Medicare Part D

Medicare's New $2,100 Drug Cap Starts Jan. 1, 2026

GLOUCESTER TOWNSHIP, N.J. — Starting January 1, 2026, no one with a Medicare Part D drug plan will pay more than $2,100 out of pocket for covered prescriptions in a calendar year. It's the biggest change to how seniors pay for medicine in a generation, and it lands right in the middle of Medicare's Annual Enrollment Period, which runs through December 7.

For people in Gloucester Township — and anyone else weighing their drug coverage this fall — here's what the new rules actually do, and what to check before enrollment closes.

The $2,100 cap, in plain English

Under the Inflation Reduction Act, Medicare Part D now has a true annual out-of-pocket limit. In 2025, that limit was $2,000. For 2026, it rises to $2,100, according to CMS.

Once your out-of-pocket spending on covered Part D drugs reaches $2,100 in a calendar year, you pay $0 for covered prescriptions for the rest of that year. That cap applies whether you have a stand-alone Part D plan or drug coverage built into a Medicare Advantage plan.

A few things to know:

• The $2,100 counts what you pay for covered drugs — deductibles, copays, and coinsurance.
• Monthly premiums do not count toward the cap.
• Drugs your plan doesn't cover don't count either. That's why the plan's formulary still matters.

The "donut hole" is gone

For years, Part D had four confusing phases, including the dreaded coverage gap — the "donut hole" — where costs jumped in the middle of the year. That phase was eliminated in 2025 and stays gone in 2026.

Part D now has just three phases: 1. Deductible — up to $615 in 2026 (plans can set a lower deductible, or none at all). 2. Initial coverage — you pay a share of the cost until you hit $2,100 out of pocket. 3. Catastrophic coverage — you pay $0 for covered drugs the rest of the year.

That's it. No more re-entering a gap, no more math to figure out which phase you're in.

The Medicare Prescription Payment Plan

Even with the $2,100 cap, a bad month can still hurt — especially if you fill an expensive specialty drug in January and get hit with a big bill up front.

That's why Medicare offers the Medicare Prescription Payment Plan, sometimes called "M3P." It's free and optional. Instead of paying the pharmacy at the counter, you get a monthly bill from your Part D plan that spreads your yearly drug costs across the remaining months of the year.

Key points from Medicare.gov:

• You still pay the same total for the year — the payment plan smooths costs, it doesn't lower them.
• You can sign up before the plan year starts or any time during the year.
• It works best for people with high drug costs early in the year, or with one very expensive prescription.
• If you rarely hit your deductible, this program may not help much.

You have to opt in — it isn't automatic. Your Part D plan handles the sign-up.

What Gloucester Township residents should check this AEP

Gloucester Township is in Camden County, where Medicare beneficiaries have a broad choice of stand-alone Part D plans and Medicare Advantage plans that include drug coverage. The number of plans, the drugs each plan covers, and the pharmacies in each network are set at the county level and can change from year to year.

Before December 7, it's worth doing three things: 1. Read your plan's Annual Notice of Change (ANOC). Your 2026 plan may cover different drugs, use different tiers, or use a different pharmacy network than it did in 2025. 2. Run your drug list through the Plan Finder at medicare.gov. It shows your estimated yearly cost under each plan, based on the medications you actually take. 3. Ask about the payment plan if you take high-cost drugs. Not every plan explains it clearly up front.

A note on higher-income enrollees

If your income is above $109,000 as a single filer (or $218,000 filing jointly), you'll pay an IRMAA surcharge on top of your Part D premium in 2026. Income is generally based on your 2024 tax return. This doesn't change the $2,100 cap — it only affects your monthly premium.