Medicare Part D Coverage Gap: The Donut Hole in 2026

If you've had Medicare Part D for a while, you remember the coverage gap, the dreaded donut hole where your drug costs suddenly jumped partway through the year. Good news on this one: it's gone. Since 2025 there's a firm annual limit on what you can pay out of pocket for covered Part D drugs, and in 2026 that limit is $2,100.

In This Guide

• Key Takeaways
• What Was the Medicare Part D Coverage Gap?
• Where the Medicare Part D Coverage Gap Went in 2026
• The Three Coverage Phases and What You Pay
• What the Manufacturer Discount Program Does
• Frequently Asked Questions
• Learn More

What Was the Medicare Part D Coverage Gap?

For years, a Part D drug plan worked in stages. You paid a deductible, then you and your plan shared costs for a while, and then you hit a stretch where your share of the price shot up. That middle stretch was the coverage gap, and just about everyone called it the donut hole.1

The name captured the shape of it. You had decent coverage at the start of the year, then you fell into a hole where drugs got a lot more expensive, then you climbed back out the far side into catastrophic coverage once you'd spent enough. For someone on a couple of pricey brand-name medications, the donut hole could turn a manageable monthly copay into a bill of several hundred dollars, usually right around summer or fall.

So for a long time, "when do I hit the donut hole" was one of the most common questions Part D enrollees asked. That question doesn't really apply anymore.

Where the Medicare Part D Coverage Gap Went in 2026

The gap closed because of the Inflation Reduction Act, the 2022 law that reworked how Part D drug costs are shared. Its headline change for people at the pharmacy counter is a hard yearly cap on out-of-pocket spending for covered Part D drugs. Reach the cap, and you're done paying for covered drugs for the rest of the calendar year.1

That cap first took effect in 2025 at $2,000. The Part D out-of-pocket cap is adjusted upward each year for the growth in Part D drug costs, so for 2026 it's $2,100.1 Once the cap exists and applies all year, there's no separate stretch where your costs spike, which is why the donut hole is described as eliminated rather than just shrunk. The old three-tier "gap" is folded into a cleaner structure.

If your total drug bills are modest, you may never come close to $2,100 in a year and won't notice the cap at all.1 If you take expensive medications, though, the cap is the number that matters most, because it's the ceiling on your year.

And if even the capped amount stretches your budget, two federal programs can help. Medicare Extra Help, the Part D Low-Income Subsidy, lowers what people with limited income and resources pay for their Part D drugs. The Medicare Prescription Payment Plan doesn't lower your total, but it lets you spread your out-of-pocket costs into monthly payments across the year instead of paying it all at the pharmacy counter.

The Three Coverage Phases and What You Pay

Part D still moves through phases in 2026, just not the four-part structure with a donut hole in the middle. There are three phases now, and here's what each one costs you.1

So the path is straightforward. You clear the deductible (if your plan has one), you pay a quarter of the cost of your covered drugs for a while, and once your own spending on those drugs adds up to $2,100, covered drugs are free for the rest of the year.1 The cap is measured by what you actually spend out of pocket on covered Part D drugs, so it's the money leaving your wallet at the pharmacy that moves you toward it.

One thing worth knowing: plans differ in the details. A plan can set a lower deductible, or none, and can charge flat copays instead of straight 25% coinsurance in the initial phase.1 The phases and the $2,100 cap are the federal frame; your specific plan fills in the rest.

What the Manufacturer Discount Program Does

When the donut hole existed, drug manufacturers kicked in a discount to soften it, through something called the Coverage Gap Discount Program. With the gap gone, that program ended. In its place, effective January 2025, is the Manufacturer Discount Program.2

On covered brand-name drugs and biologics, the manufacturer typically pays a 10% discount while you're in the initial coverage phase and typically 20% once you reach catastrophic coverage.2 Generic drugs and biosimilars aren't part of this program, so they don't carry those discounts.

There's a wrinkle the Centers for Medicare & Medicaid Services (CMS) is clear about, and it matters for anyone racing toward the cap. The manufacturer's discount lowers the price you pay, but it does not count toward your $2,100 out-of-pocket total.2 Only the money you actually pay counts toward the cap. So the discount is a real savings on each fill, but it doesn't speed you to the point where covered drugs become free.

Learn More

Find personalized help understanding what your Part D drugs will cost 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.