2025 The Three Coverage Stages of Medicare's Part D Program

Throughout the year, your prescription drug plan costs may change depending on the coverage stage you are in. If you have a Part D plan, you move through the CMS coverage stages in this order: deductible (if applicable), initial coverage and catastrophic coverage.

Select a stage to learn more about the differences between them.

Stage 1 of 3

Annual Deductible

Begins: with your first prescription of the plan year.

You pay the full cost of your prescriptions until your spending adds up to the amount of your deductible. So, if your plan has a $0 deductible, you skip straight to the next stage. Keep in mind that some deductibles may only apply to drugs on specific tiers, which means you may not have any deductible if you do not take any medications on those tiers. Any payments for your monthly premium or for medications on tiers that do not apply to the deductible are not counted toward reaching the deductible.

Initial Coverage

Begins: immediately if your plan has no deductible. Or, when the prescription payments you have made equal your plan's deductible.

During the Initial Coverage Stage, the plan pays its share of the cost of your covered prescription drugs, and you pay your share (your copayment or coinsurance amount). Your share of the cost will vary depending on the drug and where you fill your prescription. You stay in the Initial Coverage Stage until your total out-of-pocket costs reach $2,000.

Catastrophic Coverage

Begins: when your out-of-pocket costs reach $2,000 on covered drugs.

You enter the Catastrophic Coverage Stage when your out-of-pocket costs have reached the $2,000 limit for the calendar year. Once you are in the Catastrophic Coverage Stage, you will stay in this payment stage until the end of the calendar year. During this payment stage, you pay nothing for your covered Part D drugs.