The Medicare Part D Donut Hole: Is It Really Closed in 2026?

The Medicare donut hole was a dreaded coverage gap. Here's what happened to it and what you'll actually pay for prescriptions in 2026.

For years, the "donut hole" was one of the most confusing and costly aspects of Medicare prescription drug coverage. Millions of seniors would hit a spending threshold and suddenly face dramatically higher costs for their medications. But changes from the Affordable Care Act and the Inflation Reduction Act have fundamentally changed how Part D works. Here's where things stand in 2026.

What Was the Donut Hole?

When Part D launched in 2006, it had a gap in coverage nicknamed the "donut hole." After you and your plan spent a certain amount on drugs, you entered a phase where you paid a much higher share of costs — sometimes 100% — until you reached the catastrophic coverage threshold. This gap left many seniors unable to afford their medications for months each year.

The Donut Hole Timeline

How Part D Works in 2026

In 2026, the old donut hole structure has been essentially replaced by a straightforward $2,000 annual out-of-pocket cap. Here's how the phases work now:

Deductible Phase: You pay the full cost of drugs until you meet your plan's deductible (up to $590 maximum). Some plans have $0 deductibles.
Initial Coverage Phase: You pay copays or coinsurance based on your plan's formulary tiers.
After $2,000 Out-of-Pocket: Once your out-of-pocket spending reaches $2,000, you pay $0 for all covered drugs for the rest of the year.

The Bottom Line

In 2026, no Medicare beneficiary will pay more than $2,000 out-of-pocket for prescription drugs in a year. This replaces the old catastrophic coverage phase and effectively eliminates the donut hole concept entirely.

Who Benefits Most from the $2,000 Cap?

The $2,000 cap is most impactful for beneficiaries who take expensive specialty medications or multiple brand-name drugs. Here are some examples:

The Medicare Prescription Payment Plan

Even with the $2,000 cap, paying for expensive medications upfront can be a burden. The Medicare Prescription Payment Plan lets you spread your costs into predictable monthly installments. If you're expected to hit the $2,000 cap, your plan divides that amount into equal monthly payments — roughly $167/month over 12 months. There's no interest and no fees.