In 2026, Medicare Part D stops charging you for covered drugs once your out-of-pocket spending hits $2,100. The old "donut hole" coverage gap is gone, the standard benefit now runs in three phases, and a new option lets you spread your costs across the year. This guide covers how Part D works now: the phases, the cap, the deductible, what it costs, the late penalty, and the help available if your income is limited.

What Medicare Part D is and how to get it

Part D is the prescription drug coverage in Medicare. It pays for outpatient prescription drugs, the medications you fill at a pharmacy. Private insurance companies run the plans under contract with Medicare, so the exact drug list, pharmacy network, and price vary from plan to plan.

There are two ways to get it:

  • Add a standalone Part D plan to Original Medicare (Parts A and B).
  • Get drug coverage built into a Medicare Advantage plan, which bundles your hospital, medical, and drug coverage into one plan.

If you join a Medicare Advantage plan that includes drug coverage, that plan handles your Part D and you don't add a standalone plan on top. Not every Medicare Advantage plan includes it: Medical Savings Account (MSA) plans don't offer Medicare drug coverage at all, so someone enrolled in one has to join a separate Medicare drug plan.

The three benefit phases in 2026

The Inflation Reduction Act reshaped how Part D pays out. For 2026 the standard benefit runs in three phases over the calendar year, confirmed in the Centers for Medicare and Medicaid Services final 2026 redesign instructions.

Phase What you pay When it ends
Deductible The full negotiated price of your drugs, up to the plan's deductible After you've paid your plan's deductible (max $615)
Initial coverage 25% coinsurance under the standard benefit, with the plan paying the rest When your out-of-pocket spending reaches $2,100
Catastrophic $0 for covered drugs Through the end of the calendar year

The change from earlier years is the missing fourth stage. There's no coverage gap between initial and catastrophic coverage anymore. You move straight from paying your share to paying nothing once you hit the cap.

The $2,100 out-of-pocket cap

This is the figure to remember. In 2026, your out-of-pocket spending on covered Part D drugs is capped at $2,100. Once you reach it, you pay nothing for those drugs for the rest of the calendar year.

The cap was $2,000 in 2025; CMS set the 2026 figure of $2,100 in its CY 2026 Rate Announcement. The cap counts what you pay out of pocket toward covered drugs, including your deductible and your share during initial coverage. It also counts certain payments made on your behalf, such as payments through Extra Help, so assistance you receive moves you toward the $2,100 ceiling instead of leaving you to reach it on your own money alone. It does not count your monthly premium.

For someone on an expensive specialty drug, this is the biggest shift in years. Before the cap existed, there was no ceiling on what a Part D enrollee could spend in a year. Now there is.

What Medicare Part D costs

Three numbers shape your costs: the deductible, the premium, and your share during the initial coverage phase.

Deductible. The 2026 standard maximum deductible is $615, up from $590 in 2025. That figure is a ceiling on what a plan may charge, not the amount everyone pays: each plan sets its own deductible up to that federal maximum, some plans charge none at all, and if you qualify for Extra Help your deductible is lowered. Under full Extra Help it's $0. You pay the deductible before the plan starts sharing drug costs.

Premium. Each plan sets its own monthly premium, so what you pay depends on the plan you pick. CMS projects the average total premium for a standalone Part D plan will fall from $38.31 in 2025 to about $34.50 a month in 2026. Higher earners pay an income-related surcharge on top of the plan premium, called IRMAA, based on the tax return from two years earlier.

The figure behind the late penalty is separate: the national base beneficiary premium, which CMS set at $38.99 for 2026. You don't pay the base premium directly. It's the reference number used to calculate the penalty below.

The Medicare Prescription Payment Plan (M3P)

Starting in 2025, every Part D and Medicare Advantage drug plan must offer the Medicare Prescription Payment Plan, often shortened to M3P. It lets you spread your out-of-pocket drug costs into capped monthly payments across the calendar year instead of paying the full amount at the pharmacy counter.

Two points matter here. First, M3P does not lower your total drug costs. It changes the timing, not the amount. You still pay the same total over the year; you just pay it in installments billed by the plan rather than all at once at the pharmacy. Second, it helps most when you face high costs early in the year, such as a large fill in January that would otherwise eat your whole deductible in one trip.

You opt in through your plan. If the math works for your cash flow, it can keep a single expensive month from becoming a crisis.

The late-enrollment penalty

Sign up for Part D late, without other creditable drug coverage, and Medicare adds a penalty to your premium that generally lasts as long as you keep Medicare drug coverage.

The penalty is 1% of the national base beneficiary premium for each full, uncovered month you were eligible to join Medicare drug coverage but didn't and had no other creditable drug coverage. The trigger is a continuous period of 63 or more days without Part D or other creditable drug coverage after your initial enrollment period ends. In 2026 that base premium is $38.99, and the total is rounded to the nearest $0.10. Medicare's own worked example: someone who waited 14 months owes a 14% penalty, which for 2026 is $38.99 × 0.14 = $5.46, rounded to $5.50 a month.

The penalty is generally permanent. It's recalculated each year against that year's base premium, and you keep paying it for as long as you have Medicare drug coverage, even if you switch plans. The way to avoid it is to enroll when you're first eligible, or to keep other creditable drug coverage (such as a current employer's plan) and enroll within the allowed window when that coverage ends. For the enrollment windows themselves, see the Medicare enrollment periods guide.

There are limited exceptions. People who qualify for Extra Help, covered next, are not charged the penalty.

Help paying for Part D: Extra Help

If your income and resources are limited, Extra Help (the Part D Low-Income Subsidy) sharply lowers what you pay. It subsidizes your Part D premium, deductible, and copayments: under Extra Help your plan deductible is $0, your premium is covered up to your service area's regional benchmark premium, and your copays are capped. Pick a plan priced above that benchmark and you owe the difference.

There's one condition on that $0 premium, and it matters before you pick a plan. Medicare pays the premium subsidy directly to your drug plan, and the amount is based on your service area's regional benchmark premium. If you have a full premium subsidy and choose a more expensive plan, you're responsible for the difference between the benchmark premium and that plan's premium.

For 2026, the full-benefit income limit is 150% of the federal poverty level: about $1,995/month ($23,940/year) for an individual and about $2,705/month ($32,460/year) for a married couple in the 48 contiguous states and DC, with Alaska and Hawaii higher. The resource limits are $16,590 for an individual and $33,100 for a married couple, and they rise to $18,090 and $36,100 if you notify Social Security that you expect to use some of your resources for burial expenses. Because the Inflation Reduction Act eliminated the old partial-subsidy tier in 2024, everyone who qualifies now receives the full subsidy. Extra Help isn't available in Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, or American Samoa, where you apply through your local Medicaid office instead.

With full Extra Help in 2026, you pay no more than $5.10 for a covered generic and $12.65 for a covered brand-name drug, and $0 once your out-of-pocket spending reaches the catastrophic threshold. The resource limits for Extra Help are higher than those for the Medicare Savings Programs, so someone who doesn't qualify for help with their Part B premium may still qualify for Extra Help with drugs.

Frequently Asked Questions

Is the Medicare donut hole gone in 2026?

Yes. The coverage gap, the "donut hole," was eliminated starting in 2025. The 2026 standard benefit has three phases (deductible, initial coverage, and catastrophic) with no gap in between. Once your out-of-pocket spending reaches $2,100, you pay $0 for covered drugs for the rest of the year.

What is the Part D out-of-pocket maximum for 2026?

It's $2,100. That's the most you'll pay out of pocket for covered Part D drugs in 2026 before your cost drops to $0 for the rest of the calendar year. The cap counts your deductible and your share during initial coverage, plus certain payments made on your behalf such as payments through Extra Help; it doesn't count your monthly premium.

Do I have to pay my whole drug bill at the pharmacy?

Not necessarily. The Medicare Prescription Payment Plan (M3P) lets you spread your out-of-pocket drug costs into monthly payments billed by your plan instead of paying in full at the counter. Every plan has to offer it. It doesn't lower your total cost, only the timing, and your plan premium keeps coming separately.

How much is the Part D late-enrollment penalty?

It's 1% of the national base beneficiary premium ($38.99 in 2026) for each full, uncovered month you were eligible to join Medicare drug coverage but didn't and had no other creditable drug coverage. It's triggered by a continuous period of 63 or more days without Part D or other creditable drug coverage after your initial enrollment period ends, not by any gap at all. The penalty is rounded to the nearest $0.10, added to your plan premium, and generally permanent, but you don't pay it if you get Extra Help. Medicare's published example: a 14-month delay is a 14% penalty, which for 2026 is $38.99 × 0.14 = $5.46, rounded to $5.50 a month.

Can I get Part D if I have a Medicare Advantage plan?

Usually you get it through the plan. When your Medicare Advantage plan includes drug coverage, that plan is your Part D and you don't add a standalone plan on top. Some Medicare Advantage plans don't offer Medicare drug coverage at all, including Medical Savings Account (MSA) plans, and an enrollee in one of those does have to join a separate Medicare drug plan. If you want a standalone Part D plan with nothing else attached, pair it with Original Medicare instead.

Where to get help

To compare specific plans, enroll, or apply for Extra Help, these are the free, official channels to use.

Medicare Plan Finder Compare and enroll in Part D drug plans by your ZIP code and medication list. medicare.gov/plan-compare
1-800-MEDICARE Round-the-clock help enrolling in or switching a Part D plan. 1-800-633-4227
State Health Insurance Assistance Program (SHIP) Free, unbiased one-on-one counseling to help you choose a drug plan. 1-877-839-2675 shiphelp.org
Social Security Administration (Extra Help) Apply for Extra Help, the Part D Low-Income Subsidy. 1-800-772-1213 ssa.gov/medicare/part-d-extra-help

Learn More

MedicareThe Part D out-of-pocket capYes, there's now a Medicare Part D out-of-pocket cap on covered drugs. It was $2,000 in 2025 and $2,100 in 2026. Here's how the limit works and when you hit it. MedicareThe Part D coverage gap (the "donut hole")The Medicare Part D coverage gap, the donut hole, is effectively gone in 2026. A $2,100 out-of-pocket cap now limits what you pay for covered drugs. Here's how. MedicareThe Medicare Prescription Payment Plan (spreading out drug costs)The Medicare Prescription Payment Plan (M3P) spreads your 2026 Part D drug costs into monthly bills. It smooths the timing but does not lower what you pay. MedicareExtra Help with Part D drug costsMedicare Extra Help can cut Part D drug costs to a few dollars a prescription. See 2026 income and resource limits, what it pays, and how to apply. MedicareCreditable coverage: avoiding the Part D late penaltyWhat creditable prescription drug coverage means, the 63-day rule, what counts, and how to avoid the Medicare Part D late enrollment penalty in 2026. MedicarePart D late enrollment penaltiesWorried you missed a Medicare deadline? Here is how the Part A, B, and D late enrollment penalties are calculated, how long each lasts, and how to avoid them. MedicareHow to ask your drug plan to cover a denied drugIf your Medicare Part D plan denied a drug or charges too much, you can file a coverage determination. Here's how to do it and the deadlines it must meet. MedicareDo you need Part D if you take no medications?Medicare Part D is optional even if you take no medications, but skipping it when you're first eligible usually means a permanent late enrollment penalty. MedicareWhat is Medicare? Parts A, B, C, and D explainedWhat is Medicare? A plain guide to Parts A, B, C, and D, who qualifies, 2026 costs, when to enroll, and what it doesn't cover, with help-paying options. MedicareMedicare enrollment periods and late penaltiesWhen to sign up for Medicare without a lifelong penalty: the 7-month Initial Enrollment Period, working past 65, the GEP, and what each late penalty costs. MedicareOriginal Medicare vs. Medicare AdvantageCompare original Medicare vs Medicare Advantage on cost, networks, the $9,250 cap, and switching back. A neutral 2026 side-by-side to help you choose. MedicareIRMAA: the income-related premium surchargeIRMAA is the surcharge higher earners pay on Medicare Part B and Part D. See the 2026 brackets, the two-year income lag, and how to appeal with Form SSA-44. MedicareDual-eligible plans (FIDE-SNPs): Medicare and Medicaid togetherFIDE-SNPs are the high-integration dual-eligible plans replacing the MMP demonstration on 1/1/2026: definitions, state landscape, and family pitfalls.

Find personalized help comparing Medicare Part D drug plans and what you'll pay in 2026 at brevy.com.

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