How does Medicare prescription drug coverage work?

Medicare has established a "standard benefit" for prescription drug coverage, which consists of three stages. Private companies, such as Blue Cross NC, can offer enhanced prescription drug plans. However, these plans must provide a standard benefit package that is, at a minimum, equal in value to Medicare's standard benefit.

For 2027, this defined standard benefit is:

Deductible Stage: You will be responsible for 100% of the first $700 in total prescription drug costs in each calendar year before your prescription drug benefit begins.

Initial Coverage Stage: After the first $700, depending on the drug's tier, you will be responsible for 25% of the total cost of your prescription medications. The plan will pay 75% of your total drug costs until they reach a total of $2,400.

Catastrophic Coverage Stage: After your total out-of-pocket costs reach $2,400, you will pay nothing for your covered prescription medications.