While the standard Medicare plan may cover prescriptions given to patients as part of outpatient services, the basic Part A and Part B plans do not cover prescriptions at all. Medicare Part D coverage is an optional prescription drug plan that subscribers can choose to help pay for prescriptions.
When a subscriber becomes eligible for Medicare, he receives Part A coverage, which covers hospital expenses, and Part B coverage, which pays for doctor's visits and other medical needs. Medicare Part D was established in 2006 as an optional add-on, offering plans from private insurers to help defray prescription costs. Subscribers may opt into Part D when first enrolling in Medicare, but choosing Part D coverage later on may incur late enrollment penalties.
In addition to Part D coverage, some Part C, or Medicare Advantage, plans offer prescription benefits. These plans are insurance plans administered by private companies that are paid for, in whole or in part, by Medicare. They replace Medicare Part A and Part B coverage, and may offer better deductibles and copayments than the traditional Medicare plan. Subscribers may switch to a Medicare Advantage plan during the open enrollment period each year, but subscribers may face late enrollment fees when switching to a plan with prescription coverage for the first time.