Medicare Part D is the prescription drug portion of Medicare. Designed to subsidize the costs of prescription drugs for Medicare beneficiaries, it went into effect on January 1, 2006.

Medicare Part D can be obtained in two ways. The first is by adding a prescription drug plan to your existing original Medicare plan.

The second way to get Medicare Part D is to purchase a Medicare Advantage Plan that includes the prescription drug coverage. These plans, which are usually HMOs or PPOs, combine Medicare Part A, Part B and Part D into one plan. To join one of these plans, you must have Medicare Part A and Part B and live in the service area of the plan you choose.

There are limits as to when you can join a Medicare drug plan. Only those receiving Extra Help can join, switch or drop a Medicare drug plan at any time. Others may only join or make changes during specified enrollment periods, except under special circumstances as described by the enrollment plan.

Each plan provides a list of covered drugs, also called a formulary. The formulary is usually divided into tiers, by cost. More expensive drugs will have a higher co-payment than less expensive drugs.

For certain drugs, the plan may require prior authorization prior to having your prescription filled. Your doctor, or other prescriber, may need to satisfy the plan that a particular drug is medically necessary for your condition.

Your plan may insist that you first try one of the less expensive drugs before they will approve the more expensive one. They also may limit how much of the drug you can get at one time. Many times, you or your doctor can ask for an exception to the rules.

When medically necessary to prevent illness, all commercially-available vaccines, such as the shingles vaccine, must be covered, either by Part B or by your Part D provider. However, the drugs you get in places such as an emergency room are not covered by Part B. Many times, you will need to pay out-of-pocket for these drugs and then present a claim to your provider.

If you exceed the annual limit for your plan, you will encounter a coverage gap. If this happens, you will have to pay more for your medications during the gap period.

Medicare Part D requires a monthly premium. In some cases, it is in addition to your Part B premium, and in other cases it is a part of your Medicare Advantage premium. Rates will vary according to provider. A small group of people with higher incomes may be required to pay higher premiums.

In addition to the monthly premium, you may have an annual deductible. Other possible costs include copayments or coinsurance. If you are on a limited budget, you may qualify for Extra Help to pay for your drug coverage.

If you are eligible for Medicare Part D, it is important that you enroll at your first opportunity. Otherwise, you may suffer a penalty.