Quick Answer: The Medicare Part D "donut hole" no longer exists as of 2025. In 2026, Part D has three phases: a deductible phase (up to $615), an initial coverage phase, and a catastrophic phase that kicks in once your out-of-pocket drug spending hits $2,100. After that, you pay nothing for covered drugs for the rest of the year.
If you spent years dreading the Medicare Part D coverage gap, the good news is it is gone. The Inflation Reduction Act of 2022 restructured Medicare prescription drug coverage over multiple years, and by 2025 the coverage gap was fully eliminated. In 2026, the rules are simpler, the cost caps are lower than they used to be, and millions of Medicare beneficiaries are saving real money at the pharmacy counter.
This guide walks through exactly how Medicare Part D works in 2026, what replaced the donut hole, who qualifies for extra help, and what steps to take if you want to find a better plan.
What Was the Medicare Part D Donut Hole?
The coverage gap, nicknamed the "donut hole," was a phase in Medicare Part D where a beneficiary's drug coverage temporarily stopped after total drug costs hit a certain threshold. During that gap, you paid a much larger share of your medication costs out of pocket, sometimes 25 to 50 percent of the drug's price, until you reached the catastrophic coverage threshold.
The gap existed from Part D's creation in 2006. It narrowed gradually after the Affordable Care Act, then the Inflation Reduction Act finished the job by restructuring the entire benefit design starting in 2023. The donut hole as a formal phase was eliminated in 2025, and 2026 continues under that cleaner three-phase structure.
How Medicare Part D Works in 2026
As of 2026, Medicare Part D has three phases instead of four. The confusing gap phase is gone.
Phase 1: The Deductible
Not every plan charges a deductible, but for those that do, the 2026 maximum deductible is $615. You pay 100 percent of your covered drug costs until you hit that number, then you move to Phase 2.
Some plans, particularly low-premium plans and Medicare Advantage drug plans, waive the deductible entirely for certain drug tiers.
Phase 2: Initial Coverage
Once past the deductible, you pay your plan's copays or coinsurance for each prescription. Your plan pays its share. This phase continues until your out-of-pocket spending on covered drugs reaches $2,100 in 2026.
Only certain costs count toward the $2,100 limit: what you pay at the pharmacy (deductibles, copays, coinsurance). Your monthly premium does not count.
Phase 3: Catastrophic Coverage
Once your out-of-pocket drug costs reach $2,100, you enter catastrophic coverage and pay nothing for covered medications for the rest of the plan year. Your plan covers 100 percent from that point forward.
This is the most significant change from previous years. Before the Inflation Reduction Act, catastrophic coverage meant you still paid a 5 percent coinsurance on every prescription indefinitely. Beneficiaries with expensive specialty drugs could face tens of thousands of dollars in annual costs. Now the cap is firm.
2026 Part D Cost Summary
| Phase | Trigger | What You Pay |
|---|
| Deductible | Plan year starts | Up to $615 (plan-specific) |
| Initial Coverage | After deductible is met | Plan copays/coinsurance |
| Catastrophic Coverage | After $2,100 out-of-pocket | $0 for covered drugs |
Source: medicare.gov Part D costs page
What the $2,100 Cap Means in Real Terms
The 2026 cap is $2,100, up from $2,000 in 2025. CMS adjusts this number annually. While a $100 increase sounds modest, the cap itself is still a dramatic improvement over the old system, where someone on a costly specialty drug could pay unlimited amounts once they hit the catastrophic threshold.
For context: in 2023, before the IRA's phased changes fully took hold, a Medicare beneficiary on a $10,000 monthly biologic drug could pay over $6,000 per year in out-of-pocket costs just in the catastrophic phase. In 2026, their exposure ends at $2,100.
According to CMS research published by ASPE, Part D out-of-pocket costs for high-cost drug users dropped significantly after the IRA changes began phasing in.
Medicare Part D Extra Help (Low Income Subsidy) in 2026
If your income and resources are below certain thresholds, you may qualify for Extra Help, also called the Low Income Subsidy (LIS). Extra Help pays most or all of your Part D costs, including premiums, deductibles, and copays.
2026 Extra Help Income Limits
| Household Size | Annual Income Limit (2026) |
|---|
| Individual | $23,475 |
| Married couple (living together) | $31,725 |
Source: CMS CY2026 LIS Resource Limits Memo
2026 Extra Help Resource Limits
Resources include money in checking, savings, stocks, bonds, and mutual funds. Burial funds up to $1,500 per person are excluded.
| Household | Resource Limit (2026) |
|---|
| Individual | $18,090 |
| Married couple | $36,100 |
What Extra Help Covers in 2026
If you qualify for Extra Help, your 2026 costs are:
- No deductible
- Copays capped at $5.10 per generic drug
- Copays capped at $12.65 per brand-name drug
- $0 once out-of-pocket spending hits $2,100
You automatically qualify for Extra Help if you receive Medicaid, Supplemental Security Income (SSI), or are enrolled in a Medicare Savings Program (QMB, SLMB, or QI). If you are near the income thresholds but do not receive one of those programs, you can apply directly through the Social Security Administration.
Medicare Part D IRMAA: High-Income Surcharges in 2026
Beneficiaries with higher incomes pay more for Part D. The income-related monthly adjusted amount (IRMAA) is a surcharge added on top of your plan's premium if your 2024 income exceeded certain thresholds. SSA uses your 2024 tax return to determine your 2026 IRMAA.
2026 Part D IRMAA Surcharges (Individual Filers)
| 2024 Individual MAGI | 2024 Joint MAGI | Monthly Part D Surcharge (2026) |
|---|
| Under $109,000 | Under $218,000 | $0 |
| $109,000 to $136,999 | $218,000 to $273,999 | $14.50 |
| $137,000 to $170,999 | $274,000 to $341,999 | $37.50 |
| $171,000 to $204,999 | $342,000 to $409,999 | $60.40 |
| $205,000 to $499,999 | $410,000 to $749,999 | $83.30 |
| $500,000 or more | $750,000 or more | $91.00 |
Source: Kiplinger IRMAA 2026
If your income dropped significantly since 2024 (due to retirement, divorce, or other life events), you can request a reconsideration from SSA using Form SSA-44.
How to Choose a Part D Plan in 2026
The donut hole's elimination makes plan selection simpler, but premiums, formularies, and pharmacy networks still vary widely. Two plans may cover the same drug at vastly different costs.
Key Factors to Compare
- Formulary coverage: Does the plan cover your specific drugs, and at which tier?
- Monthly premium: Ranges from $0 to $100 or more per month in 2026.
- Deductible: Does the plan charge one? Can it be waived for lower-tier drugs?
- Pharmacy network: Is your preferred pharmacy in-network? Does the plan offer preferred pharmacy discounts?
- Annual out-of-pocket estimate: Medicare's Plan Finder tool projects your estimated annual drug costs for each plan based on your specific medications.
The Medicare Plan Finder at medicare.gov lets you enter your prescriptions and zip code to compare plans side by side.
How to Apply or Change Your Part D Plan
When You Can Enroll or Switch
| Enrollment Period | When It Happens | Who It Applies To |
|---|
| Initial Enrollment Period (IEP) | 7-month window around your 65th birthday | New Medicare enrollees |
| Annual Enrollment Period (AEP) | October 15 to December 7 each year | All Medicare beneficiaries |
| Medicare Advantage Open Enrollment | January 1 to March 31 | MA plan enrollees |
| Special Enrollment Periods (SEPs) | Triggered by qualifying events | Varies |
Step-by-Step: How to Enroll in Part D
- Confirm you have Part A or Part B. You must be enrolled in Medicare to join a Part D plan.
- Make a list of your current medications. Include drug name, dosage, and how often you take each.
- Go to medicare.gov/plan-compare. Enter your zip code and prescription list.
- Compare plans. Sort by estimated annual drug cost, which factors in premiums, deductibles, and copays.
- Check your pharmacy. Verify that your preferred pharmacy is in-network and check if a preferred pharmacy discount applies.
- Enroll online, by phone, or through the plan. You can enroll directly on Medicare.gov, call 1-800-MEDICARE (1-800-633-4227), or contact the plan directly.
- Confirm your enrollment. You should receive a welcome letter and new drug plan card within 2 to 4 weeks.
Documents You May Need
- Medicare card (showing your Medicare number)
- List of current prescriptions with dosages
- Name of your preferred pharmacy
- 2024 income information if applying for Extra Help
- Bank account info if you want premium auto-pay
Common Reasons Applications Are Delayed or Denied
- Enrolling outside an enrollment period without a qualifying SEP
- Choosing a plan that does not operate in your zip code
- Missing income or resource documentation for Extra Help
- Already enrolled in a conflicting plan (some MA plans include Part D)
Frequently Asked Questions
Is the Medicare Part D donut hole gone in 2026?
Yes. The coverage gap phase was eliminated in 2025 as part of the Inflation Reduction Act's restructuring of Medicare Part D. In 2026, Part D has three phases: deductible, initial coverage, and catastrophic coverage. There is no longer a gap phase where your coverage pauses.
What is the Medicare Part D out-of-pocket maximum in 2026?
The out-of-pocket maximum for covered drugs is $2,100 in 2026. Once you reach that limit, your plan covers 100 percent of the cost of covered medications for the rest of the plan year. This cap covers deductibles, copays, and coinsurance but not monthly premiums.
What is the maximum Part D deductible in 2026?
No Medicare drug plan may charge a deductible higher than $615 in 2026. Many plans charge lower deductibles, and some charge none at all, particularly for lower-tier generic drugs.
How do I know if I qualify for Extra Help with Part D costs?
You likely qualify if your annual income is under $23,475 (individual) or $31,725 (couple) in 2026, and your resources (savings, investments) are under $18,090 (individual) or $36,100 (couple). You automatically qualify if you receive Medicaid, SSI, or a Medicare Savings Program. Apply through the SSA website or call 1-800-772-1213.
Does my Part D premium count toward the $2,100 out-of-pocket limit?
No. Monthly premiums do not count toward the $2,100 cap. Only costs you pay at the pharmacy, including deductibles, copays, and coinsurance for covered drugs, count toward the limit.
What happens if I do not enroll in Part D when I first become eligible?
If you do not enroll in Part D when you first become eligible and you do not have other creditable drug coverage (such as from an employer), you will owe a late enrollment penalty. The penalty adds 1 percent of the national base beneficiary premium for every month you went without coverage. That penalty is permanent and added to your premium for as long as you have Part D.
Can I change my Part D plan if my drugs get too expensive?
Yes, during the Annual Enrollment Period (October 15 to December 7). You can switch plans each year and your new coverage starts January 1. Use Medicare's Plan Finder to compare plans based on your actual drug list before making a change.
What is IRMAA for Part D in 2026?
IRMAA is an income-related surcharge on top of your Part D premium. In 2026, it applies if your 2024 income exceeded $109,000 (individual) or $218,000 (married). The surcharge ranges from $14.50 to $91.00 per month depending on your income tier. SSA notifies you directly if IRMAA applies to you.
Medicare Part D in 2026 is meaningfully better than it was just a few years ago. The donut hole is gone, the out-of-pocket cap is firm at $2,100, and Extra Help is available for lower-income beneficiaries. The remaining challenge is choosing the right plan for your specific medications.
Check your eligibility now at CoveredUSA. It takes 2 minutes. Start the screener at /screener to see which Medicare programs you may qualify for, including Medicare Savings Programs that can lower your overall Medicare costs.
