What Is the Medicare Donut Hole and What Changed in 2026?
How Does Medicare Part D Work in 2026?
Shanti
9/16/20262 min read
What Is the Medicare Donut Hole and What Changed in 2026?
If you have Medicare and use Medicare Part D for your prescription medications, you may have heard the term Donut Hole, also known as the Coverage Gap.
The important thing to know is that the old Donut Hole structure no longer exists in the same way, and the way Medicare Part D prescription drug costs are paid has changed.
What Was the Donut Hole?
In the past, Medicare Part D prescription drug coverage had several stages. After a person’s drug costs reached a certain amount, they could enter a stage called the Coverage Gap, commonly known as the Donut Hole.
During this stage, the individual’s share of the cost of certain medications could increase until they reached the next stage of coverage.
Because of this, the Donut Hole was a significant concern for many people who took expensive prescription medications or several medications throughout the year.
What Changed?
Beginning in 2025, Medicare Part D underwent significant changes, including the introduction of an annual Out of Pocket limit for covered prescription drugs. In 2026, this limit is $2,100.
Once your qualifying Out of Pocket costs for covered Part D medications reach $2,100 during the year, you enter the Catastrophic Coverage stage.
After reaching this stage, you pay no copayment or coinsurance for covered Part D medications for the remainder of that calendar year.
How Does Medicare Part D Work in 2026?
In general, standard Medicare Part D coverage has three main stages in 2026.
1. Deductible
Some plans have a deductible. The maximum standard Part D deductible in 2026 is $615. However, some plans may have a lower deductible or no deductible at all.
2. Initial Coverage
After the deductible, the amount you pay depends on your plan’s structure and formulary. Under the standard Part D benefit, an individual generally pays 25% of the cost of covered medications during this stage.
This stage continues until your qualifying Out of Pocket costs reach $2,100 in 2026.
3. Catastrophic Coverage
Once you reach the $2,100 Out of Pocket limit, you have $0 cost sharing for covered Part D medications for the remainder of the calendar year.
Does This Mean Everyone Pays Exactly $2,100 for Prescription Drugs? No.
The $2,100 amount is the annual Out of Pocket limit for qualifying costs for covered Part D medications in 2026. It does not mean that everyone will pay $2,100.
Your actual costs may be significantly lower. Certain payments made on your behalf through programs such as Extra Help may also count toward reaching the annual Out of Pocket limit.
What If I Have Both Medicare and Medicaid?
People who have Medicare and also qualify for Medicaid or the Extra Help program may have significantly lower prescription drug costs.
For example, in 2026, people who qualify for Extra Help generally do not have a Part D deductible, and their prescription drug copayments are limited. Because benefits and costs can vary based on individual circumstances, each person’s situation should be reviewed separately.
An Important Consideration When Choosing a Medicare Plan
Do not look only at the plan’s monthly premium.
When comparing Medicare Advantage or Part D plans, it is important to consider your prescription medications, the plan’s formulary, the tier assigned to each medication, the pharmacy network, deductible, copayments, and coinsurance.
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