Part D

Part D in 2025: the new rules.

The biggest Medicare Part D change for 2026 is a hard $2,000 annual out-of-pocket cap on prescription drugs — the first time in Medicare's history that drug costs are capped. The Coverage Gap (the "Donut Hole") is permanently eliminated, replaced with a simpler three-phase structure: deductible, initial coverage, then catastrophic. You can also opt into the Medicare Prescription Payment Plan to spread your $2,000 across the year as predictable monthly bills.

The 3 things that changed

The new 3-stage structure

Stage 1 — Deductible (up to $615 in 2026)

You pay 100% of your drug costs until you've spent the plan's deductible. Some plans have a $0 deductible; max allowed is $615.

Stage 2 — Initial Coverage

You pay copays or coinsurance set by your plan—different drugs are on different "tiers" with different copays. This stage continues until your true out-of-pocket (TrOOP) hits $2,100.

Stage 3 — Catastrophic Coverage

Once you hit $2,100 in TrOOP, you pay $0 for the rest of the calendar year. Your plan and Medicare cover the rest.

What this means for you

• If you take expensive specialty drugs (cancer meds, biologics, MS treatments)—the $2,100 cap is life-changing. Many people who used to spend $10,000+/year on drugs now max out at $2,000.
• If you take only cheap generics—you might never hit the cap. But your premium probably went up to fund the cap for everyone else, so make sure your plan still makes sense.
• Plan landscapes shifted hard. Some carriers exited markets; many plans repriced; formulary tiers moved. Last year's "best plan" may be wrong this year.

The Medicare Prescription Payment Plan (M3P)

If you're going to hit the $2,100 cap and don't want a big bill in any single month, you can opt into M3P. Your plan spreads your annual out-of-pocket over the remaining months of the year. Same total cost—just smoothed out.



To opt in, contact your Part D plan directly or your broker.

Insulin and vaccines

• Insulin: Capped at $35/month per insulin product since 2023. Still in effect.
• ACIP-recommended vaccines (shingles, RSV, etc.): $0 cost-share through Part D.

Why your old Donut Hole knowledge is now wrong

If you're seeing content online about "Coverage Gap," "Donut Hole," "75% manufacturer discount," "$8,000 TrOOP threshold"—that's the pre-2025 system. It no longer exists. The structure described above is the current one.

Annual review is more important than ever

With the IRA changes, plan economics shifted dramatically. The plan that was best for you in 2025 may be a different plan in 2026. We do a 30-minute annual review every fall during Annual Enrollment Period (AEP) (Oct 15–Dec 7). Schedule yours →

Talk to a licensed agent—no cost, no pressure.

30-minute call. We'll review your situation, compare plans available in your area, and answer your questions. No obligation, ever.