Medicare Donut Hole 2026: Is the Coverage Gap Gone?
Reviewed October 7, 2026. The Medicare donut hole is gone. The “donut hole,” or coverage gap, was a phase of Medicare Part D where you paid a bigger share of your drug costs. It ended on January 1, 2025, when the Inflation Reduction Act redesigned Part D. In 2026, your out-of-pocket spending on covered Part D drugs is capped at $2,100, and after you reach that amount you pay nothing more for covered drugs for the rest of the year.
Quick answer: There is no coverage gap in 2026. Part D now has three phases: a deductible (up to $615 in 2026), initial coverage (you typically pay 25% coinsurance or a set copay), and catastrophic coverage (you pay $0 once you’ve spent $2,100 out of pocket). Sources: CMS 2026 Part D fact sheet and Medicare.gov.
What was the Medicare donut hole?
When Part D started in 2006, the standard benefit had a gap in the middle. After you and your plan together spent a set amount on drugs, you entered the coverage gap and paid a larger share of each prescription until your spending reached the catastrophic threshold. In 2023, for example, the gap began once total drug costs reached $4,660. Over the years the Affordable Care Act shrank what people paid in the gap to 25%, but the phase still existed and many people still called it the donut hole.
Under the old design, people in the catastrophic phase also kept paying about 5% of drug costs with no upper limit. That changed in 2024, and the whole structure was replaced in 2025.
When did the donut hole end?
The Inflation Reduction Act of 2022 phased in changes to Part D. Starting in 2025, CMS ended the Coverage Gap Discount Program, replaced it with a new Manufacturer Discount Program and set a $2,000 annual out-of-pocket threshold (CMS 2025 Part D fact sheet). For 2026 the threshold is $2,100 (CMS).
| Year | What changed in Part D |
|---|---|
| 2023 and earlier | Coverage gap (donut hole) phase between initial coverage and catastrophic coverage; about 5% coinsurance in the catastrophic phase |
| 2024 | Cost sharing in the catastrophic phase eliminated, but the coverage gap phase remained |
| 2025 | Coverage gap eliminated; out-of-pocket cap of $2,000 for covered Part D drugs |
| 2026 | Out-of-pocket cap of $2,100; deductible up to $615 |
How Part D works in 2026 without a coverage gap
Every Part D plan, whether it’s a stand-alone drug plan or the drug coverage in a Medicare Advantage plan, follows the same basic structure. Plans can offer better coverage than the standard design, for example a $0 deductible, but they can’t make you pay more than the limits below.
| Phase | What you pay in 2026 | When it ends |
|---|---|---|
| Deductible | The full cost of covered drugs, up to $615 (many plans have a lower deductible or none for some tiers) | When you’ve paid your plan’s deductible |
| Initial coverage | Usually 25% coinsurance, or a flat copay set by your plan’s drug tiers | When your out-of-pocket costs reach $2,100 |
| Catastrophic coverage | $0 for covered Part D drugs | December 31 |
Source: CMS Final CY 2026 Part D Redesign Program Instructions. Learn more in our guides on how Medicare Part D works and Part D drug tiers.
What counts toward the $2,100 cap
- Your deductible, copays and coinsurance for covered Part D drugs on your plan’s formulary.
- Payments made on your behalf by Extra Help and some other assistance programs.
- It does not include your monthly plan premium, drugs your plan doesn’t cover, or drugs bought outside your plan (for example, with a discount card) unless your plan counts the purchase.
Example: what a high drug bill looks like now
Say you take a brand-name drug that costs $1,000 a month and your plan has the maximum $615 deductible and 25% coinsurance. In January you pay the $615 deductible plus 25% of the remaining $385 (about $96). From February on you pay $250 a month. Your running total reaches $2,100 in July (you pay about $139 that month), and after that you pay $0 for covered drugs for the rest of 2026. Under the old design you would have hit the coverage gap and kept paying a percentage all year. This is a simplified illustration; your plan’s actual prices, tiers and pharmacy network determine your real costs.
Ways to spread out or lower your costs
Medicare Prescription Payment Plan
If you expect to reach the cap early in the year, you can ask your plan to spread your out-of-pocket drug costs across monthly bills through the Medicare Prescription Payment Plan. It doesn’t lower your total costs, but it can make a big January bill easier to manage (Medicare.gov).
Extra Help
If your income and resources are limited, Extra Help can lower your premiums, deductible and copays. People with Extra Help pay small fixed copays instead of percentages.
Compare plans every fall
Because each plan sets its own formulary, tiers and pharmacy network, the same drug can cost very different amounts from plan to plan. Review your coverage during Medicare Open Enrollment, October 15 to December 7, and use our annual plan review checklist.
Insulin
Covered insulin costs no more than $35 for a month’s supply under Part D, and you don’t have to meet a deductible for it. See saving money on insulin with Medicare.
Will the cap change in 2027?
Yes, the out-of-pocket threshold is adjusted each year. CMS sets the 2027 amounts through its annual rate announcement, and Medicare.gov lists them before Open Enrollment. We’ll update this page with the official 2027 figures. Avoiding a gap in creditable drug coverage still matters too, because the Part D late enrollment penalty didn’t go away with the donut hole.
Frequently asked questions
Is there a Medicare donut hole in 2026?
No. The coverage gap ended in 2025. In 2026, Part D has a deductible, an initial coverage phase and a catastrophic phase, and your out-of-pocket costs for covered drugs are capped at $2,100.
What is the Part D out-of-pocket maximum for 2026?
$2,100. Once your out-of-pocket spending on covered Part D drugs reaches that amount, you pay nothing for covered drugs for the rest of 2026.
Does the $2,100 cap include my premium?
No. Monthly premiums don’t count toward the cap. Only your deductible, copays and coinsurance for covered drugs count, along with certain payments made on your behalf, such as Extra Help.
Does the cap apply to Medicare Advantage drug coverage?
Yes. It applies to all Part D coverage, including the drug coverage built into a Medicare Advantage plan.
What is the Part D deductible in 2026?
Plans can’t set a deductible higher than $615 in 2026. Many plans charge less or exclude lower-cost tiers from the deductible.
Why do people still talk about the donut hole?
Older articles, plan materials and conversations still use the term. If you see a reference to a coverage gap, it describes rules from 2024 and earlier.
This article is general information, not legal, tax or individual insurance advice. Plan rules and costs can change each year, so confirm details with Medicare, Social Security or your plan. Medicare365 is not affiliated with or endorsed by the U.S. government or the federal Medicare program.