Drugs Offered

• Each part D insurance plan offers a different set of prescription drugs. Companies release a formulary, which lists all the drugs covered by their plans. Generic and inexpensive drugs are offered by all insurance companies. Brand name, expensive, and less-common prescriptions can be harder to find. The type of prescriptions you are taking is a major determination in the best Part D plan. An inexpensive plan is best for someone taking only generics. A retiree taking more expensive drugs will need the more extensive coverage of a higher-end plan.
  
  

Cost of Drugs

• Once you determine which companies offer your drugs, you should compare the required drug copayments. Part D plans categorize their drugs in tiers. Tier 1 drugs are mainly generics. Tier 4 drugs are the most expensive brand-name drugs. Higher tiers have a higher copayment amount. Carefully review each plan, as some drugs are listed in different tiers between companies. The copay lists give you an estimate of your annual drug costs. The best plan is one that minimizes your annual copayments.
  
  

Monthly Premiums and Deductible

• Prescription drug plans charge a monthly premium and a deductible. This is a charge on top of the copayments for drugs. Low premium plans have more expensive copayments and a less-generous tier structure. Plans with high premiums give a more generous cost structure for buying drugs. Low-premium plans are best for individuals taking few drugs and mainly generics. They don't need the extra coverage. Individuals taking many expensive drugs will pay less in the long run with a more expensive plan due to its lower copays.
  
  

The Donut Hole

• The doughnut hole of Part D insurance is another cost consideration in choosing a drug plan. Drug plans only cover prescriptions to an annual total cost of $2,830 as of 2011. At this point, the member must cover 100 percent of drug costs to $6,440 when the drug plan will resume coverage. Some higher premium plans offer coverage during the doughnut hole. For individuals who do not use many drugs, the doughnut hole is not a planning consideration. For individuals with high drug costs, the best Part D insurance offers some doughnut-hole coverage.