Part D is prescription drug coverage that private insurers sell to those with Medicare Part A or B. 

Part D officially began in the mid-2000s as a way of protecting against ever increasing prescription drug costs. Those with at least one part of Original Medicare are eligible to buy Part D. These plans are regulated and approved by CMS, but they’re offered through private companies. These companies pick a list of covered drugs to insure (called a formulary); they negotiate the price for these medications at partner pharmacies; and they set the member’s cost sharing by ranking each drug in a “tier.” There are usually five drug tiers in any given plan. A recent law is changing the way that Medicare drug coverage will function in the years ahead. Though the full impact of this law remains to be realized, it’s still true that many who opt out of Medicare drug coverage will face a penalty.

Check out Pelorus advisor Josh Sprague’s introduction to the different parts of Medicare which includes Part D or read our 'Deep Dive' on Medicare Part D