Georgia Medicare Donut Hole: History and the $2,100 OOP Cap

The Medicare Part D donut hole is gone. Since 2025, a Georgia senior's out-of-pocket cost for covered prescription drugs is capped for the whole year, and for 2026 that cap is $2,100. Once you reach it, covered drugs cost you $0 for the rest of the year. Here is what changed, what you now pay, and how the monthly payment plan works.1

In This Guide

• What the Georgia Medicare Donut Hole Was
• How the Coverage Gap Was Closed and Eliminated
• How Georgia Seniors Pay for Part D Drugs in 2026
• Extra Help for Georgia Seniors
• Medicare Drug Price Negotiation and Your Costs
• Choosing a Part D Plan in Georgia
• Common Misconceptions About the Georgia Medicare Donut Hole
• Quick Reference: 2026 Part D Costs
• Frequently Asked Questions
• Learn More

What the Georgia Medicare Donut Hole Was

The Medicare prescription drug benefit (Part D) was created by the Medicare Modernization Act of 2003 (MMA, Public Law 108-173) and took effect on January 1, 2006. Under Section 1860D-2(b) of the Social Security Act (42 USC 1395w-102(b)), the original benefit had four phases: a deductible, an initial coverage phase where the plan shared costs, a middle phase where coverage dropped away, and a catastrophic phase at the top.

That middle phase was the "coverage gap," nicknamed the donut hole because of its shape: a Georgia retiree had help with costs early in the year, then fell into a hole where the plan paid little and the beneficiary paid most or all of the drug's price, then reached catastrophic coverage where costs eased again. For someone on an expensive brand-name maintenance medication, the gap could arrive mid-year and mean a stretch of paying full price at the pharmacy counter, often when they least expected it.

The gap is what earned Part D its bad reputation for two decades. It is the thing Georgia seniors still ask about by name, and the single most important fact to know today is that it no longer exists: the Inflation Reduction Act eliminated it effective January 1, 2025.1

How the Coverage Gap Was Closed and Eliminated

Three federal laws gradually closed and then eliminated the donut hole:

• The Affordable Care Act of 2010 (Public Law 111-148), Section 3301, began closing the gap. It created the Coverage Gap Discount Program (codified at Section 1860D-14A of the Social Security Act, 42 CFR 423.2300 to 423.2345), which required brand-name drug manufacturers to discount drugs bought in the gap and phased down what beneficiaries paid there over the following decade.
• The Bipartisan Budget Act of 2018 (Public Law 115-123), Section 53116, accelerated that schedule, pulling the brand-drug closure forward and increasing the manufacturer discount so beneficiaries in the gap paid the same share they paid in the initial coverage phase.
• The Inflation Reduction Act of 2022 (Public Law 117-169), Section 11201, went furthest of all. It eliminated the coverage gap phase entirely, effective January 1, 2025, replaced it with a single annual out-of-pocket cap, and cut catastrophic-phase cost-sharing to $0 for the beneficiary.1

Section 11201 also replaced the old Coverage Gap Discount Program with a new Manufacturer Discount Program (Section 1860D-14C). Under it, manufacturers pay a discount on their applicable drugs, typically 10% in the initial coverage phase and 20% in the catastrophic phase. That discount lowers your Part D plan sponsor's liability on the negotiated price rather than reducing what you pay at the pharmacy counter, so in most cases it does not change your own cost-sharing. Those manufacturer discounts also do not count toward your own out-of-pocket total.4

How Georgia Seniors Pay for Part D Drugs in 2026

Under the Inflation Reduction Act framework, the 2026 Part D standard benefit has three phases, not four, with no gap between them: a plan deductible of up to $615, then 25% coinsurance (or your plan's tier copays), then $0 catastrophic coverage once your out-of-pocket spending on covered drugs reaches the $2,100 annual cap, which resets every January 1.2,1

The current mechanics of that cap live in our Georgia Medicare Part D out-of-pocket cap guide: what counts toward the True Out-of-Pocket (TrOOP) accounting and what does not, how the Manufacturer Discount Program interacts with it, and how the voluntary Medicare Prescription Payment Plan (M3P) can spread your annual drug costs into level monthly installments instead of one pharmacy-counter bill.3 This page stays focused on what the donut hole was and how it was eliminated.

Extra Help for Georgia Seniors

For Georgia beneficiaries with limited income and resources, Extra Help (the Part D Low-Income Subsidy) covers most drug costs. For 2026, the full-benefit income limit is below 150% of the federal poverty level: about $1,995 per month ($23,940 per year) for an individual and about $2,705 per month ($32,460 per year) for a married couple, the figures for the 48 contiguous states and DC (Alaska and Hawaii are higher). The 2026 resource limits are $16,590 for an individual and $33,100 for a married couple.6

Because of the Inflation Reduction Act, the former partial-subsidy tier was eliminated in 2024, so everyone who qualifies now receives the full subsidy. Full Extra Help enrollees pay no more than $5.10 per generic and $12.65 per brand-name covered drug in 2026, and $0 once out-of-pocket costs reach the catastrophic threshold.6 For most Extra Help recipients, the $2,100 cap is largely moot because the subsidy already eliminates most cost-sharing.

Apply for Extra Help through the Social Security Administration at 1-800-772-1213 or ssa.gov/i1020. Extra Help isn't available in Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, or American Samoa, where residents apply through their local Medicaid office instead. In Georgia, the Georgia Department of Community Health screens for Extra Help as part of a Medicare Savings Program application.6

Medicare Drug Price Negotiation and Your Costs

Under IRA Section 11401 (codified at Section 1191 and following of the Social Security Act), CMS negotiates prices for the highest-spend Part D drugs. The first 10 negotiated prices took effect January 1, 2026.

Lower negotiated prices change the math for anyone taking these drugs: at a lower price per fill, you reach the $2,100 cap after more fills, and a Georgia beneficiary whose only Part D drug is one of the negotiated 10 may not reach the cap at all. More drugs are scheduled for negotiation in the following years.1

Choosing a Part D Plan in Georgia

Georgia beneficiaries get Part D two ways. A standalone Prescription Drug Plan (PDP) pairs with Original Medicare and covers drugs only. A Medicare Advantage Prescription Drug plan (MA-PD) bundles hospital, medical, and drug coverage into one plan, usually with a network. The $2,100 out-of-pocket drug cap applies to both. MA-PD members also have a separate medical out-of-pocket maximum, federally capped at $9,250 for in-network care in 2026, which does not interact with the drug cap.7,1

Even with the cap, the plan you pick matters, because the cap only applies to covered drugs:

• Formulary. Plans cover drugs in tiers, from preferred generics up to a specialty tier. A drug that is not on your plan's formulary does not count toward your cap unless you win a coverage exception under Section 1860D-4(g) and 42 CFR 423.578 (your prescriber must support the request; the plan decides within 72 hours, or 24 hours if expedited). Federal law requires plans to cover "all or substantially all" drugs in six protected classes, including antidepressants, anticonvulsants, antipsychotics, cancer drugs, HIV/AIDS drugs, and transplant immunosuppressants.
• Pharmacy network. Preferred pharmacies charge lower cost-sharing than standard ones, and out-of-network pharmacy costs generally do not count toward the cap. Mail order is often cheapest for 90-day fills of maintenance drugs.
• Timing. Compare plans every fall during the Annual Enrollment Period (October 15 to December 7), when a plan's next-year formulary and tiers are published. Use the Medicare Plan Finder or free help from GeorgiaCares.

Common Misconceptions About the Georgia Medicare Donut Hole

1. Thinking the donut hole still exists. It does not. It was eliminated effective January 1, 2025. Replace it with the $2,100 out-of-pocket cap.1
2. Confusing TrOOP with total drug spend. Only what you (or family, charity, or Extra Help) actually pay counts toward the cap; plan payments do not.
3. Believing premiums count toward the cap. Your monthly premium is separate from cost-sharing and never counts.
4. Assuming out-of-network drug costs count. They generally do not. Use in-network pharmacies for the cap protections to apply.
5. Believing all drugs are free after the cap. Only covered, on-formulary drugs are. A non-formulary drug is not covered no matter how much you have spent.
6. Thinking the cap covers Medicare Part B drugs. It does not. The cap is Part D only; Part B drugs given in a doctor's office have separate cost-sharing.
7. Missing that Extra Help largely removes the cap concern. If your income is below 150% of poverty, apply through Social Security; the subsidy cuts cost-sharing well below the cap.6
8. Forgetting the annual reset. The cap starts over at $0 spent each January 1, and resets to the new year's amount.1
9. Confusing M3P with drug maker assistance. M3P spreads what you pay your Part D plan; manufacturer programs are separate drug-specific help.
10. Missing the Annual Enrollment Period. A formulary change can cost you thousands if your drug moves tiers or is dropped. October 15 to December 7 is the time to compare.

Quick Reference: 2026 Part D Costs

Learn More

Find personalized help comparing Georgia Medicare Part D plans at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.