Prescription Costs & Part D
What happened to the Medicare donut hole?
Last reviewed: · Big Sioux Benefits Data Desk
The coverage gap known as the donut hole was eliminated starting in 2025, and it does not exist in 2026. Part D now runs in three phases rather than four: a deductible phase, an initial coverage phase where you pay a share of each drug's cost, and a catastrophic phase where you pay nothing once your out-of-pocket spending reaches the annual cap of $2,100 (CMS CY2026 Part D benefit parameters).
The qualifier: the phrase still circulates, and older articles, printed guides, and well-meaning relatives all still use it, which causes real confusion at the pharmacy counter. If someone tells you that you have fallen into the donut hole in 2026, they are describing a structure that no longer exists. What they may be seeing is the ordinary jump from the deductible phase into initial coverage, or the moment a plan applies a different cost share to a brand-name drug.
Before and after
| Through 2024 | 2026 | |
|---|---|---|
| Number of phases | Four, including the coverage gap | Three |
| Coverage gap | Yes, with its own cost sharing | Eliminated |
| Annual out-of-pocket limit | None | $2,100 |
| Worst case for the year | Effectively unlimited | Knowable in advance |
The practical upshot is that the old advice built around the donut hole, timing refills to delay falling into it, or splitting prescriptions across the calendar, no longer applies. The thing to plan around now is the cap itself and when you reach it, which is covered in when you hit the $2,100 cap. If the January bill is the pain point, the Medicare Prescription Payment Plan is the tool built for it.
Sources
- CMS — Announcement of Calendar Year 2026 Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (Part D benefit parameters) — CY2026 parameters; accessed 2026-08-21
- Medicare.gov — Costs for Medicare drug coverage — accessed 2026-08-21
Related questions
Why do people still talk about the donut hole in 2026?
Because it existed for nearly twenty years and shaped how a generation of beneficiaries thought about drug costs. Printed materials, older web pages, and word of mouth all lag the rule change. If you hear it in 2026, treat it as shorthand for 'my drugs got more expensive this month' and look at which coverage phase you are actually in.
Was the donut hole replaced by something worse?
No. It was replaced by a hard annual limit on what you can pay, which did not exist before. Under the old structure there was no ceiling on out-of-pocket drug costs at all. In 2026 the ceiling is $2,100.
Drug costs turn on your specific prescriptions, so the arithmetic is worth doing once, properly: book a free, no-pressure conversation, see your county's South Dakota plan lineup, or browse all answers. SHIINE, the state's free counseling program, is at 1-800-536-8197 and sells nothing.
Big Sioux Benefits is a licensed insurance agency, not affiliated with or endorsed by the U.S. government or the federal Medicare program. We do not offer every plan available in your area. Contact Medicare.gov, 1-800-MEDICARE, or SHIINE (South Dakota's SHIP) for all of your options.