra Help continues to reduce your costs even if you enter the gap phase, which normally increases out-of-pocket expenses for many beneficiaries.
This can make a huge difference for people who take multiple or expensive medications, giving them access to essential prescriptions without the financial stress.
Annual Redetermination
Once enrolled, the SSA will reassess your eligibility each year. You’ll be asked to update your income and resource information to ensure you still qualify. Be sure to respond to any notices promptly to avoid losing your benefits.
Final Thoughts on Extra Help
If you’re struggling to afford your medications, Extra Help could be the financial relief you need. Many people who qualify never apply simply because they don’t know the program exists or believe they won’t be eligible.
Don’t assume you won’t qualify—take a few minutes to check. Even partial Extra Help can result in major savings on drug costs. Combined with the right Medicare Part D plan, this program can significantly reduce your healthcare expenses and help ensure you stay on the medications you need without financial hardship.
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