The Medicare Part D coverage gap — commonly called the “donut hole” — is one of the most misunderstood aspects of prescription drug coverage. Many seniors are surprised to learn they can actually hit a coverage gap where their insurance pays less and their out-of-pocket costs increase. Understanding how this works can save you hundreds of dollars per year.
What Is the Medicare Part D Coverage Gap?
Medicare Part D is the optional prescription drug coverage program available to anyone with Medicare. When you enroll in a Part D plan, you pay a monthly premium and a share of your prescription costs. However, there’s a gap in coverage that kicks in after you and your plan have spent a certain amount on covered medications.
Once you’ve reached the coverage gap, you’ll pay more for your prescriptions until you’ve spent enough to qualify for “catastrophic coverage,” where Medicare takes over most of the cost.
2026 Coverage Gap Limits
The coverage gap works differently than it used to. Here’s where things stand for 2026:
- Initial Coverage Limit: $5,660
- Coverage Gap Begins: After $5,660 total spending
- Donut Hole Range: $5,660 to $9,047
- Catastrophic Coverage: Kicks in after $9,047
In the coverage gap, you pay no more than 25% for brand-name drugs and 25% for generic drugs.
How to Minimize the Donut Hole Impact
While you can’t completely eliminate the coverage gap, strategies exist to minimize its impact:
- Use generic medications when possible — they count toward exiting the gap faster
- Apply for Extra Help (Low Income Subsidy) — visit SSA.gov/medicare/part-d-extra-help
- Use mail-order pharmacies — 90-day supplies often cost less
- Review your plan annually during Open Enrollment (Oct 15–Dec 7)
Don’t Let the Donut Hole Catch You Off Guard
The coverage gap doesn’t have to derail your retirement budget. We can help you compare Part D plans in your area and find the option that best fits your medication needs and budget.