The Part D "Donut Hole" Is Gone — What Replaced It in 2026

For years, the "donut hole" — Medicare Part D's coverage gap — was the most hated feature of prescription drug coverage. Beneficiaries with expensive medications would hit a spending threshold mid-year and suddenly owe far more at the pharmacy counter.

As of 2025, the donut hole is gone. The Inflation Reduction Act eliminated the coverage gap phase entirely, and the simpler structure continues in 2026.

What the donut hole used to be

Under the old design, after you and your plan spent a certain amount, you entered the coverage gap: you paid up to 25% of brand-name and generic drug costs until your out-of-pocket spending climbed high enough to reach catastrophic coverage. For people on specialty drugs, the gap could mean thousands in surprise costs late in the year.

What replaced it: a hard $2,100 cap

Part D now has just three phases:

1. Deductible — you pay up to your plan's deductible (max $615 in 2026).
2. Initial coverage — cost-sharing via copays/coinsurance until your out-of-pocket spending reaches $2,100.
3. Catastrophic coverage — $0 for covered Part D drugs for the rest of the year.

There's no gap, no cliff, no fourth phase. Your spending simply accumulates until it hits $2,100, and then you're done paying for covered drugs that year.

A real-world example

Say you take two brand-name drugs costing $600/month combined, and your plan has the full $615 deductible:

• January: you pay $600 (all applied to the deductible; $15 of deductible remains).
• February: you pay the remaining $15 deductible plus your coinsurance on the rest — roughly $150–$160.
• March onward: you continue paying copays/coinsurance, each payment counting toward the $2,100 cap.
• Around mid-year: your accumulated out-of-pocket spending crosses $2,100 — and every covered prescription after that costs $0 through December.

Under the old donut-hole design, that same person could have faced a painful spike in the fall. Now the worst case is capped and predictable.

Two more IRA protections still in force

• $35 insulin cap — a month's supply of covered insulin costs no more than $35, deductible waived.
• $0 adult vaccines — CDC-recommended adult vaccines (shingles, Tdap, and others) are free under Part D.

And if even the smoothed costs feel lumpy, the Medicare Prescription Payment Plan lets you spread what you owe into monthly installments.

Bottom line: If someone tells you to "watch out for the donut hole," they're working from outdated information. In 2026 the only number that matters is $2,100 — that's the most you'll pay out-of-pocket for covered Part D drugs all year.