Is There Still a Medicare Part D Donut Hole in 2026?
The traditional Medicare Part D “donut hole” or coverage gap is no longer part of the standard benefit structure in the way beneficiaries knew it for years.
Major Part D redesign changes took effect in 2025, including replacing the old four-phase benefit with a simpler structure and introducing an annual out-of-pocket cap.
For 2026, Medicare’s standard Part D benefit generally has three stages:
1. Deductible stage
2. Initial coverage stage
3. Catastrophic coverage stage
Most importantly:
The annual out-of-pocket threshold for covered Part D drugs is $2,100 in 2026.
Once qualifying out-of-pocket spending reaches that threshold, the beneficiary enters catastrophic coverage and owes:
$0 out of pocket for covered Part D drugs for the remainder of the calendar year.
CMS confirms that the 2026 $2,100 threshold is an inflation-adjusted increase from the original $2,000 cap introduced in 2025.
This represents one of the most significant changes to Medicare prescription-drug coverage in the program’s history.
What Was the Medicare Part D Donut Hole?
To understand what’s different, it helps to understand the old system.
Historically, Medicare Part D prescription-drug coverage moved beneficiaries through several spending phases.
These included:
Deductible
You initially paid your plan’s deductible, if applicable.
Initial Coverage
You and your plan shared prescription costs.
Coverage Gap
After drug spending reached a particular level, beneficiaries entered what became commonly known as:
the donut hole.
Although discounts gradually reduced beneficiaries’ costs within this phase over the years, the coverage gap remained a recognizable part of the Part D benefit structure.
Catastrophic Coverage
After sufficient spending, beneficiaries eventually entered catastrophic coverage.
That system changed substantially beginning in:
2025.
What Changed in 2025?
The Inflation Reduction Act fundamentally redesigned Medicare Part D.
Beginning in 2025, the standard Part D benefit was simplified and an annual beneficiary out-of-pocket cap was established.
The cap began at:
$2,000 in 2025.
For 2026, that threshold has been adjusted to:
$2,100.
CMS explains that the $2,100 amount is the original $2,000 threshold adjusted based on the annual percentage increase in average expenditures for covered Part D drugs.
So when discussing the:
“2026 donut hole,”
it’s more accurate to explain that beneficiaries no longer move through the old coverage-gap structure.
Instead, they progress toward an:
annual out-of-pocket threshold.
Medicare Part D in 2026 at a Glance
| Part D Feature | 2026 Standard Benefit |
|---|---|
| Maximum standard deductible | $615 |
| Initial coverage beneficiary share | Generally 25% |
| Annual out-of-pocket threshold | $2,100 |
| Beneficiary cost sharing after threshold | $0 for covered Part D drugs |
| Traditional donut-hole phase | No longer a separate standard phase |
| Prescription Payment Plan | Available through all Part D plans |
Medicare confirms that no Medicare drug plan may have a deductible higher than $615 in 2026, although individual plans can have a smaller deductible or no deductible.
How Medicare Part D Works in 2026
Let’s break down the new structure.
Stage 1: Deductible
Some Part D plans have an annual deductible.
The maximum deductible allowed under the standard Part D benefit for 2026 is:
$615.
If your plan uses the full deductible, you generally pay covered prescription-drug costs until the deductible is satisfied.
But:
not every plan charges the maximum.
Some plans may have:
Lower deductibles
or:
No deductible.
Plan-specific drug tiers may also affect how costs apply.
Always check your plan’s:
Evidence of Coverage and formulary.
Medicare confirms the 2026 maximum Part D deductible is $615.
Stage 2: Initial Coverage
After satisfying the deductible, if your plan has one, you enter:
initial coverage.
Under the defined standard Part D benefit, the beneficiary generally pays:
25% coinsurance
for covered generic and brand-name drugs during this stage.
This continues until qualifying out-of-pocket spending reaches:
$2,100 in 2026.
CMS explains that during the standard initial coverage phase, beneficiaries pay 25% while plan, manufacturer and government liabilities vary depending on the drug.
Individual Part D plans, however, can structure cost sharing differently while meeting Medicare requirements.
You might therefore see:
Copayments
instead of:
25% coinsurance
for certain drugs.
Stage 3: Catastrophic Coverage
This is the most important protection for beneficiaries with expensive prescriptions.
Once your qualifying out-of-pocket spending reaches:
$2,100
you enter:
catastrophic coverage.
At that point:
You pay $0 for covered Part D drugs for the rest of 2026.
Medicare confirms there is no beneficiary cost sharing for covered Part D drugs once the 2026 out-of-pocket threshold is reached.
What Happened to the Donut Hole?
The easiest way to understand the change is:
OLD PART D STRUCTURE
Deductible
↓
Initial Coverage
↓
Coverage Gap / Donut Hole
↓
Catastrophic Coverage
2026 STRUCTURE
Deductible
↓
Initial Coverage
↓
$2,100 Out-of-Pocket Threshold
↓
Catastrophic Coverage
↓
$0 beneficiary cost sharing for covered Part D drugs
That means beneficiaries no longer have to navigate a separate:
coverage-gap stage
within the standard Part D design.
Is the 2026 Out-of-Pocket Cap $2,000 or $2,100?
This is a common source of confusion.
The original cap introduced for:
2025
was:
$2,000.
But that amount is indexed.
For:
2026,
CMS established the annual Part D out-of-pocket threshold at:
$2,100.
So an article claiming the Medicare Part D out-of-pocket limit remains:
exactly $2,000 in 2026
would be outdated.
Does the $2,100 Cap Include Your Part D Premium?
No.
The out-of-pocket threshold relates to qualifying costs for:
covered Part D prescription drugs.
Your monthly Part D plan premium is separate.
That means you may still pay:
Monthly plan premiums
Income-related Part D adjustments, when applicable
and potentially:
Costs for medications that aren’t covered by your plan.
The $2,100 threshold shouldn’t be interpreted as:
“My total Medicare drug-plan spending can never exceed $2,100.”
Your premiums aren’t part of that cap.
Does Every Prescription Count Toward the $2,100 Limit?
No.
The protection applies to:
covered Part D drugs
and qualifying amounts counted toward your Part D out-of-pocket spending.
A medication not covered by your Part D plan doesn’t automatically count simply because:
you paid for it yourself.
That’s why your plan’s:
formulary
remains extremely important even after the elimination of the traditional donut hole.
Formulary Still Matters in 2026
A formulary is your plan’s:
list of covered prescription drugs.
Even with the $2,100 out-of-pocket cap, plans can differ in:
Covered medications
Drug tiers
Prior authorization
Step therapy
Quantity limits
Pharmacy networks
and:
Cost-sharing structures.
Therefore:
A lower-premium plan isn’t automatically the cheapest plan for you.
Your medications should be compared against:
each plan’s formulary and pharmacy network.
Example: Beneficiary With Expensive Prescriptions
Consider:
Susan
who takes several expensive covered medications.
Assume she has a Part D plan using the standard:
$615 deductible.
She first incurs qualifying covered-drug expenses through the deductible stage.
After satisfying the deductible, she generally pays:
25%
under the defined standard benefit until her qualifying out-of-pocket spending reaches:
$2,100.
Once she reaches that threshold:
she enters catastrophic coverage.
For the rest of the calendar year:
her cost sharing for covered Part D drugs is $0.
The exact timing depends on:
Drug prices
Plan design
Prescriptions
and:
Amounts that count toward the threshold.
Why the Change Matters for People Taking Specialty Drugs
The redesign can be especially important for people taking:
very expensive medications.
Previously, beneficiaries with high drug spending could continue paying cost sharing during catastrophic coverage.
The redesigned benefit provides a defined annual beneficiary out-of-pocket ceiling for:
covered Part D medications.
For someone with costly:
Cancer drugs
Autoimmune medications
Specialty treatments
or other high-cost prescriptions,
the annual cap can substantially limit exposure compared with the older benefit design.
However, formulary coverage and utilization-management rules still matter.
$2,100 Doesn’t Mean You Pay $2,100 Immediately
Another misconception is:
“I’ll have to pay $2,100 at the pharmacy in January.”
Not necessarily.
Your actual costs depend on:
Your prescriptions
Plan
Deductible
Copays
Coinsurance
and:
When prescriptions are filled.
Some beneficiaries may never reach:
$2,100.
Others taking expensive medications could reach the threshold:
relatively early in the year.
What Is the Medicare Prescription Payment Plan?
There’s another important feature for people with:
high prescription costs.
The:
Medicare Prescription Payment Plan
allows people with Medicare drug coverage to spread their out-of-pocket Part D prescription costs across the calendar year rather than paying the entire applicable amount at the pharmacy.
All Medicare prescription-drug plans are required to offer this option.
This program began in:
2025
and continues in:
2026.
Does the Medicare Prescription Payment Plan Reduce Your Drug Costs?
No.
This distinction is extremely important.
The program:
changes when you pay.
It doesn’t:
reduce what you owe.
Medicare explains that the payment option can help manage monthly expenses but doesn’t save money or lower prescription-drug costs.
Think of it as:
cash-flow management
rather than:
a drug discount.
Example of Why Monthly Payments May Help
Suppose someone takes an expensive medication early in the year.
Without the payment program, they could face:
substantial pharmacy costs early in the calendar year.
With the Medicare Prescription Payment Plan, eligible Part D out-of-pocket costs can instead be:
spread across monthly plan bills.
This can make expenses:
more predictable.
Medicare says beneficiaries with high prescription costs earlier in the calendar year are among those most likely to benefit from the program.
You Don’t Pay the Pharmacy Under the Payment Plan
When participating in the Medicare Prescription Payment Plan, you generally don’t pay your Part D out-of-pocket amount directly to the pharmacy when filling a covered prescription.
Instead:
your health or drug plan bills you monthly.
You’re still responsible for the costs.
Medicare says monthly bills are calculated using the costs you would otherwise have paid, previous balances and the number of months remaining in the calendar year.
Payment Plan vs. $2,100 Cap
These are two completely different protections.
$2,100 Out-of-Pocket Threshold
Limits qualifying annual beneficiary out-of-pocket spending on:
covered Part D drugs.
Medicare Prescription Payment Plan
Allows qualifying costs to be:
spread throughout the year.
The payment plan doesn’t increase or reduce:
the $2,100 cap.
Medicare confirms that the annual $2,100 prescription-drug out-of-pocket maximum applies whether or not a beneficiary participates in the payment program.
What’s New With Insulin in 2026?
Part D insulin protections also continue, with an important 2026 refinement.
Beginning in 2026, CMS says cost sharing for a month’s supply of each covered insulin product is capped at the lesser of:
- $35
- 25% of the Medicare-negotiated maximum fair price, when applicable
- 25% of the plan’s negotiated price
This means:
$35 is the ceiling under this rule, not necessarily the amount every beneficiary will pay.
Some covered insulin products could potentially have lower cost sharing under the formula.
Recommended Adult Vaccines Continue at $0 Cost Sharing
Part D also continues the requirement for:
no cost sharing
for adult vaccines recommended by the Advisory Committee on Immunization Practices and covered under Part D.
CMS identifies this protection as continuing in 2026.
Depending on eligibility and coverage, this can include vaccines such as:
Shingles
and other recommended adult immunizations covered under Part D.
Medicare Drug Price Negotiation Arrives in 2026
Another major 2026 development is the implementation of negotiated prices for the first group of drugs selected under:
Medicare Drug Price Negotiation.
CMS’s Part D redesign instructions specifically account for negotiated prices taking effect for selected drugs beginning:
January 1, 2026.
This change is related to:
but separate from
the elimination of the traditional donut-hole structure.
A beneficiary’s actual cost still depends on:
Plan
Drug
Coverage phase
Formulary
and:
Applicable Medicare rules.
The 2026 Part D Benefit Is Simpler—but Plan Shopping Still Matters
The elimination of the traditional coverage gap doesn’t mean:
all Part D plans are now equivalent.
Plans can still differ considerably.
Compare:
Monthly premium
Deductible
Prescription formulary
Drug tiers
Copays
Coinsurance
Preferred pharmacies
Mail-order options
Prior authorization
Step therapy
and:
Quantity limits.
Your prescriptions may make one plan:
dramatically better
than another.
Example: Cheap Premium vs. Better Drug Coverage
Consider two plans.
Plan A
Premium: Lower
Your medication: Higher tier
Pharmacy: Non-preferred
Prior authorization: Required
Plan B
Premium: Higher
Your medication: Preferred tier
Pharmacy: Preferred network
Prior authorization: Not required
Looking only at:
monthly premiums
could lead you toward:
Plan A.
But your annual total cost could potentially be:
higher.
This is why Medicare beneficiaries should compare:
total expected annual costs
rather than premiums alone.
What If Your Prescription Isn’t Covered?
The $2,100 annual threshold doesn’t eliminate:
formulary problems.
If a medication isn’t covered, ask your plan or healthcare professional about:
Covered alternatives
Formulary exceptions
Prior authorization
Appeals
or:
Alternative treatment options.
Don’t simply assume an expensive non-covered prescription will count toward:
your Part D annual out-of-pocket threshold.
Extra Help Can Reduce Costs Further
People with limited income and resources may qualify for:
Extra Help
with Medicare prescription-drug costs.
Medicare says Extra Help can help pay drug-plan costs, and some beneficiaries automatically qualify through programs including:
Medicaid
Medicare Savings Programs
or:
Supplemental Security Income.
If prescription costs remain difficult even with the Part D redesign:
check eligibility.
What About Late Enrollment Penalties?
The Part D redesign doesn’t eliminate:
late enrollment penalties.
A beneficiary may owe a penalty after going without Part D or other creditable prescription coverage for:
63 consecutive days or more
after becoming eligible, subject to Medicare’s rules.
For 2026, Medicare lists the national base beneficiary premium used in calculating the penalty as:
$38.99.
The penalty can generally continue for as long as you have Part D coverage.
Creditable Drug Coverage Also Changes in Importance
People who receive prescription coverage outside Medicare—particularly through:
employer or retiree plans—
should pay attention to whether that coverage remains:
creditable.
CMS updated the simplified methodology used by certain group health plans for determining creditable prescription coverage in response to the richer Part D benefit.
For 2026 only, CMS allows applicable non-RDS group health plans to use either the existing or revised simplified methodology. Under the revised methodology, the plan generally must be designed to pay at least 72% of participants’ prescription-drug expenses, compared with 60% under the previous simplified methodology.
Beneficiaries should rely on their plan’s:
annual creditable-coverage notice
rather than trying to calculate this themselves.
2024 vs. 2025 vs. 2026: What Changed?
| Feature | Older Part D Structure | 2025 | 2026 |
|---|---|---|---|
| Separate traditional coverage gap | Yes | Removed from redesigned standard structure | Removed |
| Annual Part D OOP cap | No comparable $2,000 cap | $2,000 | $2,100 |
| Beneficiary cost sharing after OOP threshold | Previously continued | $0 | $0 |
| Medicare Prescription Payment Plan | No | Introduced | Continues |
| Maximum standard deductible | Varied annually | $590 | $615 |
| First Medicare negotiated drug prices | Not yet effective | Not yet effective | Effective for first selected drugs |
The most important point:
Don’t use an old “donut hole” chart to understand your 2026 Part D coverage.
The benefit has changed substantially.
What Should Medicare Beneficiaries Do in 2026?
1. Review Every Medication
Write down:
Drug name
Dosage
Frequency
and:
Preferred pharmacy.
2. Check the Formulary
Make sure each medication is:
covered.
3. Check Drug Tiers
Find out whether prescriptions are:
Preferred generic
Generic
Preferred brand
Non-preferred
or:
Specialty drugs.
4. Compare Total Annual Costs
Don’t choose based only on:
premium.
5. Check Your Deductible
Your plan’s deductible may be:
lower than $615.
6. Understand the $2,100 Threshold
Know which costs:
count toward it.
7. Consider the Payment Plan
Especially if expensive prescriptions create:
large early-year bills.
8. Check Extra Help Eligibility
You could qualify for:
additional assistance.
Common Medicare Part D Mistakes in 2026
Mistake 1: Searching for the Old Donut Hole
The benefit structure has changed.
Mistake 2: Assuming the Cap Is Still $2,000
For 2026, it’s:
$2,100.
Mistake 3: Thinking the Cap Includes Premiums
It doesn’t.
Mistake 4: Assuming Every Prescription Counts
Coverage and qualifying Part D costs matter.
Mistake 5: Choosing a Plan Only by Premium
Your prescriptions may make another plan cheaper overall.
Mistake 6: Thinking the Payment Plan Is a Discount
It spreads costs.
It doesn’t:
reduce them.
Mistake 7: Ignoring Formularies
The $2,100 cap doesn’t make every drug covered.
Frequently Asked Questions
Is there a Medicare Part D donut hole in 2026?
The traditional coverage-gap or “donut hole” isn’t a separate stage in the redesigned standard Part D benefit. Beneficiaries generally move through the deductible and initial coverage stages before reaching catastrophic coverage.
What is the Medicare Part D out-of-pocket maximum for 2026?
The annual out-of-pocket threshold is:
$2,100.
Once that threshold is reached, beneficiaries owe no cost sharing for covered Part D drugs for the remainder of the calendar year.
Wasn’t the Part D cap $2,000?
Yes. The cap began at $2,000 in 2025. It increased to $2,100 for 2026 through the statutory annual adjustment.
What is the maximum Part D deductible in 2026?
The maximum standard deductible is:
$615.
Some plans have a lower deductible or no deductible.
What happens after I spend $2,100?
Once qualifying out-of-pocket spending reaches the threshold, you enter catastrophic coverage and owe:
$0
for covered Part D drugs for the rest of the calendar year.
Does my monthly premium count toward the $2,100?
No. Plan premiums aren’t part of the prescription-drug out-of-pocket cap.
Does the Medicare Prescription Payment Plan lower my costs?
No. It allows you to spread qualifying Part D out-of-pocket costs across monthly payments. Medicare explicitly says the program doesn’t lower your drug costs.
Is the Medicare Prescription Payment Plan available with every Part D plan?
Yes. All Medicare prescription-drug plans must offer the payment option.
Do I have to join the payment program?
No. It’s an optional payment method.
Are insulin costs still capped in 2026?
Yes. For 2026, cost sharing for a month’s supply of each covered insulin product is the lesser of $35, 25% of the applicable maximum fair price, or 25% of the plan’s negotiated price.
Key Takeaways
The biggest Medicare Part D story for 2026 isn’t really a:
“new donut hole.”
It’s the continuation and evolution of a redesigned prescription-drug benefit in which the traditional coverage-gap structure has been removed.
For 2026:
Maximum standard deductible: $615
Annual out-of-pocket threshold: $2,100
Beneficiary cost sharing after reaching the threshold: $0 for covered Part D drugs
Medicare Prescription Payment Plan: Continues
First Medicare-negotiated prices for selected drugs: Take effect in 2026.
For beneficiaries with expensive prescriptions, the:
$2,100 annual out-of-pocket threshold
can provide important protection against very high covered Part D drug expenses.
But the redesign doesn’t make plan selection irrelevant.
You still need to compare:
Formularies
Premiums
Deductibles
Pharmacies
Copays
Coinsurance
and:
Drug restrictions.
For 2026, the best Medicare Part D strategy is therefore not to worry about:
“falling into the donut hole.”
Instead, understand:
how quickly your covered prescription costs could take you toward the $2,100 annual threshold—and which plan covers your medications most effectively.
Disclaimer
This article is for general educational and informational purposes only and isn’t personalized medical, Medicare, legal, tax or financial advice. Medicare rules, plan formularies, premiums, pharmacy networks and prescription costs can change. Beneficiaries should verify current information with Medicare and their Part D or Medicare Advantage plan before making coverage decisions.