Medicare Prescription Drug Plans were originally created during a time when drugs were less used and less expensive. As drug prices have gone through the roof, and drugs are prescribed in greater numbers, older individuals for whom Medicare was designed have found it increasingly difficult to pay for their prescriptions. The Medicare Prescription Drug Improvement and Modernization Act of 2003 was intended to address this issue.

Private insurance companies administer Medicare Prescription Drug plans. There are more than 20 plans available and all must conform to Medicare guidelines. Individuals wishing to sign up for coverage should compare the plans and find the one that covers the prescriptions they are taking now, as well as the ones they may need in the future. Premiums for each plan vary, and Medicare estimates them to average $32 per month. There is a $250 deductible, and Medicare will then pay for 75% of your prescriptions drugs, until you reach the sum of $2,250. At that point, Medicare stops paying and you must pay the entire amount for all drugs you purchase. After this cut-off, when you've then paid $2,850 towards prescriptions, your Medicare coverage will kick back in, and will then pay 95% of your drug costs for the remainder of the year. You can change your plan during the open enrollment which occurs at the end of each year. Anyone who is already eligible or already receiving Medicare can sign up for a prescription drug plan between November 15 and May 15. For every month that you delay enrollment, there is a penalty of 1% of your monthly premium added to your monthly premium for each month you delayed enrollment, unless you were receiving drug coverage through an employer's or spouse's health coverage.