Medicare Part D is a plan you can purchase along with your Original Medicare plans, or your Medicare Advantage plan.

Part D plans are structured based on their formulary. Each plan will cover drugs in essential categories for treatment, but different drugs. So, when choosing a Part D plan, look for formularies that include the drugs you already use or may need in the future.

Formularies are also broken down into separate categories referred to as tiers, each tier setting your out-of-pocket costs. Out-of-pocket costs include coinsurance, which are a percentage of the total cost of the drug, and copayments, which is a set fee.

Here are the four main Part D tiers:

• Tier 1: Lowest copayment, covers most generic prescription drugs. These aren’t brand-name drugs, but generic alternatives with identical active ingredients (i.e., they have the exact same effects as more expensive drugs).
• Tier 2: Medium copayment, covers preferred, brand-name prescription drugs. These are drugs that don’t have a less expensive generic alternative but are still preferred by most doctors, so their costs are lower.
• Tier 3: Higher copayment, covers non-preferred, brand-name prescription drugs. These are drugs without a brand-name, preferred alternative.
• Specialty Tier: Highest copayment, covers expensive drugs that are used for specific treatments.