Definition. A former phase of Medicare Part D, between initial coverage and catastrophic coverage, in which people paid a larger share of their drug costs. The Inflation Reduction Act removed it starting in 2025.
What it means
Under the original Part D design, after you and your plan spent a set amount on drugs, you entered a gap in which you paid much more until you reached catastrophic coverage. The Affordable Care Act shrank the gap over the 2010s, and the Inflation Reduction Act eliminated it in 2025.
Part D now works like this:
- Deductible: you pay full cost up to your plan's deductible, which can't be more than $615 in 2026 (some plans have a lower one or none).
- Initial coverage: you pay your plan's copays or coinsurance.
- Catastrophic coverage: once your out-of-pocket costs for covered drugs reach $2,100 in 2026, you pay nothing more for covered Part D drugs that year.
You can also spread your out-of-pocket drug costs over the year in monthly bills through the Medicare Prescription Payment Plan.
In Oregon
The rules are federal, so there is no coverage gap for any Oregon Part D or Medicare Advantage drug plan. CMS has set a higher cap for 2027; see Medicare costs for 2027.
Sources
- Medicare.gov — Costs in the coverage phases of Part D
- Medicare.gov — Medicare Prescription Payment Plan
- CMS — Medicare Drug Price Negotiation Program
Frequently asked questions
Is there still a donut hole in 2026?
No. Since 2025 Part D has no coverage gap, and your out-of-pocket costs for covered drugs are capped at $2,100 for 2026.
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