Educational content only. Not Medicare, insurance, or financial advice. Not affiliated with CMS, Medicare.gov, or SSA.
By Keith Guirao, founder and editor of Savvy Senior Central (Maven Media).
Part D is extra coverage for prescription drugs, including many recommended shots or vaccines. Private companies run those plans under rules set by Medicare. Original Medicare does not include it. You join a separate Medicare drug plan (PDP), or you get drug coverage inside most Medicare Advantage Plans. Skip it without creditable coverage, and most of the pharmacy bill is yours, plus a late-enrollment penalty that usually lasts as long as you have Part D.
The 2026 rule ads treat as a medical maximum is not one. Covered Part D drugs have a yearly out-of-pocket cap of $2,100. After that, you pay $0 copay or coinsurance for covered Part D drugs for the rest of the calendar year. That is a Part D pharmacy rule. It is not a yearly limit on Original Medicare hospital and doctor bills, and it is not the medical out-of-pocket maximum on a Medicare Advantage Plan.
I have spent 18 years inside consumer marketing and lead generation in insurance and health. That is operator experience, not a counseling credential. The brochure headline is the cap. The structural traps are the HMO-without-drugs rule, the $38.99 base-premium myth, and the 63-day creditable-coverage clock.
What Part D is and two ways to get it
*Medicare & You 2026*: Part D is optional and offered to everyone with Medicare. Even if you do not take drugs now, consider getting it. Skip it at first eligibility without creditable coverage or Extra Help, and you will likely pay a late enrollment penalty if you join later, generally for as long as you have Part D.
Two ways to get it, as the handbook and Medicare.gov print them:
- A separate Medicare drug plan (PDP.) These plans add Part D to Original Medicare, some Medicare Cost Plans, some Medicare Advantage Private Fee-for-Service (PFFS) Plans, and Medical Savings Account (MSA) Plans. You must have Part A and/or Part B to join a separate drug plan.
- A Medicare Advantage Plan (Part C or other Medicare health plan with drug coverage.) You get Part A, Part B, and Part D through a single plan. You must have Part A and Part B to join Advantage. Not all Advantage plans offer drug coverage.
You must live in the plan’s service area and be lawfully present in the U.S. Costs and covered drugs vary by plan. This page does not rank formularies or name a “best” drug plan.
Original Medicare, Advantage, and the HMO/PPO trap
If you stay in Original Medicare, you join a separate Part D plan if you want Medicare drug coverage. Medigap sold after 2005 does not include drugs. Most Advantage plans include Part D. You do not then join a second drug plan.
Medicare.gov and *Medicare & You 2026* split the rest by plan type:
- HMO or PPO without drugs: you generally cannot join a separate Medicare drug plan. If you want Part D, you have to join an HMO or PPO that offers it.
- PFFS without drugs: you can get a separate Medicare drug plan.
- MSA: no Part D inside the plan. If you want Medicare drug coverage, join a separate PDP.
- Special Needs Plans (SNPs🙂 all SNPs must provide Medicare drug coverage (Part D).
Medicare.gov’s choose-coverage page: you can join a separate drug plan without losing your current health coverage only in limited situations (for example, a PFFS plan that does not include Part D, an MSA plan, a Medicare Cost Plan, or certain employer plans). If you are in an HMO, HMO Point-of-Service, or PPO and you join a separate drug plan, you will typically be disenrolled from Advantage and returned to Original Medicare. Going without drugs in an HMO/PPO that does not offer Part D can mean a late enrollment penalty later.
The 2026 yearly cap is $2,100 and only for covered Part D drugs
Official 2026 amount, printed in *Medicare & You 2026*, CMS educational materials, and Medicare.gov’s drug-cost pages: $2,100. Once you reach that cap, you pay no copayment or coinsurance for covered Part D drugs for the rest of the calendar year.
Medicare.gov describes the benefit in stages. If the plan has a deductible, you pay until you reach it. CMS’s CY 2026 Part D redesign instructions set the defined standard deductible at $615; some plans have a lower deductible or none. (*Medicare & You 2026* separately notes that if a plan has a deductible, it will be no more than $700 in 2027: a next-year ceiling, not the 2026 figure.) After that, you generally pay coinsurance (often described as 25% in the standard benefit redesign materials) until out-of-pocket spending on covered Part D drugs reaches $2,100 (including certain payments made on your behalf, like Extra Help). Then catastrophic coverage: $0 for covered Part D drugs the rest of the calendar year.
What counts: spending on covered Part D drugs. What does not: the monthly plan premium (you still pay it); off-formulary drugs; Original Medicare hospital and doctor bills; an Advantage plan’s *medical* out-of-pocket maximum. The Medicare Prescription Payment Plan can spread pharmacy costs across the year; Medicare.gov says it does not save you money. The $2,100 cap still applies.
$38.99 is not the Part D price
$38.99 in 2026 is the Part D national base beneficiary premium. CMS announced it in the July 28, 2025 Part D bid fact sheet. Medicare.gov’s 2026 costs materials and the avoid-penalties page restate it. *Medicare & You 2026* uses it in late-enrollment-penalty math. Medicare uses that figure to estimate the late enrollment penalty and Part D IRMAA. CMS calls it the starting point for a plan-specific basic premium. It is not “the Part D price.” Plan premiums vary by ZIP and formulary.
Higher-income people pay a Part D IRMAA on top of the plan premium. CMS (Nov. 14, 2025): approximately 8% of people with Part D pay it. Live add-on dollars sit on SSA’s IRMAA page and the CMS fact sheet, prefer those tables over a pasted chart that will age. You pay Part D IRMAA even in an Advantage plan that includes drugs.
You still pay the Part B premium. Most people pay the 2026 standard of $202.90 a month, even with no Part B services, and even in Advantage. A $0 drug-plan premium does not cancel that bill. See Part B premiums and IRMAA.
The late enrollment penalty: 1% a month, from that base, usually for life
Medicare.gov and *Medicare & You 2026* print the same formula. You may owe a late enrollment penalty if, after your Initial Enrollment Period, there is a period of 63 or more days in a row without Medicare drug coverage or other creditable prescription drug coverage. After you join, the plan tells you if you owe it. You will generally pay it for as long as you have Part D, even if you switch plans. It is not a one-time late fee.
The math: 1% × the national base beneficiary premium ($38.99 in 2026) × the number of full, uncovered months. Rounded to the nearest $0.10 and added to your monthly premium. The base can change each year, so the penalty can change each year. Medicare.gov’s 2026 example: 14 months uncovered is 14% of $38.99 → $5.50/month after rounding.
Two usual ways off that hook: creditable coverage, or Extra Help. Creditable coverage is drug coverage expected to pay, on average, at least as much as Part D, employer or union, TRICARE, Indian Health Service, or VA, as Medicare.gov names them. Your plan must tell you whether it is creditable (usually annually). Discount cards and drug-discount websites are not coverage. If you get Extra Help, you do not pay the penalty.
If you leave an Advantage plan that included drugs and return to Original Medicare, get a standalone Part D plan quickly to avoid a gap and a possible penalty. Calendar windows sit in the enrollment guide.
Part B is not a drug plan
Part B covers a limited number of outpatient prescription drugs under certain conditions, usually drugs you would not typically give yourself (doctor’s office or hospital outpatient setting). *Medicare & You 2026*: if you get non-covered prescription drugs, you pay 100% of the cost unless you have Part D or other drug coverage. Part D covers drugs Part B does not. Check the plan’s formulary.
Drugs you get during a covered hospital or skilled nursing facility stay are generally Part A territory for that stay’s covered drugs, not your Part D card, confirm with the facility and plan documents.
Formulary, tiers, prior authorization, and pharmacies
This page will not rank drug lists.
A formulary is the plan’s list of covered drugs. Each list includes at least two drugs in the most commonly prescribed categories and classes; plans choose which drugs they offer. All plans must include most drugs in protected classes (cancer, HIV/AIDS, antidepressants, antipsychotics, anticonvulsants, transplant immunosuppressants). Many plans use tiers; a lower tier generally costs less. Plans may use prior authorization, step therapy, and quantity limits. You or your prescriber can ask for an exception.
In some plans, drugs are only covered at in-network pharmacies. Preferred pharmacies may charge less. Out of network, you will probably pay full cost and may not count that spending the way in-network spending counts, read the Evidence of Coverage.
The official comparison tool is Medicare.gov/plan-compare. Enter the drugs you take and the pharmacies you use. That is a government estimator, not a ranking.
Extra Help and who should confirm before skipping Part D
People with limited income and resources may qualify for Extra Help (the Part D low-income subsidy), which can lower premiums, deductibles, and copays, and removes the late-enrollment penalty while you have Extra Help. Apply through Social Security. SHIP can help you understand whether Extra Help or a Medicare Savings Program is in play. This page does not determine eligibility.
If you have employer, union, VA, TRICARE, or other coverage, get the annual creditable coverage notice in writing before you decline Part D. Assuming a discount card is “creditable” is how permanent penalties start.
FAQ
Is $38.99 the premium for a Part D plan in 2026?
No. $38.99 is the 2026 national base beneficiary premium used for late-enrollment penalty math and Part D IRMAA. Actual plan premiums vary.
What is the $2,100 cap?
It is the 2026 yearly out-of-pocket threshold for covered Part D drugs. After you reach it, you pay $0 for those covered drugs the rest of the calendar year. It does not cap Original Medicare medical bills or an Advantage medical OOP maximum.
Do I still pay Part B if I have Part D?
Yes. Part B and Part D are separate. Most people pay $202.90/month for Part B in 2026, plus any Part B IRMAA or late penalty.
Can I have a separate Part D plan with Medicare Advantage?
Usually only in limited plan types (for example, certain PFFS without drugs, MSA, Cost plans). If you are in an HMO or PPO and join a separate PDP, you will typically be dropped from Advantage and returned to Original Medicare.
Do I need Part D if I take no prescriptions today?
Medicare.gov still advises considering it. Going 63+ days without creditable coverage after you are first eligible can trigger a late penalty when you join later, often for as long as you have Part D.
What counts as creditable coverage?
Coverage expected to pay, on average, at least as much as Part D (employer/union, TRICARE, IHS, VA as Medicare.gov lists). Your plan must tell you. Discount cards are not coverage.
Does the $2,100 cap include my plan premium?
No. Premiums do not count toward the cap. Off-formulary drugs and non-drug medical bills do not either.
How is Part D IRMAA paid?
SSA determines the add-on from MAGI (usually a two-year lookback). It is paid in addition to your plan premium (often deducted from Social Security or billed separately), even if you pay the plan directly. Live amounts: SSA.
Sources
Every figure above traces to CMS, Medicare.gov, or SSA. We do not cite insurance marketplaces for data. Figures last verified September 22, 2026 (ET).
- Medicare.gov: What's Medicare drug coverage (Part D)?
- Medicare.gov: Avoid late enrollment penalties
- CMS: 2026 Medicare Parts A & B Premiums and Deductibles / Part D IRMAA (Nov. 14, 2025)
- CMS: 2026 Part D Bid Information (base premium $38.99)
- Medicare.gov: Medicare & You 2026 (Publication 10050)
- Medicare.gov: 2026 Medicare Costs (Publication 11579)
- Medicare.gov: Plan Compare
- SSA: Premiums for higher-income beneficiaries
- CMS: 2026 MA and Part D Advance Notice Fact Sheet (Part D OOP threshold $2,100)
- CMS: Draft CY 2026 Part D Redesign Program Instructions (standard deductible parameter $615; OOP threshold $2,100)
