How It Works

Our Methodology

How we calculate estimated annual costs for Medicare Part D plans — and where the estimates have known limits.

CMS Source Data Updated Annually Open Methodology

DrugCovered generates cost estimates to help you compare Part D plans. Understanding how those estimates are calculated — and where they have limits — will help you make the best use of our tool.

How We Calculate Your Costs

1 Annual Premium

Annual Premium = Monthly Premium × 12

The monthly premium shown in CMS plan data is multiplied by 12 to get a full-year cost. This is the simplest and most standardized component.

Note: Some enrollees pay an income-related premium adjustment (IRMAA surcharge). This is not included in our estimates because it depends on your individual income and is assessed separately by Social Security.

2 Drug Copay Estimates

Annual Drug Cost = Copay (30-day, preferred) × 12

For each drug on your list, we look up the copay for that specific drug-plan combination in the CMS Formulary (Beneficiary Cost) file. We use the preferred pharmacy 30-day supply copay as the baseline, multiplied by 12 to estimate annual fills.

If a preferred pharmacy copay is not available, we fall back to the standard pharmacy copay. If neither is available, we note that the drug may not be covered.

Assumption: We assume 12 fills per year (one per month) for every drug. Drugs taken less frequently will have lower actual costs; acute-use drugs may have far fewer fills.

3 Coinsurance Estimates

Estimated Drug Cost = Coinsurance% × $100 (assumed retail price)

Some plan tiers use a coinsurance percentage rather than a flat copay. When a plan charges coinsurance (e.g., 25% of drug cost), we apply that percentage to an assumed retail price of $100 per fill to estimate your out-of-pocket cost.

Important limitation: The $100 assumed price is a rough average. Specialty drugs (Tier 5) can cost thousands of dollars per fill, meaning actual coinsurance costs may be dramatically higher than our estimate. Coinsurance estimates should be considered indicative rather than accurate for high-cost specialty drugs.

4 Annual Deductible

Total Cost += Deductible (where applicable to your drug tiers)

Many Part D plans have an annual deductible (up to the CMS maximum, which is $590 for 2026). The deductible typically applies to Tier 3 and higher drugs, but not to Tier 1 or Tier 2 generics in many plans.

When estimating total annual cost, we include the plan's deductible in full if any of your drugs fall on a tier where the deductible applies, per the formulary data.

Note: We do not model partial-year deductible scenarios. The deductible is included as a lump sum where applicable.

5 Total Estimated Annual Cost

Total = Annual Premium + Deductible (if applicable) + Sum of Drug Costs

We sum the annual premium, any applicable deductible, and the estimated annual cost for each drug on your list to produce a single Estimated Annual Cost figure for each plan. Plans are sorted by this figure by default.

Known Limitations

Extra Help / Low Income Subsidy (LIS) Not Modeled

Beneficiaries who receive Extra Help (LIS) pay significantly reduced premiums and copays. Our estimates are based on standard (non-LIS) costs. If you receive Extra Help, actual costs will be lower.

Pharmacy Choice Not Modeled

Costs vary between preferred and non-preferred pharmacies. We use preferred-pharmacy rates where available. If your usual pharmacy is not in a plan's preferred network, actual costs will be higher.

Generic Substitution Not Modeled

If a brand-name drug you take has a generic equivalent, a plan may encourage or require generic substitution. We report costs for the specific drug you entered, not potential generic alternatives.

Coverage Gap (Donut Hole) Not Modeled

Part D plans have a coverage gap phase. As of 2025, the Inflation Reduction Act capped out-of-pocket costs, but the structure varies by plan year. Our estimates do not model what happens when you enter the coverage gap or catastrophic coverage phase.

Fill Frequency Assumption

We assume every drug is filled once per month (12 fills per year). If you take a drug less frequently, or if you use a 90-day mail-order supply, actual costs will differ.

Estimates Only — Not a Guarantee

All figures on DrugCovered are estimates for comparison purposes. Plans can change their formularies during the year with notice. Always confirm cost-sharing details directly with the plan and with your pharmacist before relying on any estimate for financial planning.

Data Sources

CMS Plan Information File — Plan premiums, deductibles, and benefit structures
CMS Formulary/Beneficiary Cost File — Drug tier assignments and copay/coinsurance rates
CMS Geographic Service Area File — Plan availability by ZIP code
FDA National Drug Code Directory — Drug names, generic/brand identification

All data is sourced from publicly available government files at no cost. Data is refreshed annually in alignment with CMS plan year releases. The current data reflects the 2026 plan year.

Update Frequency

CMS releases plan-year data in the fall, prior to the Annual Enrollment Period (AEP), which runs October 15 through December 7 each year. We update our database following each CMS release — typically in October — and perform incremental updates if CMS releases mid-year corrections.

The data displayed on this site is for the 2026 plan year. If you are comparing plans for a future year, check back after CMS releases that year's data.

Questions About Our Methodology?