Personal Finance & Estate › Medicare, Medi-Cal & long-term care › Medicare (federal health insurance at 65+)
Medicare Part D (prescription drugs)
$2,100 out-of-pocket cap (2026)· Insurance type
Law or rule (2026)Set by statute, regulation or the agency; numbers change yearly.
Medicare's prescription drug coverage, bought from private insurers as a standalone plan or inside a Medicare Advantage plan.
See it on the Personal Finance & Estate map →How it works
Each plan sets its own drug list, pharmacies and premium; the 2026 deductible can be up to $615. Under the 2022 Inflation Reduction Act, yearly out-of-pocket drug costs are capped at $2,100 in 2026, insulin at $35 a month, and costs can be spread monthly. Medicare's first negotiated prices, for 10 drugs, took effect in January 2026. Main trap: enrolling late without other 'creditable' drug coverage adds a lifelong penalty of 1% of a base premium for each month. Recheck your plan every fall.
Why it matters for you
The cap ended the old 'donut hole' risk of five-figure drug bills, but plans change drug lists yearly, so the October 15–December 7 review matters.
Rules, limits and sources (2026)
Created by the 2003 Medicare Modernization Act, with coverage from 2006; CMS publishes plan data and the Medicare Plan Finder; the cap and negotiation are in the 2022 law.
Watch out for
Whether the cap and price negotiation will push up plan premiums or narrow drug lists over time is debated; early premium trends are mixed.
Connections (2)
▸Medicare Part D (prescription drugs) adds drug coverage to Medicare (federal health insurance at 65+)Law or rule (2026)
How they connect
Part D lets private insurers sell drug plans under Medicare rules: standalone plans for people in Original Medicare, or drug coverage built into most Advantage plans. Medicare subsidizes roughly three-quarters of the cost, and low-income enrollees get 'Extra Help' with premiums and copays.
When it applies
Signed by President George W. Bush in December 2003 as part of the Medicare Modernization Act; coverage began January 1, 2006.
The rule
Social Security Act Part D (Sec. 1860D-1 onward); CMS publishes plan and enrollment data and the yearly base premium.
Watch out for
How the 2025 redesign, which shifted more catastrophic drug costs onto insurers, will affect standalone plan prices and choices is still playing out.
▸IRMAA (income surcharge on Parts B & D) also surcharges Medicare Part D (prescription drugs)Law or rule (2026)
How they connect
The same income tiers that raise Part B also add a fixed monthly surcharge to Part D, roughly $14 to $91 per person in 2026. It is paid to Medicare, usually from Social Security, on top of the plan's own premium, and applies even when drug coverage comes inside a Medicare Advantage plan.
When it applies
Added by the Affordable Care Act of 2010, starting in 2011; it uses the same two-year-old tax return as Part B.
The rule
Social Security Act Sec. 1860D-13(a)(7); CMS publishes Part D IRMAA amounts each fall alongside Part B premiums.
Watch out for
Few enrollees notice the Part D surcharge separately; how its amounts move after the 2025 drug-benefit redesign is still unclear.