Prescription savings guide
What Was the Medicare Donut Hole — and What Replaced It?
Last updated September 4, 2026 · Reviewed by the LowerScript editorial team · Español
The Medicare Part D "donut hole" was a coverage-gap phase in older Part D plans, where you temporarily paid a larger share of your drug costs. It no longer exists — the Inflation Reduction Act's Part D redesign eliminated the coverage-gap phase starting in 2025. Part D now has three phases plus an annual out-of-pocket cap, and a discount card can still help along the way. [Source: CMS Final CY2026 Part D Redesign Program Instructions]
How the phases work now
Part D now has three phases: a deductible phase (you pay the full negotiated price up to the deductible), initial coverage (you pay 25% coinsurance), and catastrophic coverage ($0 cost-sharing once you reach the annual out-of-pocket cap). There is no coverage-gap ("donut hole") phase anymore — your cost-sharing simply stays at 25% coinsurance through initial coverage until you hit the cap, instead of rising in a separate gap phase the way older plans worked. [Source: CMS Final CY2026 Part D Redesign Program Instructions]
The 2026 Part D numbers
For 2026, Medicare's final program rules set the standard deductible at $615 and the annual out-of-pocket threshold at $2,100 (up from $2,000 in 2025) — once your true out-of-pocket drug spending reaches that threshold, Part D cost-sharing drops to $0 for the rest of the year (your premium still applies). 2026 is also the first year negotiated prices apply to the initial 10 drugs selected under Medicare's drug-price negotiation program. These numbers change annually — always confirm the current year's figures at Medicare.gov or with your plan. [Source: CMS CY2026 program rules; figures re-verified at Medicare.gov, 2026-08-02.]
Looking ahead to 2027
CMS has finalized the 2027 numbers too: the standard deductible rises to $700 (from $615) and the annual out-of-pocket threshold rises to $2,400 (from $2,100). CMS is also ending the temporary subsidy that held down some stand-alone Part D premiums in 2025–2026, part of the standard annual updates. 2027 plan details become available October 1, 2026, with enrollment opening October 15. [Source: CMS CY2027 Rate Announcement, Apr. 2026.]
Where a discount card fits
Even without a coverage-gap phase, a discount card can still help: during your deductible phase before your plan starts sharing the cost, when a drug isn't on your plan's formulary at all, or any time the discount-card cash price is simply lower than your copay. Compare both at the pharmacy before you pay. Discount-card purchases aren't processed through your Part D plan, so they don't count toward your annual out-of-pocket total.
Learn more
See Medicare prescription discounts in North Carolina, and check Medicare.gov for current program details.
Frequently asked questions
Does the Medicare donut hole still exist?
No — the Inflation Reduction Act's Part D redesign eliminated the coverage-gap phase starting in 2025. Part D now has three phases plus an annual out-of-pocket cap.
What replaced the donut hole?
Three phases — deductible, initial coverage, and catastrophic coverage — plus a $2,100 annual out-of-pocket cap for 2026, after which Part D cost-sharing drops to $0 for the rest of the year.
Can a discount card still help with Part D costs?
Yes — during your deductible phase, for a drug your plan doesn't cover, or any time the cash price beats your copay. Compare both before you pay.
Do discount-card purchases count toward the out-of-pocket cap?
No — since they aren't processed through your Part D plan, they don't count toward your annual out-of-pocket total.
This guide is general information, not medical, legal or financial advice. Always talk to your doctor or pharmacist about your medications. LowerScript is a discount program, not insurance.
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