Medicare Part D

Before You Fill That Prescription: Part D's 2026 Rules Explained

MOUNT PLEASANT, Wis. — If you take prescription drugs and have Medicare, the rules for what you pay are changing again on January 1, 2026. The out-of-pocket ceiling for covered Part D drugs is moving up slightly to $2,100 for the year, the old "donut hole" stays gone, and an optional payment plan lets you spread your drug costs across the months instead of getting hit with a big bill at the pharmacy counter. Here in Mount Pleasant, Annual Enrollment runs now through December 7 — the window to double-check that your plan still fits before these rules take effect.

What the $2,100 cap actually covers

Once your out-of-pocket spending on covered Part D drugs reaches $2,100 in 2026, you pay $0 for the rest of the year on those prescriptions. This cap applies whether your drug coverage comes through a stand-alone Part D plan or through a Medicare Advantage plan that includes drug coverage.

A few important details from CMS:

• The $2,100 counts what you pay — deductibles, copays and coinsurance on covered drugs. Monthly premiums do not count toward it.
• Drugs your plan does not cover (not on its formulary) do not count toward the cap.
• The Part D deductible in 2026 can be no higher than $615. Plans can set it lower, but not higher.

The coverage gap is really gone

For years, Medicare drug coverage had four phases, and the "donut hole" was the stretch where many people suddenly paid much more. That phase was eliminated in 2025 and stays eliminated in 2026. Part D now has three phases:

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

The simpler structure is meant to make it easier to predict what a year of medicine will actually cost you.

The Medicare Prescription Payment Plan — how it works

New in 2025 and continuing in 2026, the Medicare Prescription Payment Plan lets you pay your Part D out-of-pocket costs in monthly installments instead of all at once at the pharmacy. It's sometimes called "M3P" or drug cost smoothing.

A few things to know before you opt in:

• It is optional, and it is free to join. There is no interest and no fee.
• It does not lower your drug costs. It only spreads them across the remaining months of the year.
• You sign up through your Part D plan (not through Medicare directly), and you can opt in at any time during the year.
• If you have very high drug costs early in the year, smoothing can help you avoid a painful one-time bill. If your drug costs are low or steady, it may not help much.

CMS suggests thinking carefully before signing up if you tend to fall behind on bills — missing a monthly payment can get you removed from the program, though your drug coverage itself continues.

Common mistakes to avoid this fall

A few slip-ups we see every AEP that are easy to prevent:

• Assuming your current plan is unchanged. Plans send an Annual Notice of Change each fall. Formularies, pharmacy networks and cost tiers can shift from one year to the next.
• Forgetting to check the formulary. The $2,100 cap only applies to drugs your plan actually covers. If a medication drops off the formulary, that spending won't count.
• Ignoring IRMAA. If your income (from your 2024 tax return) is above $109,000 as a single filer or $218,000 for a couple, you may owe an income-related surcharge on top of your Part D premium in 2026.
• Missing the December 7 deadline. After that, your next chance to change a stand-alone Part D plan generally isn't until next fall, unless you qualify for a Special Enrollment Period.

Mount Pleasant residents: where to get help

Mount Pleasant is in Racine County, and plan availability — the number of Part D and Medicare Advantage options you can choose from — is set at the county level. To compare what's available for 2026:

• Use the Plan Finder at medicare.gov to see every plan available in your ZIP code and enter your specific medications.
• Call 1-800-MEDICARE (1-800-633-4227), 24 hours a day, 7 days a week.
• Contact Wisconsin's SHIP — the Wisconsin State Health Insurance Assistance Program (also called the Medigap Helpline and Board on Aging & Long Term Care) — for free, unbiased counseling from trained volunteers.