Prescription drug costs are one of the biggest worries for people on Medicare. Recent changes have made Part D coverage much more protective, especially for people who take expensive medicines. This guide explains how Part D works in 2026, what has changed, and how to choose a plan during open enrollment.
How Part D works
Original Medicare does not cover most prescription drugs you take at home. Drug coverage comes from Part D, offered by private insurers approved by Medicare, either as a stand-alone prescription drug plan (PDP) alongside Original Medicare, or built into most Medicare Advantage plans (MA-PD).
Each plan has its own premium, deductible, list of covered drugs (formulary), drug tiers and pharmacy network.
Key Part D numbers for 2026
| Item | 2026 amount |
|---|---|
| Annual out-of-pocket cap on covered drugs | $2,100 |
| Maximum standard deductible | $615 |
| Insulin cost for covered insulin | No more than $35 for a month’s supply |
| Recommended adult vaccines (such as shingles) | $0 |
| Average stand-alone Part D plan premium | About $34.50 a month |
Plan premiums vary widely by plan and location. People with higher incomes pay an extra amount (IRMAA) on top of their plan premium.
The $2,100 out-of-pocket cap
Since 2025, Part D has had a hard cap on what you pay out of pocket for covered drugs each year. For 2026 the cap is $2,100. Once your out-of-pocket spending on covered drugs reaches that amount, you pay nothing more for covered drugs for the rest of the calendar year.
The old “donut hole” coverage gap has been eliminated. For people who take costly medicines for cancer, multiple sclerosis, rheumatoid arthritis or other conditions, the cap can save thousands of dollars a year compared with the rules of just a few years ago.
Spreading costs over the year
Reaching $2,100 early in the year can still be hard to pay all at once. The Medicare Prescription Payment Plan lets you spread your out-of-pocket drug costs into monthly payments across the year, with no interest or fees. You can opt in through your plan. Starting in 2026, people who used it can have their participation renewed automatically unless they opt out.
This option is most helpful for people with high drug costs early in the year. It does not lower your total cost.
The first negotiated drug prices
Under the Inflation Reduction Act, Medicare negotiated prices directly with drug makers for the first time. Negotiated prices for 10 widely used drugs took effect on January 1, 2026:
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- Eliquis and Xarelto (blood thinners)
- Jardiance, Farxiga and Januvia (diabetes; Jardiance and Farxiga are also used for heart failure and kidney disease)
- Entresto (heart failure)
- Enbrel (rheumatoid arthritis, psoriasis and related conditions)
- Stelara (psoriasis, Crohn’s disease and ulcerative colitis)
- Imbruvica (blood cancers)
- Fiasp and NovoLog insulin aspart products (diabetes)
CMS announced that the negotiated prices are between about 38 and 79 percent below list prices. Medicare estimated that people with Part D would save about $1.5 billion in out-of-pocket costs when the prices take effect. A second group of drugs, including semaglutide (Ozempic, Wegovy and Rybelsus), is scheduled for negotiated prices starting in 2027.
Your exact savings depend on your plan’s cost-sharing and where you are relative to your deductible and the cap.
Extra Help for lower incomes
Extra Help (the Low-Income Subsidy) significantly lowers Part D premiums, deductibles and copays. Since 2024, people with incomes up to 150 percent of the federal poverty level who meet resource limits qualify for full Extra Help. You can apply through Social Security. Many states also offer pharmaceutical assistance programs.
How to choose a Part D plan
- Make a list of all your medicines, including dose and how often you take them.
- Use the Medicare Plan Finder at Medicare.gov. Enter your drugs and preferred pharmacies to see estimated total yearly costs for each plan.
- Compare total costs, not just premiums. A plan with a low premium can cost more overall if your drugs are on a high tier.
- Check the formulary and restrictions, such as prior authorization, step therapy or quantity limits on your medicines.
- Check pharmacy networks. Preferred pharmacies and mail order can be cheaper.
- Look at star ratings, which reflect quality and customer service.
- Review every year. Plans change formularies, premiums and pharmacy networks annually.
Free, unbiased help is available from your State Health Insurance Assistance Program (SHIP).
Important dates
- Initial enrollment: around your 65th birthday, when you first become eligible for Medicare
- Open enrollment: October 15 to December 7 each year. Changes take effect January 1.
- Medicare Advantage open enrollment: January 1 to March 31, for people already in Medicare Advantage
- Special enrollment periods apply after certain events, such as moving or losing other coverage
Avoid the late enrollment penalty
If you go 63 days or more in a row without Part D or other creditable drug coverage after you first become eligible, you may pay a late enrollment penalty, usually for as long as you have Part D. It equals 1 percent of the national base premium for each month you went without coverage. If you have coverage from an employer or union, ask for a notice confirming whether it is creditable.
The bottom line
Medicare drug coverage is more protective in 2026 than ever: out-of-pocket costs for covered drugs are capped at $2,100, insulin costs no more than $35 a month, recommended vaccines are free, and the first negotiated prices have lowered costs for 10 major drugs. Use open enrollment from October 15 to December 7 to compare plans based on your own medicines, and check whether you qualify for Extra Help.
This article is for general information only and is not insurance or financial advice. Plan details vary. Check Medicare.gov or contact your State Health Insurance Assistance Program before choosing a plan.