Medicare Part D

Prescription Drug Coverage — redesigned for 2026 to make your medication costs more predictable and manageable than ever before.

What Is Part D & How Do You Get It?

Medicare Part D is voluntary outpatient prescription drug coverage available to anyone eligible for Medicare. It is offered through two types of CMS-approved private insurance plans:

Standalone Prescription Drug Plans (PDPs)

Added to Original Medicare (Part A and/or Part B) or a Medicare Supplement (Medigap) plan.

Medicare Advantage Prescription Drug Plans (MA-PDs)

Combined plans covering medical, hospital, and prescription drugs under a single policy. Requires having both Part A and Part B.

The 2026 Benefit Structure

Thanks to provisions under the Inflation Reduction Act (IRA), the coverage gap (historically known as the "donut hole") remains completely eliminated. In 2026, Part D consists of only three distinct phases:

Phase	Name	Description & Cost-Sharing	2026 Threshold
1	Yearly Deductible	The enrollee pays 100% of their prescription drug costs until the deductible is met. Some plans have $0 deductibles or waive them for lower-tier drugs.	Maximum of $615
2	Initial Coverage	The enrollee pays their plan's copayment or coinsurance (standard is 25% of the drug cost). The plan and drug manufacturers cover the remaining cost.	From deductible up to $2,100 TrOOP
3	Catastrophic Coverage	Once the out-of-pocket threshold is reached, the enrollee enters catastrophic coverage and pays $0 (no cost-sharing) for all covered Part D drugs for the rest of the calendar year.	Starts at $2,100 TrOOP

Note on TrOOP (True Out-of-Pocket)

Only what you pay directly (or what is paid on your behalf by programs like Extra Help/Low-Income Subsidy) counts toward the $2,100 out-of-pocket cap. Plan premiums and manufacturer discounts do not count toward this limit.

Core CMS Requirements & Protections

To ensure beneficiary safety, access, and affordability, CMS strictly regulates how Part D plans operate. Every plan must include the following elements:

The Medicare Prescription Payment Plan (M3P)

This opt-in payment feature allows enrollees to spread their out-of-pocket pharmacy costs into interest-free monthly installments. New for 2026, participation in M3P will automatically renew from year to year unless the beneficiary actively opts out.

Formularies & Tiered Pricing

Every plan must establish a CMS-approved formulary (list of covered medications), usually categorized into tiers (e.g., Tier 1: Preferred Generic, Tier 3: Preferred Brand, Tier 5: Specialty). Formularies must include at least two therapeutically unique drugs in every Medicare-recognized drug category.

The Six Protected Classes — all drugs must be covered:

1Anticonvulsants
2Antidepressants
3Antineoplastics (Cancer treatment)
4Antipsychotics
5Antiretrovirals (HIV treatment)
6Immunosuppressants (Organ transplant rejection)

Insulin and Vaccines at No or Low Cost

Insulin Cap: All covered Part D insulin products are capped at a maximum of $35 per month's supply, and the standard deductible does not apply to them.

Adult Vaccines: Vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) — including the shingles vaccine — must be covered at $0 cost-sharing (no deductible or copay).

Mandatory Transition Policy

CMS requires plans to have an active transition process for new members or those affected by formulary changes at the start of a contract year.

Temporary Supply: Plans must provide a one-time temporary supply (typically 30 days in retail settings or 31 days in long-term care) of a non-formulary drug within the first 90 days of enrollment.

Required Notice: Within 3 business days of a transition fill, the plan must send a CMS-approved written notice explaining that the fill was temporary and detailing how to transition to an alternative or request an exception.

Coverage Determinations, Exceptions & Appeals

If a needed medication is not on the formulary, or if a plan places restrictive utilization management criteria on it, beneficiaries have the right to request:

Formulary Exception: Asking the plan to cover a non-formulary drug because of medical necessity.
Tiering Exception: Asking the plan to charge a lower copay tier for a higher-tier drug.
Appeals Process: If a request is denied, CMS mandates a standardized, multi-level appeal process — starting with a plan redetermination and escalating up to independent external reviews.

Questions About Your Prescription Drug Coverage?

Choosing the right Part D plan depends on your specific medications and pharmacy. We can help you compare plans and find the best fit — at no cost to you.