Medicare Part D
Part D is Medicare’s prescription drug benefit, delivered through private insurance plans — either standalone drug plans or bundled into Medicare Advantage. It’s optional, but if you don’t enroll when first eligible and don’t have other creditable drug coverage, you can face a permanent late-enrollment penalty.
The 2026 structure: three phases
Deductible
You pay 100% of drug costs up to your plan’s deductible — at most $615 in 2026. Many plans set it lower, or waive it for generics.
Initial coverage
You typically pay 25% coinsurance or a copay, while the plan covers the rest of your prescription costs.
Catastrophic
Once your out-of-pocket spending reaches $2,100, you pay $0 for covered drugs for the rest of the calendar year.
The old “donut hole” coverage gap is gone. Medicare streamlined the benefit into the three phases above as part of the Inflation Reduction Act’s reforms, and the $2,100 annual cap replaced it.
What counts toward the $2,100 cap
Your deductible, copays, and coinsurance all count. Premiums don’t count, and neither do costs for drugs outside your plan’s formulary or Extra Help subsidy amounts.
A few other useful pieces
Insulin cap
Cost-sharing for a month’s supply of insulin is capped at the lesser of $35, 25% of the drug’s negotiated price, or 25% of a special negotiated maximum fair price.
Vaccines
ACIP-recommended adult vaccines have no deductible and no cost-sharing.
Medicare Prescription Payment Plan (M3P)
An optional program that lets you spread your out-of-pocket drug costs into monthly installments across the year instead of paying a lump sum early on — useful if a big deductible or an expensive prescription hits in January. It doesn’t reduce your total cost, it just smooths the timing.
Extra Help
If you qualify for this low-income subsidy, your copays are capped at $4.50 for generics and $11.20 for brand-name drugs in 2026 — and you’ll rarely reach the full cap.
What’s usually not covered
A few things generally aren’t covered by Part D — over-the-counter medicines, most vitamins, weight-loss and cosmetic drugs, and anything already covered under Part A or Part B.
The late-enrollment penalty
If you don’t sign up for Part D when you’re first eligible — and you don’t already have other creditable drug coverage, such as from an employer, a retirement plan, or the VA — a penalty can be added permanently to your premium. It’s based on how long you went without coverage, and it’s easy to avoid. Getting that timing right is one of the things we’re here to help you with.
How Part D fits with Parts A and B
Since Part A and Part B don’t cover most retail prescription drugs, Part D — or a Medicare Advantage plan that includes drug coverage — fills that gap. See Medicare Basics for how Parts A and B work, and Your Options for how people usually close the remaining gaps.
Formularies vary a lot from plan to plan, so the deductible and the premium aren’t the whole story. Checking that a plan actually covers your regular medications matters just as much — and that’s something we can go through together.
Figures reflect 2026 Medicare costs as published by the Centers for Medicare & Medicaid Services (CMS) and are subject to annual change. Plan premiums cited are general ranges and will vary by carrier, plan, and county — always confirm current rates for a specific plan before enrolling.
Last reviewed: August 2026
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