The Part D Coverage Gap in 2026: What Is Left of the "Donut Hole"?

For years, the Part D "donut hole" was one of the most confusing parts of Medicare — a phase where your cost-sharing jumped up in the middle of the year. Recent changes have reshaped how Part D spending phases work, and it is worth understanding what applies to you now.

The Old Structure, Briefly

Historically, Part D had four phases: a deductible, an initial coverage phase, a coverage gap ("donut hole") with higher cost-sharing, and a catastrophic phase with reduced costs. The coverage gap phase used to catch people off guard mid-year when their cost-sharing suddenly increased.

What Changed

Under recent reforms, Medicare Part D beneficiaries now have an annual out-of-pocket cap on covered prescription drug costs — $2,000 for 2026. Once you hit that cap, your covered Part D drugs are $0 for the rest of the calendar year. This effectively neutralizes the old coverage gap's financial shock for most people, since the total exposure is capped regardless of which phase you are technically in.

The Medicare Prescription Payment Plan

If you know your drug costs will be high for the year, you can also opt into the Medicare Prescription Payment Plan, which spreads your out-of-pocket drug costs into predictable monthly installments across the calendar year instead of large costs hitting all at once early in the year.

What This Means Practically

• Your maximum drug cost exposure in a calendar year is now capped, which makes budgeting much more predictable
• The specific dollar phases matter less than they used to — the annual cap is the number to track
• If you take expensive specialty medications, ask your plan or agent whether the payment plan option would smooth out your cash flow

These are exactly the kinds of year-to-year changes that make an annual plan review worthwhile, since your actual costs under the new structure can look very different from what you experienced in past years.