Medicare Part D Guide (2026)

Medicare Part D is the voluntary Medicare prescription drug benefit offered through private insurance plans approved by Medicare. All Part D plans cover a list of drugs (the formulary) at various cost-sharing tiers. You can get Part D as a standalone plan added to Original Medicare, or as part of a Medicare Advantage plan that includes drug coverage (MAPD).

Starting in 2026, the Part D out-of-pocket maximum is $2,000/year for covered drugs — a landmark change from the Inflation Reduction Act. After reaching $2,000 in covered drug costs, you pay $0 for the rest of the year. This is a major improvement that eliminates the old 'catastrophic' coverage gap concerns for seniors on expensive medications.

Extra Help (also called Low Income Subsidy, or LIS) is a federal program that helps people with limited income and resources pay Part D costs. Full Extra Help covers premiums, deductibles, and most copays — leaving $0 to $11.20 per drug in copays. Partial Extra Help reduces but doesn't eliminate costs. Income limit: ~$21,000/year (individual), ~$28,500/year (couple). Apply through Social Security Administration (800-772-1213) or ssa.gov.

If you go more than 63 days without creditable prescription drug coverage after you first become eligible for Medicare, you pay a late enrollment penalty added permanently to your Part D premium. The penalty is 1% of the national base premium ($36.78 in 2026) for every month you were without coverage. A 12-month gap = ~12% permanent premium increase. Employer and some other drug coverage counts as 'creditable' if it's as good as Medicare Part D.

If you live in an assisted living facility, you keep your own Medicare Part D plan — the facility doesn't choose your drug coverage. Most AL facilities use a contracted pharmacy (often an LTC pharmacy). Important: ensure your contracted pharmacy is in your Part D plan's preferred network, or you may pay significantly higher drug costs. Confirm the LTC pharmacy relationship when touring AL facilities.

A formulary is the list of drugs a Part D plan covers. Plans organize drugs into tiers with different cost-sharing: Tier 1 (preferred generics, lowest copay), Tier 2 (generics), Tier 3 (preferred brand-name), Tier 4 (non-preferred brand-name), Tier 5 (specialty drugs, highest cost-sharing). In 2026, specialty drug copays are capped at $600/month (for plans using this tier). Always check the specific formulary for your medications before enrolling.

Generally no — you can only change Part D plans during the Annual Enrollment Period (Oct 15 – Dec 7). Special Enrollment Periods apply for: entering a nursing facility (can switch to a plan with a convenient LTC pharmacy network), qualifying for Extra Help, or specific other circumstances. For the MA Open Enrollment Period (Jan 1 – Mar 31), you can switch Medicare Advantage plans, which may change your drug coverage.

The Medicare Prescription Payment Plan (introduced 2025) lets you spread your out-of-pocket drug costs evenly across the year in monthly payments rather than paying a large amount upfront early in the year. This is especially helpful for seniors on expensive medications who would otherwise hit their $2,000 cap in Q1–Q2. It's voluntary and offered by all Part D plans — ask your plan about enrollment.