How Medicare Part D works
Three stages, and since 2025 a hard cap: $2,100 in 2026.
Part D is Medicare's prescription drug coverage. It's sold by private plans approved by Medicare, either as a standalone drug plan that works with Original Medicare, or built into a Medicare Advantage plan.
The benefit changed a lot recently. The old coverage gap (the "donut hole") is gone, and since 2025 there's a yearly cap on what you pay for covered drugs.
The 2026 benefit, stage by stage
- Deductible: you pay the full negotiated price until you reach the plan's deductible, which can be no more than $615 in 2026. Many plans have a lower deductible, or none for some drug tiers.
- Initial coverage: you pay copays or coinsurance (in the standard design, 25%) until your out-of-pocket costs reach $2,100.
- Catastrophic coverage: after $2,100, you pay nothing for covered Part D drugs for the rest of the year.
What you pay besides drugs
Each plan charges a monthly premium, which varies by plan and area. People with higher incomes also pay a Part D IRMAA surcharge. If you went without creditable drug coverage after you were first eligible, you may owe a late enrollment penalty on top.
Standalone plan or Medicare Advantage?
If you have Original Medicare, with or without Medigap, you'd join a standalone Part D plan. If you join a Medicare Advantage plan, drug coverage usually comes with it; with most Advantage plans you can't add a separate Part D plan.
Every plan is different
Plans follow the same federal rules but choose their own formularies, tiers, pharmacy networks and cost sharing. The plan that's cheapest for one person can be expensive for another, which is why comparing with your own drug list matters, every year.
Coming in 2027
The maximum deductible rises to $700 and the out-of-pocket cap to $2,400.
Common questions
Yes. Since 2025, Part D has no coverage gap, and your out-of-pocket costs for covered drugs are capped each year.
Unless you have other creditable drug coverage, going without can lead to a late enrollment penalty if you join later. A low-premium plan can protect you.
No. The $2,100 cap counts what you pay for covered drugs, not your monthly premium.
Want help with your own choices?
Every state runs a State Health Insurance Assistance Program (SHIP) with trained counselors who give free, unbiased Medicare help and do not sell plans. Find yours on our Medicare by state pages, or call Medicare at 1-800-MEDICARE (1-800-633-4227) (TTY 1-877-486-2048, 24 hours a day, 7 days a week).
Planning the rest of your coverage in retirement? We can help with life insurance later in life and final expense coverage.
Sources
- Costs for Medicare drug coverage, Medicare.gov. Checked September 29, 2026.
- Medicare costs, Medicare.gov. Checked September 29, 2026.
- CY 2027 Rate Announcement, Centers for Medicare & Medicaid Services. Checked September 29, 2026.
General information about the federal Medicare program, not advice about your situation. Figures are for 2026 unless stated and change every year; last reviewed September 29, 2026. Quote My Policy is a private company. Not connected with or endorsed by the United States government or the federal Medicare program.
Quote My Policy does not sell Medicare plans on this site. For plan-specific help, contact Medicare at 1-800-MEDICARE (1-800-633-4227) (TTY 1-877-486-2048, 24 hours a day, 7 days a week) or your State Health Insurance Assistance Program.