Part D (Prescription Drug Plan)
Optional Medicare prescription drug coverage, offered as a standalone PDP or bundled into Medicare Advantage (MA-PD).
Full Definition
Medicare Part D is the federal prescription drug benefit, created by the Medicare Modernization Act of 2003 and effective 2006. Part D is optional and is purchased either as a Standalone Prescription Drug Plan (PDP) alongside Original Medicare or Medigap, or bundled inside a Medicare Advantage plan (MA-PD). CMS sets maximum benefit parameters annually (deductible, initial coverage limit, coverage gap, catastrophic threshold). The Inflation Reduction Act introduced a $2,000 annual out-of-pocket cap effective 2025, reshaping PDP plan design. Standalone PDP commissions are small ($100 initial / $50 renewal in 2025) — agents typically sell PDP as part of a larger Medicare relationship rather than as a primary revenue driver.
Example
A Medigap Plan G enrollee also needs drug coverage. The agent pairs Plan G with a standalone PDP at $45/month, earning $100 FYC on the PDP in addition to the Medigap FYC.
Related Terms
- Medicare Advantage (Part C) — Private insurance plans that deliver Medicare Part A and B benefits (and usually Part D) as an alternative to Original Medicare.
- Medicare Supplement (Medigap) — Private insurance that pays the out-of-pocket gaps (copays, coinsurance, deductibles) left by Original Medicare, standardized into lettered plan types.
- AEP (Annual Enrollment Period) — The October 15 – December 7 annual window during which Medicare beneficiaries can enroll in, switch, or drop Medicare Advantage and Part D plans.
- CMS (Centers for Medicare & Medicaid Services) — The federal agency within HHS that administers Medicare, Medicaid, CHIP, and the federal ACA Marketplace — and sets binding rules for all three.