Quick answer: Under the Inflation Reduction Act redesign, Medicare Part D now has an annual out-of-pocket cap and a three-phase benefit, not the older “donut hole” coverage gap. For 2026, Medicare.gov and CMS list a defined-standard deductible of no more than $615 and an annual out-of-pocket threshold of $2,100. After you reach that threshold, official materials say you pay $0 for covered Part D drugs for the rest of the year (catastrophic coverage). For 2027, Medicare.gov’s Part D costs page has also listed a deductible of no more than $700 and an out-of-pocket threshold of $2,400 — confirm those figures on the live page, because they are year-specific. The cap applies to counted drug spending, not automatically to your plan premium. This explainer belongs in our Medicare guide and works alongside how Part D formularies and tiers work.
Sources: Medicare.gov Part D costs and “What Medicare Part D drug plans cover” pages (2026 defined-standard deductible no more than $615; 2026 annual OOP threshold $2,100, then $0 enrollee cost-sharing for covered Part D drugs; Medicare.gov also listed 2027 deductible no more than $700 and OOP $2,400 as of a November 2026 check). CMS Inflation Reduction Act / Part D redesign materials describing elimination of the coverage gap and the annual cap. Extra Help and what counts toward the threshold should be confirmed on Medicare.gov. Prescription premiums and non-covered drugs are not a substitute for official “what counts” rules. Official URLs fetched 2026-11-10: https://www.medicare.gov/health-drug-plans/part-d/basics/costs (includes the 2026 and 2027 deductible caps and OOP thresholds quoted in this article) and https://www.medicare.gov/basics/costs/medicare-costs (2026 OOP limit $2,100). Checked November 2026, with live-page confirmation the same day.. This is general consumer information, not legal, tax, medical or benefits advice. Medicare rules, plan designs and dollar amounts change. Confirm current details on Medicare.gov, with CMS, Social Security, your plan, and a State Health Insurance Assistance Program (SHIP) counselor before you rely on a figure or a deadline.
The Current Three Phases, Without the Old Coverage Gap
People who learned Part D a decade ago often still talk about a doughnut hole, or coverage gap, in the middle of the year. Official CMS and Medicare.gov materials describe a redesigned benefit: the coverage gap as a separate phase has been eliminated. In the defined standard benefit, you generally move through a deductible phase, an initial coverage phase, and then catastrophic coverage once you hit the annual out-of-pocket threshold.
Those phases are easiest to follow if you treat official year labels carefully. Costs for 2026 and costs for 2027 are not interchangeable, and a plan can use cost-sharing that is actuarially equivalent to the defined standard rather than a literal copy of it. Always read your plan’s Evidence of Coverage and the official Medicare.gov cost page for the year you are in.
In 2026, official figures include a defined-standard deductible of no more than $615 and an annual out-of-pocket threshold of $2,100. After that threshold, official materials say you pay $0 for covered Part D drugs for the remainder of the calendar year. During initial coverage, the defined standard has typically used 25% coinsurance, but your plan may use copays by tier instead of a flat coinsurance rate. The important consumer point is the official cap, not a plan advertisement that rounds the number.
For 2027, Medicare.gov’s Part D costs page has published a deductible of no more than $700 and an out-of-pocket threshold of $2,400. If you are comparing plans during the 2026 fall Open Enrollment Period (October 15–December 7) for coverage that starts January 1, 2027, use the 2027 official figures and the 2027 plan documents. Recheck the live Medicare.gov page if you are reading this later, because Congress and CMS can change future-year amounts.
The cap is not a promise that every pharmacy charge will disappear. It applies to covered Part D drugs once official counting rules say you have reached the threshold. A drug that is not on the formulary, a drug obtained outside the plan’s rules, or a product that is not a Part D drug may be treated differently. Our formulary and tiers article explains why the list itself matters.
What Counts Toward the Cap, and What Usually Does Not
Medicare.gov has stated that the out-of-pocket threshold can include your deductible, your own out-of-pocket spending, and certain payments made on your behalf, such as through the Extra Help program. That official list is the one to follow. Do not assume that every payment in a pharmacy receipt counts, and do not assume that a manufacturer copay card is counted the way you hope. If a payment type matters to your budget, confirm it on Medicare.gov or with your plan or a SHIP counselor, rather than from a social post.
Plan premiums generally are a separate monthly cost. They are how you buy the coverage; they are not automatically part of the drug out-of-pocket cap. IRMAA, if you owe a Part D income-related adjustment, is also a separate official surcharge explained in our Medicare premiums and IRMAA article.
Extra Help (the Part D Low-Income Subsidy) can change what you pay at the pharmacy and, according to official language, certain Extra Help payments may count toward the threshold. Eligibility and the current Extra Help amounts belong on Medicare.gov and in our Medicare Savings Programs and Extra Help guide. If you may qualify, apply; do not skip Extra Help because you have heard about the cap.
Track your progress through plan Explanation of Benefits documents and your pharmacy claims, and use the official year threshold. Reaching the cap mid-year is possible if you use high-cost covered drugs. It is not automatic for every enrollee. People with only a few generic prescriptions may never hit the cap, and that is expected.
Medicare Advantage plans that include drug coverage still operate under Part D rules for those drugs. The plan’s medical out-of-pocket maximum (for Part A and B services) is a different number from the Part D cap. Do not add them together as if they were one official figure, and do not treat one as a substitute for the other.
Insulin and recommended vaccines have had separate Inflation Reduction Act cost limits described by CMS and Medicare.gov in official materials. Those limits are their own rules. Confirm the current official insulin and vaccine cost-sharing language on Medicare.gov rather than restating a secondhand number here.
How to Use the Cap When You Compare or Appeal a Bill
When you compare drug plans — during fall Open Enrollment or another enrollment window — enter every prescription in Medicare.gov’s official comparison tool. The tool is built to estimate yearly drug costs under each plan, which is more useful than looking only at the cap. A plan with a lower premium can still have higher total costs if your drugs sit on expensive tiers. The cap then becomes a backstop for counted spending on covered Part D drugs, not a reason to ignore the formulary.
If a pharmacy charges you after you believe you have already met the official threshold, do not assume the cashier is the last word. Keep the receipt, check the plan’s claim record, and contact the plan. If the plan denies coverage or applies the wrong phase, you can use the official Part D appeals and exception process described in our appeals guide and on Medicare.gov. A coverage determination, exception or appeal is sometimes the right tool when a drug is not on the formulary or is priced as if the cap did not apply.
If you lose drug coverage or go without creditable coverage, a late enrollment penalty can still apply even in a year that has a cap. The cap limits counted out-of-pocket drug costs for people who are enrolled; it does not erase late-enrollment rules, which we cover in late enrollment penalties.
People with Original Medicare usually get Part D through a stand-alone drug plan. People in Medicare Advantage often get drug coverage through the Advantage plan. Either way, the official annual figures and phase names come from CMS and Medicare.gov, not from a plan’s marketing nickname for the benefit.
If your drugs change mid-year — a new specialty medication, a dose increase, a move to a different pharmacy — re-run the official comparison when you next have an enrollment window, and ask the plan how the current year’s cap is being tracked. Keep a simple folder with Explanation of Benefits documents. That paperwork is what an appeal or a pharmacist-plan conversation will rely on.
The cap is a significant consumer protection, and official sources should be the place you read the current dollar amounts. Treat any figure in this article as dated to the Medicare.gov and CMS pages checked in November 2026, and confirm before you budget around it.
Mid-Year Changes, Notices and How to Read a Pharmacy Bill
Part D plans send Explanation of Benefits summaries that show what you paid, what the plan paid, and how close you are to official thresholds. Those summaries are more reliable than adding register receipts by hand, because official counting rules can include certain payments made on your behalf and can exclude others. If the running total looks wrong, call the plan with the claim numbers rather than arguing only with the pharmacy cashier.
A mid-year drug change — a new specialty medication, a move to a 90-day supply, or a prescriber switch — can change how fast you approach the cap. Ask the plan how the new claim will be processed, and ask the prescriber whether a formulary alternative exists if the new drug is not covered. Official exception and coverage-determination processes exist for non-formulary or high-tier drugs; the cap does not replace those processes.
Mail-order and preferred-pharmacy prices can differ from a neighborhood counter even under the same plan. The cap still uses official counted amounts, but your path to the threshold can be faster or slower depending on where you fill. Enter the actual pharmacy in Medicare.gov’s comparison tool when you can, including during fall Open Enrollment for the next year.
If you lose Extra Help, gain Extra Help, or move, official rules may also change what you pay and may open a Special Enrollment Period. Those changes should be reported and confirmed; they are not automatic just because a tax return was filed. SHIP and 1-800-MEDICARE can help you see whether a mid-year plan change is allowed.
Keep the last three Explanation of Benefits documents, the official deductible and threshold figures for the year, and any coverage-determination letters in one folder. When a claim is still charging you after you believe the official threshold has been met, that folder is the starting point for a plan review or an appeal, not a social-media screenshot of someone else’s cap story.
Frequently Asked Questions
Is the doughnut hole still part of Part D?
Official CMS and Medicare.gov materials describe a redesigned benefit in which the coverage-gap phase has been eliminated. The current defined-standard design uses a deductible, initial coverage, and catastrophic coverage after the annual out-of-pocket threshold.
What is the 2026 out-of-pocket cap?
Medicare.gov and CMS list a 2026 annual out-of-pocket threshold of $2,100, after which official materials say you pay $0 for covered Part D drugs for the rest of the year. The 2026 defined-standard deductible is no more than $615.
What are the 2027 figures?
As of a November 2026 check, Medicare.gov’s Part D costs page listed a 2027 deductible of no more than $700 and an out-of-pocket threshold of $2,400. Confirm the live page when you compare 2027 plans.
Do plan premiums count toward the cap?
Treat premiums as a separate monthly cost unless official Medicare.gov counting rules clearly include a specific payment. Confirm “what counts” on Medicare.gov.
Does Extra Help affect the cap?
Extra Help can lower what you pay and official materials say certain payments made on your behalf, including through Extra Help, can count toward the threshold. Check current Extra Help rules on Medicare.gov.
Does the cap apply to drugs my plan does not cover?
The official $0 catastrophic cost-sharing language applies to covered Part D drugs. A non-formulary or non-Part D product may be treated differently. Ask the plan or use a coverage determination if needed.
