Medicare Part D is the federal program that covers prescription drugs for Medicare beneficiaries. In 2026, the program includes a $2,100 annual out-of-pocket cap, meaning once your drug costs hit that limit, your plan pays 100% for the rest of the year. If you are approaching Medicare eligibility or already enrolled, understanding how Part D works can save you thousands of dollars annually, especially if you qualify for Extra Help (the Low-Income Subsidy).
What Is Medicare Part D?
Medicare Part D is optional prescription drug coverage offered through private insurance plans approved and regulated by Medicare. You can get it two ways: as a standalone Prescription Drug Plan (PDP) that pairs with Original Medicare (Parts A and B), or bundled into a Medicare Advantage plan that already includes drug coverage (called MA-PD plans).
Every Part D plan maintains a formulary, which is a list of covered drugs. Plans organize drugs into tiers that determine your cost-sharing. Lower tiers typically include generic drugs with the lowest copays, while higher tiers cover brand-name and specialty drugs with higher cost-sharing.
What Does Part D Cover in 2026?
Part D covers a broad range of prescription medications, but the specific drugs depend on your plan's formulary. Federal rules require all Part D plans to cover at least two drugs in each drug category, including commonly prescribed drug classes.
Drugs typically covered include:
- Generic and brand-name prescription medications
- Vaccines not covered under Part B (such as shingles and Tdap)
- Insulin (capped at $35 per month for a 30-day supply under the Inflation Reduction Act)
- Drugs negotiated directly with manufacturers under Medicare's new drug pricing authority
Part D does not cover most over-the-counter medications, weight loss drugs (with some exceptions), drugs used for cosmetic purposes, or drugs covered by Medicare Part A or Part B.
The 2026 Formulary Tier Structure
Most Part D plans use a five-tier formulary:
| Tier | Drug Type | Typical Cost-Sharing |
|---|
| 1 | Preferred generics | Lowest copay (often $0 to $5) |
| 2 | Non-preferred generics | Low copay |
| 3 | Preferred brand-name drugs | Mid-range copay or coinsurance |
| 4 | Non-preferred brand-name drugs | Higher copay or coinsurance |
| 5 | Specialty drugs | Highest cost-sharing (often 25-33%) |
Plans update their formularies annually. Always check that your specific medications are covered before enrolling in or switching plans.
2026 Medicare Part D Costs
Premiums
The average standalone Part D plan premium is approximately $34.50 per month in 2026, down from prior years. Medicare Advantage plans with drug coverage average approximately $11.50 per month. Actual premiums vary significantly by plan and region.
Deductible
The maximum Part D deductible for 2026 is $615. Not all plans charge a deductible, and some plans waive it for lower-tier drugs. You pay the deductible before your plan begins covering costs.
Out-of-Pocket Cap
Starting in 2026, once you spend $2,100 out of pocket on covered drugs in a plan year, your plan pays 100% for the rest of the year. This is a major improvement from prior years and effectively eliminates what used to be called the "donut hole" or coverage gap.
The Three Coverage Stages in 2026
| Stage | How It Works |
|---|
| Deductible Stage | You pay 100% of drug costs until you meet the deductible (up to $615) |
| Initial Coverage Stage | You pay your plan's copays or coinsurance on covered drugs |
| Catastrophic Stage | After $2,100 in out-of-pocket costs, you pay $0 for covered drugs |
High-Income Surcharge (IRMAA)
If your income exceeds certain thresholds, you pay an Income-Related Monthly Adjustment Amount (IRMAA) on top of your plan premium. In 2026, the surcharge begins at $109,000 in annual income for a single person (based on your 2024 tax return).
Medicare Extra Help: Income Limits and Savings for 2026
Extra Help, also called the Low-Income Subsidy (LIS), is a federal program that significantly reduces Part D costs for people with limited income and resources. It has an average annual value of approximately $5,700 per person.
2026 Extra Help Income Limits
| Household Size | Annual Income Limit |
|---|
| Individual | $23,475 |
| Married couple | $31,725 |
Alaska and Hawaii residents have slightly higher limits. These figures represent approximately 150% of the federal poverty level.
2026 Extra Help Resource Limits
| Household Size | Resource Limit |
|---|
| Individual | $18,090 |
| Married couple | $36,100 |
Resources include bank accounts, stocks, and bonds. Your primary home, one vehicle, and $1,500 per person set aside for burial expenses are not counted.
What Extra Help Pays For
If you qualify for Extra Help in 2026:
- Your Part D premiums may be fully or partially covered
- Your deductible is reduced to $0
- Copays are capped at $5.10 for generics and $12.65 for brand-name drugs
- After $2,100 in out-of-pocket costs, you pay $0 for the rest of the year
You automatically qualify for Extra Help if you receive Medicaid, Supplemental Security Income (SSI), or participate in a Medicare Savings Program. Otherwise, you need to apply through the Social Security Administration.
Medicare Savings Programs and Part D
Medicare Savings Programs (MSPs) can help cover your Medicare costs beyond just drug coverage. There are four MSPs: the Qualified Medicare Beneficiary (QMB) program, the Specified Low-Income Medicare Beneficiary (SLMB) program, the Qualifying Individual (QI) program, and the Qualified Disabled and Working Individuals (QDWI) program.
Enrollment in any MSP automatically qualifies you for Extra Help with Part D. If you think you might qualify, use our free benefits screener to check eligibility for Medicare Savings Programs and other assistance.
How to Enroll in Medicare Part D
Step 1: Confirm You Are Eligible
You must be enrolled in Medicare Part A or Part B (or both) to join a Part D plan. Most people become eligible at age 65. People under 65 can qualify if they receive Social Security disability benefits for 24 months or have ALS or end-stage renal disease.
Step 2: Choose Your Enrollment Window
Initial Enrollment Period (IEP): A 7-month window centered on your 65th birthday. It starts three months before the month you turn 65 and ends three months after. Enrolling during this window avoids late penalties.
Annual Enrollment Period (AEP): October 15 through December 7 each year. Any changes take effect January 1. This is when most people switch plans.
Special Enrollment Periods (SEPs): If you lose other creditable drug coverage, move out of your plan's service area, or qualify for Extra Help, you may have a Special Enrollment Period outside the standard windows.
Step 3: Compare Plans
Go to medicare.gov and use the Medicare Plan Finder tool. Enter your zip code and list your medications to see which plans cover your drugs and at what cost. Compare:
- Monthly premium
- Annual deductible
- Copays for your specific medications
- Pharmacy network (make sure your preferred pharmacy is in-network)
- Star rating (higher is better)
Step 4: Enroll
You can enroll in three ways:
- Online at medicare.gov using the Plan Finder tool
- By phone at 1-800-MEDICARE (1-800-633-4227), TTY: 1-877-486-2048
- Directly through the insurance company offering the plan
Step 5: Apply for Extra Help if Eligible
If your income and resources fall within the limits above, apply for Extra Help at the same time. You can apply:
- Online at ssa.gov/extrahelp
- By calling Social Security at 1-800-772-1213
- In person at your local Social Security office
Step 6: Review Coverage Each Year
Plans change their formularies, premiums, and pharmacy networks each October. Review your Annual Notice of Change (ANOC) when it arrives and compare your current plan against other options during the AEP.
Late Enrollment Penalty
If you go 63 or more days without creditable prescription drug coverage after you are first eligible for Part D, you will owe a late enrollment penalty. The penalty in 2026 is calculated as 1% of the national base beneficiary premium ($38.99 in 2026) for each full month you went without coverage. This penalty is added permanently to your monthly Part D premium.
For example, if you went 24 months without coverage, your penalty would be approximately $9.36 per month ($38.99 x 0.24), added to your plan premium for as long as you have Part D.
You can avoid the penalty by maintaining other creditable drug coverage, such as coverage through an employer, union, TRICARE, or the Department of Veterans Affairs.
Check Your Benefits Eligibility
Medicare Part D, Extra Help, and Medicare Savings Programs can work together to dramatically lower prescription drug costs. Many people who qualify for Extra Help never apply because they do not know about it.
Use our free benefits screener to find out in minutes which programs you may qualify for, including Medicare Savings Programs, Extra Help, Medicaid, and other assistance programs. There is no cost and no obligation.
Frequently Asked Questions
What is the Medicare Part D out-of-pocket cap in 2026?
The out-of-pocket cap for 2026 is $2,100. Once your spending on covered drugs reaches this amount within a plan year, your plan pays 100% of covered drug costs for the rest of the year. This cap is new for 2026 and replaces the old coverage gap structure.
Is Medicare Part D required?
Part D is optional, but if you do not enroll when you are first eligible and do not have other creditable drug coverage, you may owe a permanent late enrollment penalty when you eventually join.
What is the Medicare Part D deductible for 2026?
The maximum deductible allowed in 2026 is $615. Individual plans may charge less or waive the deductible entirely, especially for lower-tier generic drugs.
Who qualifies for Medicare Extra Help in 2026?
To qualify for Extra Help in 2026, your annual income must be at or below $23,475 (individual) or $31,725 (married couple), and your resources must be at or below $18,090 (individual) or $36,100 (married couple). Medicaid enrollees and SSI recipients qualify automatically.
How much does Extra Help save on Part D?
Extra Help has an average annual value of approximately $5,700. It reduces or eliminates your Part D premium, waives the deductible, and caps copays at $5.10 for generics and $12.65 for brand-name drugs.
Can I change my Part D plan outside of Open Enrollment?
Yes, in certain situations. If you qualify for Extra Help, move out of your plan's service area, lose other creditable drug coverage, or experience other qualifying life events, you may have a Special Enrollment Period. People who qualify for Extra Help can switch plans once per calendar quarter (January through September) and once during October through December.
Does Part D cover insulin?
Yes. Under the Inflation Reduction Act, insulin is capped at $35 for a 30-day supply under any Medicare Part D plan. This cap applies to all covered insulins regardless of which tier they appear on your plan's formulary.
What is the difference between a Part D plan and Medicare Advantage with drug coverage?
A standalone Part D Prescription Drug Plan (PDP) adds drug coverage to Original Medicare (Parts A and B). A Medicare Advantage plan with drug coverage (MA-PD) combines hospital, medical, and drug coverage in a single plan from a private insurer. Both provide the same Part D drug benefits, but the plan structures and networks differ.
