CONTEXT: Medicare Part D drug benefits include substantial cost sharing. OBJECTIVE: To determine beneficiaries’ knowledge of benefits and cost responses. DESIGN, SETTING, AND PARTICIPANTS: Telephone interviews were conducted in 2007 in a stratified random sample of community-dwelling Kaiser Permanente-Northern California Medicare Advantage beneficiaries aged 65 years or older, with a gap in coverage if they exceeded $2250 in drug costs (N = 1040; 74.9% response rate). Half were selected to have reached the gap in 2006. In the source population of Medicare Advantage Prescription Drug plan beneficiaries, 8% entered the coverage gap in 2006. Models were adjusted for individual characteristics and weighted for sampling proportions. MAIN OUTCOME MEASURES: Knowledge of cost sharing including awareness of the coverage gap, gap start and end amounts, and drug cost sharing before, during, and after the gap. Cost-related responses including cost-coping behaviors (eg, switching to lower-cost medications), reduced adherence (eg, not refilling prescriptions), and financial burden (eg, going without necessities). RESULTS: An estimated 40% (95% confidence interval [CI], 35%-45%) of beneficiaries were aware that their drug plan in 2006 included a coverage gap; knowledge of the gap was greater among individuals who reached the gap during the year. Approximately 36% (95% CI, 32%-41%) of beneficiaries reported at least 1 of the following responses to drug costs: cost-coping behavior (26%), reduced adherence (15%), or experiencing financial burden (7%). In multivariate analyses, beneficiaries with lower household income more frequently reported cost responses (difference of 14.5 percentage points for < $40,000/y vs > or = $40,000/y [95% CI, 3.6-25.4 percentage points]). Compared with beneficiaries who were unaware of having a coverage gap, those who were aware more frequently reported any cost response (difference of 11.3 percentage points [95% CI, 0.8-21.9 percentage points]), but had fewer reports of borrowing money or going without necessities (difference of 5.5 percentage points [95% CI, 1.1-10.0 percentage points]). CONCLUSIONS: Beneficiaries in this Medicare Advantage plan have limited knowledge of Part D cost sharing and often report behavioral responses to drug costs. Limited knowledge is associated with fewer reports of cost responses overall, but more reports of financial burden.