Medicare Part D

How Part D Works in 2026: The New $2,100 Cap Explained

NEWARK, N.J. — If you take prescription drugs, 2026 brings one of the biggest changes to Medicare Part D in years. For the first time, there's a hard yearly limit on what you pay out of pocket at the pharmacy — and the old "donut hole" is gone.

Here's a plain-language walk-through of how Part D works now, what the numbers mean, and the small mistakes that trip people up during enrollment season.

The big change: a $2,100 out-of-pocket cap

Starting in 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, according to CMS. Once you hit that ceiling, you pay $0 for the rest of the year on covered drugs.

That's the headline. But to understand how you get there, it helps to know the three phases your drug spending moves through.

The three phases of Part D in 2026

Since 2025, Part D has had three phases instead of four. The coverage gap — the "donut hole" that used to sit in the middle — is officially gone.

1. The deductible phase. Your plan can charge a deductible of up to $615 in 2026. Until you meet it, you generally pay the full negotiated price of your drugs. Some plans set a lower deductible, or none at all, but $615 is the maximum allowed.

2. The initial coverage phase. After the deductible, you pay a copay or coinsurance for each prescription and your plan pays the rest. This continues until your out-of-pocket spending reaches $2,100.

3. The catastrophic phase. Once you hit $2,100, you pay nothing for covered drugs for the remainder of the year.

That's the whole map. No more gap, no more surprise price hike halfway through the year.

What counts toward the $2,100 cap

This is where readers often get confused. Only certain spending counts toward that $2,100 ceiling:

• What you pay for covered Part D drugs (deductible, copays, coinsurance).
• Certain payments made on your behalf, such as help from Extra Help/LIS or a State Pharmaceutical Assistance Program.

Your monthly plan premium does not count. Neither do drugs your Part D plan doesn't cover, or drugs paid for under Part B (like most infusions given in a doctor's office).

The Medicare Prescription Payment Plan

Even with the cap, some people hit big bills early in the year — for example, a $1,500 charge in January for a specialty drug. To help with that, Medicare offers the Medicare Prescription Payment Plan, an optional program that spreads your out-of-pocket drug costs across the calendar year in monthly installments.

You don't pay more overall — you pay the same total, just smoothed out. Every Part D plan must offer it, but you have to opt in. You can sign up before the plan year starts or any time during the year. Details are at medicare.gov.

What Newark residents should know about plan choices

Newark is in Essex County, where Medicare beneficiaries can choose between Original Medicare with a stand-alone Part D drug plan, or a Medicare Advantage plan that includes drug coverage. The county has a full slate of options from multiple carriers each year.

Plan formularies (the list of drugs each plan covers), pharmacy networks, and cost-sharing tiers vary — sometimes a lot — from plan to plan. The rules above (the $615 max deductible, the $2,100 cap, the three phases) apply to every Part D plan, but how you get to the cap depends on which plan you're in and which drugs you take.

Deadlines and mistakes to avoid

• Annual Enrollment Period: Oct. 15 – Dec. 7. This is when most people can join, switch, or drop a Part D or Medicare Advantage plan for the following year.
• Medicare Advantage Open Enrollment: Jan. 1 – March 31. If you're already in a Medicare Advantage plan, you get one more chance to switch or return to Original Medicare.
• Don't assume last year's plan is still the right fit. Formularies and costs can change every January. Re-check your drugs on the Plan Finder at medicare.gov each fall.
• Don't skip Part D just because you don't take drugs today. If you go 63+ days without creditable drug coverage after you're eligible, you may owe a late-enrollment penalty for life once you do sign up.
• Higher earners: know about IRMAA. In 2026, an income-based surcharge (IRMAA) is added to Part D premiums for single filers with income above $109,000 (based on your 2024 tax return). It's paid to Medicare, not the plan.