Medicare Part D Explained: Prescription Drug Coverage in 2026
Medicare Part D is the part of Medicare that helps pay for prescription drugs — and thanks to recent reforms, 2026 brings some of the biggest improvements in years. Here’s a plain-language guide to how Part D works and what’s new. (Figures are 2026 standard amounts and can change; your own plan may differ.)
The big news for 2026: Your out-of-pocket spending on covered prescription drugs is now capped at $2,100 for the year. Once you hit that limit, you pay $0 for covered drugs for the rest of the year.
What is Part D?
Part D is prescription drug coverage offered through private insurance companies approved by Medicare. You can get it two ways: as a standalone drug plan added to Original Medicare, or built into a Medicare Advantage plan that includes drug coverage. Each plan has its own list of covered drugs (called a “formulary”) and its own pharmacy network.
What you’ll typically pay
Most plans have a monthly premium, and many have an annual deductible (Medicare sets a maximum each year). After the deductible, you pay a copay or coinsurance for each prescription — until your out-of-pocket spending reaches the annual cap.
The “donut hole” is gone
For years, Part D had a confusing coverage gap known as the “donut hole,” where you paid more after your drug costs reached a certain point. That gap has been eliminated. Now there’s a simpler path: you pay costs until you reach the $2,100 annual cap, and then covered drugs are free for the rest of the year — a major relief for anyone with high prescription costs.
Spread payments over the year
There’s also a newer option called the Medicare Prescription Payment Plan. Instead of paying large amounts at the pharmacy all at once, you can spread your out-of-pocket drug costs into monthly payments across the year. It doesn’t lower your total cost, but it makes budgeting easier. You have to opt in through your plan.
When can you enroll?
You can first join a Part D plan when you’re initially eligible for Medicare (around your 65th birthday). After that, the Open Enrollment Period runs October 15 to December 7 each year, when you can join, switch, or drop drug plans, with changes taking effect January 1. It’s smart to review your plan every year, because formularies and prices change.
Tip: There’s usually a late-enrollment penalty if you go without drug coverage after you’re first eligible, so it often pays to sign up on time even if you don’t take many medications now.
How Part D fits the bigger picture
Whether you get Part D on its own or bundled into a Medicare Advantage plan depends on how you get the rest of your Medicare. To understand that choice, see our guide to Original Medicare vs. Medicare Advantage.
Morning News Life is an independent publisher and is not connected with or endorsed by the U.S. government, Medicare, or the Centers for Medicare & Medicaid Services. This article is for general educational purposes only and is not insurance or medical advice. Figures are 2026 standard amounts and may change. For free, unbiased help, contact your State Health Insurance Assistance Program (SHIP).
