The prevalence of diabetes in the U.S. Medicare population is growing at an alarming rate. From 1980 to 2004, the number of people aged 65 or older with diagnosed diabetes increased from 2.3 million to 5.8 million. According to the Centers for Medicare and Medicaid (CMS), 32% of Medicare spending is attributed to the diabetes population. Since its inception, Medicare has expanded medical coverage of monitoring devices, screening tests and visits, educational efforts, and preventive medical services for its diabetic enrollees. However, oral antidiabetic agents and insulin were excluded from reimbursement. In 2003, Congress passed the Medicare Modernization Act that includes a drug benefit to be administered either through Medicare Advantage drug plans or privately sponsored prescription drug plans for implementation in January 2006. In this article we highlight key patient and drug plan characteristics and resources that providers may focus upon to assist their patients choose a coverage plan. Using a case example, we illustrate the variable financial impact the adoption of Medicare part D may have on beneficiaries with diabetes due to their economic status. We further discuss the potential consequences the legislation will have on diabetic patients enrolled in Medicare, their providers, prescribing strategies, and the diabetes market.