Medicare Part D Donut Hole Calculator 2026
Walk through the 2026 Medicare Part D drug-cost stages — deductible, initial coverage, and the new $2,000 out-of-pocket cap that replaced the old donut hole. See when you hit catastrophic protection and what the monthly Medicare Prescription Payment Plan would smooth.
| Stage Breakdown | |
| Stage 1 — Deductible (100% you) | — |
| Stage 2 — Initial Coverage (25% you) | — |
| Stage 3 — Catastrophic (0% you after cap) | — |
| Total Drug Out-of-Pocket | — |
| Premiums | |
| Annual Premium | — |
| Annual IRMAA Surcharge | — |
| Total Annual Cost (OOP + Premiums) | — |
How Part D Changed in 2025 — and Where We Are in 2026
The Inflation Reduction Act of 2022 made dramatic changes to Medicare Part D, with the biggest changes activating in 2025 and continuing into 2026. The coverage gap ("donut hole") has effectively been eliminated, replaced by a simpler three-stage design with a hard $2,000 annual out-of-pocket cap. Once you spend $2,000 on covered drugs in 2026, you pay $0 for the rest of the year (catastrophic phase) per the IRA reforms (source: cms.gov).
The three stages now are: (1) the annual deductible (up to $590 in 2026), where you pay 100% of drug costs; (2) the initial coverage phase, where you typically pay 25% coinsurance and the plan pays 75%; (3) the catastrophic phase, which kicks in once your true out-of-pocket spending (TrOOP) hits $2,000. After that, the plan and federal reinsurance cover all costs.
The Medicare Prescription Payment Plan (M3P)
New for 2025-2026: the Medicare Prescription Payment Plan, sometimes called M3P, lets you smooth your $2,000 annual out-of-pocket cap into level monthly payments. Instead of paying $300 at the pharmacy in January and $0 in November, you opt in and pay the same amount monthly to your plan, capped at no more than $2,000 over 12 months (source: medicare.gov). This is particularly valuable for retirees on fixed incomes who need expensive medications early in the year.
Opting in is free, voluntary, and reversible mid-year. The catch: if you switch plans during open enrollment, you must re-enroll in M3P with the new plan. There is no cost or interest charged, just an administrative smoothing of when you pay. The 2026 M3P monthly cap is calculated as the projected annual out-of-pocket divided by remaining months in the calendar year.
What Counts and Does Not Count Toward the $2,000 Cap
Counts toward TrOOP: your share of drug costs (deductible, copays, coinsurance) for covered Part D drugs at participating pharmacies, plus payments made on your behalf by the Extra Help / Low-Income Subsidy program, State Pharmaceutical Assistance Programs, certain Indian Health Service programs, charity assistance from nonprofits, and the value of manufacturer rebates passed through. Does NOT count: monthly Part D premiums, IRMAA surcharges, drug costs paid by Medicare Advantage employer/union supplemental plans, drugs not on your plan's formulary, and drugs from out-of-network pharmacies.
This distinction matters: premium and IRMAA are paid year-round regardless of whether you hit the $2,000 cap. A high-IRMAA retiree may pay $80-200/month in surcharges alone on top of the base premium. See our Medicare IRMAA calculator to project these surcharges.
Choosing a Plan in 2026 — Premium vs Formulary Tradeoffs
Cheaper-premium plans often have stricter formularies, more prior authorization, and higher tier copays. Pricier-premium plans (often $40-70/month) typically have broader formularies and lower tier 1-3 copays. Use Medicare.gov's plan finder to compare YOUR specific drugs against each plan's formulary and pricing — not just the headline premium. Tier 1 generics typically run $0-3, tier 2 preferred generics $5-15, tier 3 brand $40-50, tier 4 specialty $100+ or 25% coinsurance.
For broader Medicare planning, see our Medigap vs Medicare Advantage calculator and IRMAA calculator.
Last updated April 2026. Sources: cms.gov, medicare.gov, kff.org.