Medicare Part D covers prescription drugs and is sold by private insurance companies approved by Medicare. In 2026, Part D premiums average $40–$55/month, with a maximum deductible of $590 and a $2,000 out-of-pocket cap — a major change from previous years that eliminates the old “donut hole.”
2026 Part D Key Numbers
| Benefit | 2026 Amount |
|---|---|
| Average monthly premium | ~$40–$55 |
| Maximum annual deductible | $590 |
| Out-of-pocket cap | $2,000 |
| National base beneficiary premium | $36.78 |
| Late enrollment penalty (per month late) | 1% of $36.78 |
How Part D Cost Works in 2026
Starting in 2026, Part D has three distinct phases (the coverage gap/donut hole no longer exists):
| Phase | What You Pay |
|---|---|
| Deductible phase | You pay 100% of drug costs until you meet the deductible (up to $590) |
| Initial coverage phase | You pay copays/coinsurance per drug tier until you hit $2,000 OOP |
| Catastrophic coverage | You pay $0 after reaching $2,000 out-of-pocket for the year |
The $2,000 out-of-pocket cap (introduced under the Inflation Reduction Act) is a massive improvement from prior years, when the catastrophic threshold was over $8,000.
Part D Premium Costs by Income Level (IRMAA, 2026)
Higher-income Medicare beneficiaries pay an IRMAA surcharge added to the plan premium:
| 2026 Individual Income | 2026 Joint Income | Monthly IRMAA Surcharge |
|---|---|---|
| ≤ $106,000 | ≤ $212,000 | $0 (no surcharge) |
| $106,001–$133,000 | $212,001–$266,000 | +$13.70 |
| $133,001–$167,000 | $266,001–$334,000 | +$35.30 |
| $167,001–$200,000 | $334,001–$400,000 | +$57.00 |
| $200,001–$500,000 | $400,001–$750,000 | +$78.60 |
| Above $500,000 | Above $750,000 | +$81.00 |
Example: A single filer earning $140,000 pays their plan’s premium plus an extra $35.30/month IRMAA.
Typical Out-of-Pocket Costs by Drug Tier
Most Part D plans use a 5-tier formulary structure. Copays and coinsurance vary by plan:
| Drug Tier | Typical Cost During Coverage Phase |
|---|---|
| Tier 1 — Preferred generics | $0–$5 copay |
| Tier 2 — Non-preferred generics | $5–$20 copay |
| Tier 3 — Preferred brand-name | $35–$50 copay |
| Tier 4 — Non-preferred brand-name | $80–$100 copay or 25–50% coinsurance |
| Tier 5 — Specialty drugs | 25–33% coinsurance |
Medicare Part D vs. Medicare Advantage Drug Coverage
| Feature | Standalone Part D Plan | Medicare Advantage with Drug Coverage (MAPD) |
|---|---|---|
| Works with | Original Medicare only | Medicare Advantage plan |
| Avg. monthly premium | $40–$55 | Often $0 (bundled with MA plan) |
| Drug formulary flexibility | Shop 20+ plans in your area | Tied to your MA plan’s formulary |
| Provider network | Any Medicare pharmacy | May be restricted |
| Best for | Original Medicare + Medigap users | Those on Medicare Advantage |
Late Enrollment Penalty
If you skip Part D when first eligible and don’t have creditable coverage:
Penalty formula: 1% × national base premium ($36.78) × number of full months without coverage
| Months Without Coverage | Annual Penalty Added | Monthly Penalty |
|---|---|---|
| 12 months | 12% × $36.78 = $4.41/month | $4.41 |
| 24 months | 24% × $36.78 = $8.83/month | $8.83 |
| 36 months | 36% × $36.78 = $13.24/month | $13.24 |
The penalty is permanent and recalculated annually based on the current base premium.
How to Lower Part D Costs
- Compare plans annually — Formularies and premiums change every year. Use Medicare’s Plan Finder at Medicare.gov each October (open enrollment: Oct 15–Dec 7).
- Use preferred network pharmacies — Copays are often 20–30% lower at preferred pharmacies.
- Request Medicare Extra Help — If your income and assets are limited, Extra Help (also called Low Income Subsidy/LIS) can reduce or eliminate premiums, deductibles, and copays. Apply through Social Security at SSA.gov.
- Ask for generics — Generic substitution for Tier 1/2 drugs dramatically reduces out-of-pocket spending.
- Use the $2,000 cap strategically — If you take specialty drugs, you’ll likely hit the $2,000 cap mid-year and then pay $0 for the rest of the year.
Part D Enrollment Windows
| Window | When | Eligibility |
|---|---|---|
| Initial Enrollment Period | 3 months before to 3 months after your 65th birthday month | New Medicare enrollees |
| Open Enrollment | October 15 – December 7 each year | All Medicare enrollees (switch plans) |
| Special Enrollment Period | Triggered by certain life events (losing employer coverage, moving, etc.) | Qualifying enrollees |
Medicare Part D has a coverage gap called the donut hole — see Medicare donut hole explained for how it works. For Medigap plans that cover some out-of-pocket costs, see Medigap cost and Medigap Plan G vs. N. For the health insurance hub, see health insurance hub.
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