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 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.
You can't stack both. If you join a Medicare Advantage plan that includes drug coverage, that plan handles your Part D.
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 | A copay or coinsurance share, 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. The 2026 figure of $2,100 reflects the year's adjustment for the growth in average Part D drug spending. The cap counts what you pay out of pocket toward covered drugs, including your deductible and your share during initial coverage. 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 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. Each plan sets its own deductible up to that federal maximum, and some plans charge none at all. You pay this before the plan starts sharing drug costs.
Premium. Each plan sets its own monthly premium. The average standalone Part D premium in 2026 is about $46.50. 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 permanent penalty to your premium.
The penalty is 1% of the national base beneficiary premium for each full month you went without coverage after you were first eligible. In 2026, with the base premium at $38.99, each uncovered month adds about $0.39 to your monthly premium, rounded to the nearest $0.10. A 24-month delay produces a 24% penalty, roughly $9.40 a month.
The penalty is permanent. It's recalculated each year against that year's base premium, and you keep paying it for as long as you have Part D. 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 covers most or all of your drug plan premium, lowers or eliminates the deductible, and caps your copays.
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. The resource limits are $16,590 for an individual and $33,100 for a married couple. Because the Inflation Reduction Act eliminated the old partial-subsidy tier in 2024, everyone who qualifies now receives the full subsidy.
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
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.
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; it doesn't count your monthly premium.
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.
It's 1% of the national base beneficiary premium ($38.99 in 2026) for each full month you went without creditable drug coverage after becoming eligible. The penalty is added to your premium and is generally permanent. A 24-month delay works out to about $9.40 a month in 2026.
Usually you get it through the plan. Most Medicare Advantage plans include drug coverage, and you can't add a separate standalone Part D plan on top. If you want a standalone Part D plan, pair it with Original Medicare instead.
Learn More
- What is Medicare? Parts A, B, C, and D explained
- Medicare enrollment periods and late penalties
- Original Medicare vs. Medicare Advantage
- IRMAA: the income-related premium surcharge
- Dual-eligible plans (FIDE-SNPs): Medicare and Medicaid together
Find personalized help comparing Medicare Part D drug plans and what you'll pay in 2026 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.