The Medicare Donut Hole in 2026: What Replaced It

There is no Medicare Part D donut hole in 2026. The coverage gap was eliminated in 2025, and in its place is a simpler three-stage benefit with a yearly out-of-pocket limit of $2,100 for covered drugs. This guide explains how the new stages work, what counts toward the limit, what still costs extra, and what to check while you compare plans for next year.

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TL;DR

• The donut hole no longer exists. Part D now has three stages: deductible, initial coverage and catastrophic coverage.
• In 2026 the Part D deductible is capped at $615 (some plans charge less or nothing), you then pay 25% coinsurance until you hit $2,100, and after that covered drugs cost $0 for the rest of the year.
• Your monthly plan premium, drugs your plan does not cover, and Part B drugs given in a doctor’s office do not count toward the cap.
• The Medicare Prescription Payment Plan can spread your costs across the year. It changes timing, not the total you owe.
• Plan deductibles, formularies and copays still differ, so the plan you pick still decides what you pay.

Table of Contents

• What the donut hole was and why it is gone
• The three Part D stages in 2026
• Who pays the rest of the bill
• What counts toward the $2,100 cap, and what does not
• A real-world example: Eliquis
• Extra Help in 2026
• Spreading costs with the Medicare Prescription Payment Plan
• Using this fall’s enrollment window well
• Our perspective
• Get your 2026 drug costs checked by a local broker
• FAQ
• Sources

What the donut hole was and why it is gone

Before 2025, Part D had four phases: deductible, initial coverage, the coverage gap (the donut hole) and catastrophic coverage. NCOA explains that the gap was removed in 2025, leaving three phases and a program that is easier to follow.

The change came from the Affordable Care Act, which had been shrinking the gap for years, and the Inflation Reduction Act, which finished the job and added the out-of-pocket cap. The older structure also kept people paying a 5% share on very expensive drugs even in the catastrophic phase. That share is gone too.

If you read an older article that mentions a gap where you pay 25% until you reach a higher spending threshold, it describes the old rules. Today the 25% stage simply runs until your own out-of-pocket spending reaches the cap.

The three Part D stages in 2026

Here is how the year works, based on Medicare’s own cost page:

Stage What you pay in 2026 When it ends Deductible All costs for covered drugs, up to $615 (some plans charge less or $0) When you meet your plan’s deductible Initial coverage 25% coinsurance on covered drugs When your out-of-pocket spending reaches $2,100 Catastrophic coverage $0 for covered drugs End of the calendar year

Your exact deductible and your costs depend on the plan you choose. Some plans use flat copays instead of 25% coinsurance in the middle stage, as long as the plan meets Medicare’s rules. That is one reason two people with the same drug list can pay different amounts.

Where the $2,100 figure comes from

The cap started at $2,000 in 2025. For 2026 it was adjusted upward by the annual increase in average Part D drug spending, which is how it reached $2,100. Because it is indexed, expect it to be updated from year to year, so check Medicare’s current figures when you shop for a new plan.

A simplified example

Say your plan has the full $615 deductible and your drugs cost $1,000 a month at list price. This is an illustration, not a quote, and it ignores manufacturer discounts and plan-specific copays.

1. In January you pay the first $615 yourself, then 25% of the remaining $385, which is about $96. Your January total is roughly $711.
2. From February, you pay about $250 a month, 25% of each $1,000.
3. You reach $2,100 in out-of-pocket spending in roughly the fifth or sixth month, and from then on covered drugs cost $0 until December 31.

The point is that your worst-case yearly drug bill for covered drugs is now known in advance, which was not true under the old rules. You still pay your premium on top of that.

Who pays the rest of the bill

You are not alone in the middle and late stages. Under CMS’s 2026 redesign rules:

• Initial coverage: the plan typically pays 65% of the cost of brand-name (applicable) drugs and 75% of other covered drugs. For brand-name drugs, the manufacturer discount program typically covers 10%.
• Catastrophic coverage: the plan typically pays 60% of covered drug costs. Manufacturers pay a discount typically equal to 20% on brand-name drugs, and Medicare pays a reinsurance subsidy of 20% on brand-name drugs and 40% on other covered drugs.

The manufacturer discount applies to brand-name drugs only. For generics, plans pay 75% in the initial phase and Medicare pays 40% in the catastrophic phase. You do not have to do anything to trigger these payments. They happen behind the scenes at the pharmacy.

What counts toward the $2,100 cap, and what does not

The cap tracks your out-of-pocket spending on covered drugs. According to Medicare, it includes your deductible, your out-of-pocket spending and certain payments made on your behalf, such as through Extra Help.

Several costs sit outside it:

• Your monthly plan premium. The premium does not count toward the cap, so budget for it separately.
• Drugs not on your plan’s formulary. Costs for non-covered drugs do not count.
• Drugs given in a doctor’s office or infusion suite. These bill under Part B, where you still owe 20% coinsurance unless you have a Medigap policy or a Medicare Advantage out-of-pocket maximum that helps.

That last point is why drug coverage and the rest of your Medicare setup should be looked at together. If you take an infused medication, your Part B protection matters as much as your Part D plan. Our guide to Medicare Advantage versus Medigap walks through how each handles the 20%.

A real-world example: Eliquis

Readers often ask what a brand-name drug like Eliquis costs under Medicare in 2026. DrugCovered reports a median 30-day copay of $44.00 at a preferred pharmacy, with plan costs ranging from $0.00 to $88.00. That spread is the whole story of Part D: the same drug can cost very different amounts depending on the plan’s formulary tier, deductible and pharmacy network.

Before you enroll, look up each of your medications by name and dose, confirm which tier it sits on, and check whether your pharmacy is a preferred one. A broker can run that comparison across carriers in one sitting.

Extra Help in 2026

If you qualify for Extra Help (the Low-Income Subsidy), your costs are lower still. Medicare’s drug coverage guide says that in 2026 you pay $0 for your drug plan premium and deductible, up to $5.10 for each generic drug and up to $12.65 for each brand-name drug, and $0 for each covered drug once your total out-of-pocket spending reaches $2,100.

If your income is limited, ask about Extra Help and your state’s Medicare Savings Program before choosing a plan. The Social Security Administration handles Extra Help applications.

Spreading costs with the Medicare Prescription Payment Plan

The cap is a ceiling, but you can still face a big bill in the first months of the year, when the deductible and 25% stage hit. The Medicare Prescription Payment Plan (MPPP) addresses that. It is free and voluntary, and lets you spread your out-of-pocket prescription costs across the year instead of paying at the pharmacy counter. It does not lower what you owe in total.

Each month, your payment is what you would have paid at the pharmacy that month plus any remaining balance, divided by the months left in the year.

It fits best when you take costly drugs early in the year. Plans note it may be less useful if your yearly drug costs are low, your costs are the same each month, you sign up after September, or you already get Extra Help or other assistance. Because we are now in November, joining for the rest of this year would leave little time to spread payments. The better moment to think about it is when you set up your plan for the new year.

Using this fall’s enrollment window well

The drug benefit is simpler, but plan choice has not gotten simpler. In 2026, beneficiaries in each state could choose between 8 and 12 stand-alone drug plans, plus many Medicare Advantage drug plans. KFF also reports 360 stand-alone plans nationwide, a 22% drop from 2025, so the lineup you had last year may have changed.

A short checklist for your annual review:

1. Re-check your drug list. Include doses and any new prescriptions from this year.
2. Confirm your drugs are still on the formulary and see which tier they sit on for next year.
3. Compare the deductible and the premium together. A low premium with the full $615 deductible can feel very different from a higher premium with a $0 deductible.
4. Check your pharmacy. Preferred pharmacies often mean lower copays.
5. Look at Part B exposure. If you use office-administered drugs, review how your Medigap or Advantage plan handles the 20%.
6. Ask whether the payment plan suits you if you expect big costs early in the year.

Medicare’s annual open enrollment runs each fall, so check Medicare.gov or call us for the current dates. For more background, see our guides to Medicare prescription drug costs, what Part D is and how formularies work and the Part D deductible. If you are new to Medicare, our piece on late enrollment penalties explains how timing affects Part D premiums.

Our perspective

The end of the donut hole is good news, and it is also a reason to look at your plan again, not to set it and forget it. The $2,100 cap protects you from the worst case, but everything below that line still depends on your plan’s deductible, formulary tiers and pharmacy network.

We work as independent brokers across multiple carriers, so we can line up your exact prescriptions against the plans available in Colorado and show you what each is designed to cost you across a full year, premium included. That is a different exercise from picking the lowest premium on a screen.

We also stay with you after you enroll. If a drug is denied, a price jumps or a plan changes its formulary, you have someone to call, and we review your coverage with you every year. Our view is that good Medicare coverage is a relationship, not a one-time purchase.

Zach

Get your 2026 drug costs checked by a local broker

If you live in Castle Pines or anywhere in Colorado, we can compare Part D and Medicare Advantage drug coverage against your actual medication list, explain how your Part B costs fit in, and handle the enrollment paperwork. Our help comes at no direct cost to you. See our Part D plans in Castle Pines or start with Medicare planning.

We also help with Medigap quotes, Medicare Advantage consultations, annual enrollment reviews, and appeals and grievances when a plan denies coverage. You can browse everything on our services page.

FAQ

Is there a donut hole in 2026?

No. The Part D coverage gap ended in 2025. In 2026 you pay a deductible of up to $615, then 25% coinsurance until your out-of-pocket spending reaches $2,100, and then $0 for covered drugs for the rest of the year, according to Medicare.

Does the $2,100 cap include my premium?

No. Your monthly Part D premium is separate and does not count toward the cap. Drugs your plan does not cover also do not count, so confirm your medications are on the formulary.

Does the cap apply to drugs my doctor gives me in the office?

No. Drugs given in a doctor’s office or infusion suite are billed under Part B, where you generally owe 20% coinsurance. A Medigap policy or the out-of-pocket maximum on a Medicare Advantage plan can reduce that exposure.

Can I spread my drug costs over the year?

Yes. The Medicare Prescription Payment Plan lets you pay your out-of-pocket drug costs in monthly installments instead of at the pharmacy. It does not reduce the total, and it tends to help most if you join early in the year and have high costs.

Will my drug costs be the same on every plan?

No. Deductibles, tiers, copays and pharmacy networks vary by plan. A single brand-name drug can range from $0.00 to $88.00 for a 30-day supply depending on the plan, so compare plans using your own medication list.

Sources

• Medicare Part D Donut Hole Explained: What Changed in 2025 (NCOA)
• Does the Medicare Part D donut hole still exist? (Medicare Resources)
• Medicare: How much does Medicare drug coverage cost?
• Medicare: Costs
• CMS: Final CY 2026 Part D Redesign Program Instructions
• KFF: A Current Snapshot of the Medicare Part D Prescription Drug Benefit
• The Financial Wire: Medicare now caps what you pay out of pocket for prescriptions
• 24/7 Wall St.: Medicare’s New $2,100 Drug Cap
• Health New England: Medicare Prescription Payment Plan
• The Money Overview: Medicare’s new payment plan for Part D enrollees
• Medicare: Your Guide to Medicare Drug Coverage
• DrugCovered: Eliquis Medicare Coverage and Cost 2026

Recommended

• What Is Medicare Part D in 2026? Formularies, Premiums, and
• Is Medicare Part D Ending in Colorado in 2026? No.
• Medicare Prescription Drug Costs 2026: New Cap