Medicare
Catastrophic Coverage Phase
Once a Part D enrollee spends $2,100 out-of-pocket on covered drugs in 2026, they enter the catastrophic phase and pay nothing for the rest of the year.
Last reviewed: May 2026 · Editorial methodology
Definition
The catastrophic coverage phase is the final stage of the Medicare Part D prescription drug benefit structure, activated once a beneficiary's qualifying out-of-pocket drug spending reaches the annual threshold — $2,100 in 2026 under reforms made by the Inflation Reduction Act. Prior to the IRA, the catastrophic phase still required beneficiaries to pay 5% coinsurance. Beginning in 2025, once the catastrophic threshold is reached, beneficiaries pay $0 cost-sharing for all covered Part D drugs for the remainder of the calendar year. The $2,100 threshold counts only certain out-of-pocket payments — what the beneficiary actually paid, plus any amounts paid by Extra Help on their behalf. Amounts paid by secondary insurance, drug manufacturer coupons (in most cases), or the plan itself do not count. The transition into the catastrophic phase resets each January 1, so spending accumulated in one year does not carry over to the next. The Medicare Prescription Payment Plan (M3P) can help beneficiaries smooth payments throughout the year so costs are more evenly distributed before reaching the catastrophic threshold.
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Cover Forge USA Editorial Team
Editorial Lead
This article was researched and written by the Cover Forge USA editorial team against federal sources (NAIC, CMS, FEMA, DOL, SSA, state DOIs) and standard policy forms. Bylines organize content by topic — they do not assert individual licensure. See our editorial-policy for details.
Reviewed 2026-06-14
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