Medicare Part D Glossary

Annual Election Period (AEP)

October 15 through December 7, which is generally the only time of each year that you can change plans (unless you meet certain special exceptions, such as moving out of your plan's service area or you are covered by Medicaid).

The percent that you pay for a covered drug. With some plans, you do not pay coinsurance until you have first paid a deductible.

This is the set amount you pay for each covered drug. Different copays may apply depending on the type of drug (brand or generic) or the days’ supply of the prescription (30 or 90 days). See "Drug Tiers".

Coverage Gap

Amount you pay for Medicare prescription drug coverage after the initial coverage limit and until the total amount paid by you and your plan for covered prescription drugs reaches the limit. This amount changes each year. The coverage gap is sometimes referred to as a "donut hole."

Creditable Coverage

Drug coverage that is at least as good as Medicare prescription drug coverage.


A set amount of dollars you must pay before you receive coverage for your benefits.

Donut Hole

See "Coverage Gap."

Drug Tiers

Drug tiers allow plans to group different types of drugs together on their preferred drug lists (such as generic drugs, brand name drugs, or preferred brand name drugs). For example, a two-tier pharmacy plan will have two different copay options. The lower copay may apply to generic drugs, and the higher copay may apply to brand name drugs.


A list of drugs covered by a health insurance plan. This list must always meet Medicare's requirements and is sometimes called a "preferred drug list."

Monthly Plan Premium

The payment you make to a health insurance company for your health plan.


The increased amount you may have to pay if you do not apply for Part D (Medicare prescription drug coverage) when you are first eligible. If you don't join when you are first eligible, and you don't currently have a drug plan that is at least as good as Medicare prescription drug coverage, you may have to pay a penalty that increases the cost of the monthly premium by one percent for every month you wait to join.

Preferred Drug

A drug that typically requires the lowest copay.

Preferred Drug List

See "Formulary."

True Out-of-Pocket (TrOOP)

Amount you pay for your covered prescriptions. This amount changes each year and may be paid by another person, or by a qualified state pharmaceutical assistance program (SPAP), on your behalf.