More than 66 million people have Medicare health coverage, according to the program. And according to the Commonwealth Fund, nine out of 10 of those Medicare beneficiaries report taking prescription drugs regularly.
While many Medicare recipients can manage their drug costs over the long term, some experience periods when access and affordability are issues. This is especially true for those on multiple medications or high-cost branded drugs.
In the past, there was a “gap” in Medicare Part D coverage for prescription drugs. That gap left Medicare recipients scrambling to cover more of their prescription costs. But that has now changed. Medicare Part D has a cap on what you’ll have to pay out-of-pocket for prescriptions.
Medicare Part D Donut Hole
According to the National Council on Aging (NCOA), up until 2025, if you spent a certain amount on prescription drugs, you’d enter the Medicare Part D “donut hole” or coverage gap.For example, in 2024, you reached the Part D donut hole when you and your plan paid $5,030 for your medications.
At that time, Part D had four phases of coverage. They included:
- deductible
- initial coverage
- coverage gap (donut hole)
- catastrophic coverage
What Is the Medicare Part D Out-of-Pocket Cap?
According to the Patient Advocate Foundation, starting in 2025, there is an annual limit on what you pay out-of-pocket for prescription medications. This applies to plans obtained through Medicare and Medicare Advantage prescription drug plans.All prescriptions, including specialty prescriptions that are covered by Part D, come under this cap. The cap includes:
- deductibles
- copayments
- coinsurance for covered drugs
The cap applies to all Medicare recipients with Part D prescription drug coverage, regardless of income level.
What Doesn’t Come Under the Medicare Part D Cap?
The Part D cap doesn’t apply to prescription drug costs that are not covered under a Part D Plan. It also doesn’t apply to prescription drugs covered under Medicare Part B. These include injectables and infused drugs.It doesn’t apply to Part D monthly premiums.
Medicare Part D Deductible
Your deductible is a preset amount that you, or others on your behalf, pay out of pocket for your covered prescriptions before Medicare or other insurance starts to pay.According to Medicare, no Medicare drug plan may have a deductible more than $615 in 2026. In 2025 the Medicare deductible was $590.
Some Medicare drug plans don’t have a deductible.
Medicare Prescription Drug Coverage Stages
Typically, in 2026, Medicare drug plans and Medicare Advantage Plans with drug coverage have three stages. These include:- deductible stage ($615 maximum in 2026 if your plan has one)
- initial coverage stage (After you reach the deductible, you pay 25 percent of the cost as coinsurance until you reach $2,100 in 2026.)
- catastrophic coverage (You won’t have to pay out-of-pocket Part D drugs for the rest of the calendar year.)
The EOB will give you what counts toward your out-of-pocket costs and your total drug costs. You don’t have to keep track of your drug costs; the EOB does that for you.
Drawbacks to the Medicare Part D Cap
According to U.S. News, one side effect of the Part D change is a shift of financial responsibility onto insurers. The result is that some plans may increase premiums. Some plans may revise formularies, adjust pharmacy networks or eliminate some drugs. A formulary is a list of prescription drugs that your Medicare Part D plan covers.These changes could limit someone’s access to certain drugs or pharmacies. In an interview published in U.S. News, Scot Maibor, the managing director at Senior Benefits Boston, an insurance brokerage in Haverhill, Massachusetts, said: “An unintended result of the cap is that most plans are now charging the maximum allowed deductible and applying this to all drug tiers.”
Maibor said that Medicare recipients could be paying more for their prescriptions in the first part of the year until they meet the deductible.
Medicare Prescription Payment Plan
If you have a Medicare prescription plan, according to the program, you have the option to make payments for your out-of-pocket drugs instead of paying upfront at the pharmacy. This allows you to spread the cost of medications covered by your plan across the calendar year.Participating in the prescription payment plan is voluntary.
If you select this payment option, you’ll continue to pay your plan premium monthly. You’ll receive a bill from your health or drug plan to pay for your prescription drugs. There’s no fee to participate.
Out-of-Pocket Cap Makes Medicare Part D Easier
Having an out-of-pocket cap for the Medicare Part D drug plan should make things easier for many. After you spend $2,100 in 2026, your plan pays 100 percent of the cost of covered prescriptions. This allows Medicare recipients who need it a way to save on their prescription drug costs.The Epoch Times copyright © 2026. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
