Medicare Part D Coverage Phases: How does Part D work?
UPDATED Nov. 23, 2025. There are three Medicare Part D coverage phases (stages). The numbers below are for the year 2026.
Annual Deductible – The First Stage of Medicare Part D Coverage Phases
The Annual Deductible is the amount you must pay for your prescription drug plan before the plan starts to pay. In 2026, the deductible is $615.
Initial Coverage: Copayments and coinsurance
During the Initial Coverage, you pay a copayment/coinsurance (as defined by the plan) for each covered drug, and the plan pays its share. The typical coinsurance is 25%, i.e., you pay 25% of the drug costs, and the insurance company pays the rest. The initial coverage continues until you reach the $2,100 out-of-pocket cap.
Donut Hole (Coverage Gap) – Eliminated
The Coverage Gap phase was eliminated in 2025
Catastrophic Coverage
A $2,100 cap on out-of-pocket spending for covered Part D drugs. Once you reach this amount, you’ll automatically qualify for catastrophic coverage and won’t pay more out-of-pocket for the rest of the year for formulary drugs.
US Government Sources
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