What Was the Donut Hole?
The coverage gap — better known as the “donut hole” — was the phase in Part D where you paid more for your drugs after passing a spending threshold.
It Ended January 1, 2025
The Inflation Reduction Act eliminated the coverage gap. As of January 1, 2025, there is no more donut hole. Part D now works in three phases.
The Three Phases (2026)
- Deductible — you pay up to $615 (the max per plan in 2026) before coverage begins.
- Initial coverage — you and your plan share drug costs.
- Catastrophic — once you hit the out-of-pocket cap, covered Part D drugs cost you $0 the rest of the year.
The $2,100 Cap
For 2026 the annual out-of-pocket cap is $2,100 (it was $2,000 in 2025). Once your spending on covered Part D drugs reaches $2,100, you pay $0 for covered Part D drugs for the rest of the year.
What Counts Toward the Cap?
Only covered Part D drugs count. Your monthly premium does NOT count toward the cap.
Smoothing Your Costs
The Medicare Prescription Payment Plan is an optional way to spread drug costs into monthly payments instead of paying large amounts at the pharmacy counter.
Formularies Still Matter
Formularies still differ by plan — tiers, prior authorization rules, and pharmacy networks vary. Check the formulary before you choose.
A Pharmacist’s Take
As a pharmacist, I saw the old coverage gap hurt medication adherence: when costs suddenly jumped, some people skipped doses or stretched prescriptions. A clear $2,100 ceiling with $0 covered-drug costs after that gives predictability that helps people stay on their medications as prescribed.
The Bottom Line
No more donut hole. Three phases. A $2,100 cap for 2026. Premiums don’t count toward it. Formularies still matter. Plan details can change year to year, so review your coverage.
Questions about your Part D coverage? Call for a no-cost consult: (803) 415-7794.