Medicare

Medicare Part D

Medicare Part D covers prescription drugs and features a $2,100 out-of-pocket cap in 2026, ending the coverage gap that previously left beneficiaries with full costs.

Last reviewed: May 2026 · Editorial methodology

Definition

Medicare Part D is the outpatient prescription drug benefit for Medicare beneficiaries, available either as a stand-alone Prescription Drug Plan (PDP) added to Original Medicare or built into a Medicare Advantage Prescription Drug (MAPD) plan. Part D plans are offered by private insurers approved by CMS and must cover a minimum set of drugs — though formularies, tiers, and cost-sharing vary significantly by plan. The Inflation Reduction Act overhauled Part D cost-sharing, with the out-of-pocket cap set at $2,100 in 2026 — meaning once you spend $2,100 in qualifying drug costs in a calendar year, your Part D cost-sharing drops to $0 for covered drugs for the remainder of the year. The Medicare Prescription Payment Plan (M3P) allows beneficiaries to spread Part D out-of-pocket costs across the year in monthly installments rather than paying in full at the pharmacy. A late enrollment penalty applies if you go 63+ continuous days without creditable prescription drug coverage after your Initial Enrollment Period ends, and this penalty is permanent.

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Tip

Glossary definitions are educational. Always check your own policy language — insurers can define common terms differently from one another. When in doubt, request a written explanation from your agent.

Related terms

Medicare Part C (Medicare Advantage)Medicare Advantage plans deliver all Original Medicare benefits through private insurers and frequently include prescription drug coverage, dental, vision, and hearing benefits.MAPD (Medicare Advantage Prescription Drug)MAPD plans combine the hospital, medical, and drug benefits of Medicare Parts A, B, and D into one integrated plan from a private insurer.FormularyA formulary determines which medications your insurance covers and at what cost-sharing level, making it critical to review before choosing a plan.Drug TierDrug tiers rank medications from cheapest (generics) to most expensive (specialty drugs), with your copay or coinsurance rising as tiers increase.Extra Help (Low-Income Subsidy)Extra Help (also called the Low-Income Subsidy or LIS) dramatically lowers prescription drug costs for Medicare beneficiaries with limited income and resources.Donut Hole (Part D Coverage Gap)The Part D coverage gap (donut hole) was effectively closed by the Inflation Reduction Act, which capped out-of-pocket drug costs at $2,000 in 2025, rising to $2,100 in 2026.

Related guides

Source: Cover Forge USA editorial team|Last verified: May 2026|Methodology
Definitions are educational and may be simplified. Always refer to your policy contract and consult a licensed agent for terms that affect coverage decisions.
CF

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 June 2026

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