Medicare Part D: Formularies, Costs & the 2026 Out-of-Pocket Cap

How Part D Works

Part D plans are sold by private insurers and each maintains its own formulary — the list of covered drugs, grouped into cost tiers. Generic drugs typically sit in the lowest tiers; brand-name and specialty drugs cost more. Plans also contract with specific pharmacy networks, so your total cost depends on both the formulary tier of your medications and where you fill them.

The 2026 $2,100 Out-of-Pocket Cap

Under changes phased in by the Inflation Reduction Act, Part D now includes an annual out-of-pocket cap — $2,100 for 2026. Once your covered drug costs for the year reach that amount, your plan pays 100% of covered drug costs for the remainder of the calendar year. This effectively replaced the old "donut hole" coverage gap that used to require higher cost-sharing in the middle of the year.

Part D plans may also charge an annual deductible of up to $615 in 2026 before cost-sharing starts, though many plans set a lower deductible or none — always check the specific plan's Summary of Benefits.

Extra Help (Low-Income Subsidy)

Extra Help is a federal program that can reduce or eliminate Part D premiums, deductibles, and copays for people with limited income and resources. Eligibility is based on income and asset limits set each year — a licensed agent or your local Social Security office can help you check whether you qualify.

Related Reading

• What Is Medicare's Coverage Gap and Does It Still Exist in 2027?
• Medicare and Your Medications: How to Lower Your Drug Costs Year-Round
• Medicare Part D: Choosing the Right Drug Plan
• Medicare's Part D Out-of-Pocket Cap for 2026
• Does Medicare Cover GLP-1 Medications Like Ozempic and Wegovy?

See also our Medicare Plans overview, the Medicare Advantage Guide, the Medigap Guide, and our Medicare FAQ. For a more ground-up, self-paced walkthrough of Medicare basics, our free course at LearnMedicare.org is a good complement to this guide.

Frequently Asked Questions