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Terms Used with Medicare Part D

If you’re considering a Medicare Part D plan, or already enrolled, you may not understand some of the terms used.


The formulary is the list of medications covered by the plan. Categorized into four different tiers with different costs.

Out-of-Pocket Maximum

The out-of-pocket maximum, or limit, is the most you will pay for covered prescriptions in one year. Typically, after you reach this amount in deductibles, copayments, and coinsurance, the plan pays 100 percent of any remaining costs. Once you reach this amount, you will automatically receive catastrophic coverage and will pay a small amount for medications for the remainder of the year. 


Medication is categorized into Tiers. Each Tier will have a different cost.


The least expensive and considered equivalent alternatives to expensive brand-name.

Preferred Brand Name

No equivalent alternative or generic version is available.

Non-Preferred Brand Name

One of the more expensive types of medication.


The highest cost of medication available

Financial Help

For seniors with limited income and resources, financial help is available to help with some of the Part D costs. Qualification for the Extra Help program is based on income and resources.



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Finding Your Level of Extra Help:

Save on Drug Costs:

What Drug Plans Cover:

Generic Drugs: Questions and Answers:

Costs in the Coverage Gap:


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