Medicare Part D Prescription Drug Plans
Understand how Medicare Part D works, compare plan options, and find the best prescription drug coverage for your medications in 2026.
$2,000
Annual OOP Cap
$590
Max Deductible
~$40
Avg Premium/mo
$35
Max Insulin Cost/mo
How Medicare Part D Works
Medicare Part D provides prescription drug coverage through private insurance plans approved by Medicare. You can get Part D coverage either through a stand-alone Prescription Drug Plan (PDP) that works alongside Original Medicare, or through a Medicare Advantage plan that includes drug coverage (MA-PD).
Part D is voluntary but strongly recommended. If you do not enroll when first eligible and lack other creditable drug coverage, you will face a permanent late enrollment penalty that increases your premiums for life.
2026 Part D Coverage Phases
1. Deductible Phase
You pay the full cost of drugs until you meet the annual deductible (up to $590 in 2026). Many plans have $0 deductibles for generic drugs or waive the deductible entirely.
2. Initial Coverage Phase
After the deductible, you pay copays or coinsurance for prescriptions. Costs vary by drug tier: generics are cheapest (Tier 1-2), brand-name drugs cost more (Tier 3-4), and specialty drugs are most expensive (Tier 5).
3. Out-of-Pocket Cap ($2,000)
Thanks to the Inflation Reduction Act, total out-of-pocket Part D spending is capped at $2,000 per year. This eliminates the old coverage gap (donut hole) and provides significant cost protection.
4. Catastrophic Coverage
Once you reach the $2,000 out-of-pocket cap, you pay nothing for covered Part D drugs for the remainder of the calendar year.
Understanding Drug Formularies and Tiers
Each Part D plan has a formulary — a list of covered drugs organized into tiers. Lower tiers have lower costs:
| Tier | Drug Type | Typical Cost |
|---|---|---|
| Tier 1 | Preferred generics | $0 - $15 |
| Tier 2 | Generics | $5 - $20 |
| Tier 3 | Preferred brands | $30 - $50 |
| Tier 4 | Non-preferred brands | 25-50% coinsurance |
| Tier 5 | Specialty drugs | 25-33% coinsurance |
Key 2026 Part D Protections
$2,000 Annual Out-of-Pocket Cap
No more donut hole. Total out-of-pocket drug spending is capped at $2,000 per year, after which you pay $0 for covered drugs.
$35 Insulin Cap
All covered insulin products are capped at $35 per month per prescription, regardless of the coverage phase you are in.
Free Vaccines
All Part D covered vaccines (including shingles and Tdap) are available at $0 cost-sharing under the Inflation Reduction Act.
Medicare Prescription Payment Plan
New option to spread out-of-pocket drug costs into monthly payments throughout the year instead of paying large amounts at the pharmacy.
How to Choose a Part D Plan
- List your medications: Write down every prescription including drug name, dosage, and quantity
- Use Medicare Plan Finder: Enter your drugs at Medicare.gov to compare plans in your area
- Check formularies: Verify each medication is covered and note the tier
- Compare total costs: Look at premiums + deductible + copays for your specific drugs, not just premium alone
- Check pharmacies: Verify your preferred pharmacy is in the plan's network (preferred pharmacies often have lower copays)
- Review restrictions: Check for prior authorization, step therapy, or quantity limit requirements on your drugs
- Re-evaluate annually: Formularies and costs change every year — compare plans during each Annual Enrollment Period
Related Guides
Frequently Asked Questions
What is Medicare Part D?
Medicare Part D is the prescription drug benefit program. Coverage is available through stand-alone Prescription Drug Plans (PDPs) that supplement Original Medicare, or through Medicare Advantage plans that include drug coverage (MA-PDs).
How much does Part D cost?
Part D premiums average about $40/month in 2026, ranging from $7 to over $100. The maximum deductible is $590. Thanks to the Inflation Reduction Act, annual out-of-pocket drug costs are capped at $2,000.
Do I need Part D if I have Medicare Advantage?
Most Medicare Advantage plans include Part D prescription drug coverage. If your MA plan includes Part D, you do not need a separate stand-alone Part D plan. Check your MA plan details to confirm drug coverage is included.
What happens if I do not sign up for Part D?
If you do not enroll in Part D when first eligible and do not have other creditable drug coverage, you will pay a permanent late enrollment penalty of 1% of the national base premium per month you were without coverage.
Disclaimer: Plan availability, benefits, and premiums vary by location. Contact Medicare.gov or 1-800-MEDICARE for complete information. We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.