Medicare Part D

Medicare's New $2,100 Drug Cap: What Changes in 2026

Starting Jan. 1, 2026, the way Medicare covers prescription drugs will look different than it did just two years ago. The most notable change: a hard $2,100 cap on what you pay out of pocket for covered Part D drugs in a calendar year. Once you hit that number, you pay nothing more for covered prescriptions for the rest of the year.

Germantown, Md. — A big shift in how you pay for prescriptions

For Germantown residents comparing coverage during the Annual Enrollment Period — Oct. 15 through Dec. 7 — this is one of the most important updates to understand before making a decision for next year.

The $2,100 out-of-pocket cap, in plain English

Here is how the cap works, according to CMS Part D program rules:

• The cap applies to your out-of-pocket spending on covered Part D drugs — things like deductibles and copays or coinsurance at the pharmacy.
• Monthly Part D premiums do not count toward the cap.
• Drugs not on your plan's formulary, and most Part B drugs (like many drugs given in a doctor's office), do not count either.
• The cap resets each January.

The 2026 figure is $2,100, up slightly from $2,000 in 2025. The Part D deductible can be no higher than $615 in 2026, though many plans set theirs lower.

The "donut hole" is gone — here's what replaced it

For years, Part D had four payment phases, including a confusing middle stretch called the coverage gap, or "donut hole," where costs could jump unexpectedly.

That gap was eliminated in 2025. In 2026, there are just three phases:

1. Deductible phase — you pay full negotiated price until you meet your plan's deductible (up to $615). 2. Initial coverage phase — you pay a copay or coinsurance while your plan pays the rest. 3. Catastrophic phase — once your out-of-pocket spending hits $2,100, you pay $0 for covered drugs the rest of the year.

No more surprise price spike halfway through the year. That is the biggest structural change most people will feel.

The Medicare Prescription Payment Plan: spreading costs over the year

Hitting $2,100 in January or February can still be a shock if you take an expensive specialty drug. That's why Medicare now offers the Medicare Prescription Payment Plan — an optional program that lets you spread your out-of-pocket drug costs across the calendar year in monthly installments instead of paying the pharmacy all at once.

A few things to know:

• It is free to join, but it does not lower your total costs — it just smooths them out.
• You still owe the same amount by year's end; you just pay the plan monthly instead of the pharmacy at pickup.
• You can sign up before the plan year begins or any month during the year.
• It tends to help most if you have high drug costs early in the year. If your prescriptions are inexpensive, it may add paperwork without much benefit.

You opt in through your Part D or Medicare Advantage drug plan, not through Medicare directly.

What this means during Annual Enrollment

Germantown is in Montgomery County, where a range of stand-alone Part D plans and Medicare Advantage plans with drug coverage are offered each year. The exact plans and their prices change annually, so even if you liked your coverage in 2025, it is worth checking your Annual Notice of Change letter for 2026.

A few tips as you compare:

• Look at the full year's projected drug cost, not just the monthly premium.
• Confirm each of your prescriptions is on the plan's formulary.
• Check the pharmacy network — a preferred pharmacy can matter more than the sticker price of the plan.
• If your income is above $109,000 (single filer, 2026), be aware IRMAA surcharges may apply to your Part B and Part D premiums.

If you miss the Dec. 7 deadline and are in a Medicare Advantage plan, you still have the Medicare Advantage Open Enrollment Period from Jan. 1 to March 31 to make one change.