Starting in 2025, the structure of Medicare Part D changed significantly, and in 2026, catastrophic coverage continues to begin once your out-of-pocket spending on covered prescription drugs reaches $2,000 for the year. This includes what you pay directly and certain payments made on your behalf, such as through the Extra Help program.

Once you reach the $2,000 out-of-pocket cap, you will not pay anything more for your covered Part D prescriptions for the rest of the calendar year. New for 2026, you can also choose to spread your out-of-pocket costs evenly throughout the year through the Medicare Prescription Payment Plan, making medication expenses even more manageable.

This protection replaces the old catastrophic phase and eliminates the donut hole coverage gap entirely. These changes make drug costs more predictable and affordable, especially for those who take high-cost medications. It’s a significant improvement for Medicare beneficiaries and helps reduce financial strain caused by rising prescription drug prices. Always review your plan during open enrollment to make sure your medications are covered.