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Medicare Drug Cost Cap 2026

Beginning in 2025, Medicare introduced one of the most significant changes to prescription coverage in years: a yearly limit on out-of-pocket costs for medications under Medicare Part D. This change continues in 2026, with a slightly higher limit on the Medicare drug cap 2026 designed to help beneficiaries manage rising prescription expenses.

What Is the 2026 Medicare Drug Cap?

In 2026, the Medicare Part D out-of-pocket cap will be $2,100. Once a beneficiary pays $2,100 in out-of-pocket costs for covered prescription drugs in a calendar year, they will owe nothing more for those medications for the rest of the year.

This cap includes deductibles, copays, and coinsurance for covered Part D drugs, but it does not include:

• Monthly Part D premiums
• The cost of drugs covered under Medicare Part B (such as infusions administered in a doctor’s office)
• Medications not on the plan’s formulary

Whether someone has a stand-alone Part D plan or a Medicare Advantage plan with drug coverage, the cap applies to all covered prescriptions.

Why This Change Matters

Before this new system, Medicare beneficiaries had no upper limit on out-of-pocket drug costs. This meant that those with chronic illnesses or expensive specialty medications could spend thousands each year with no relief.

The new $2,100 cap gives beneficiaries greater financial protection and predictability. Once the limit is reached, cost-sharing ends, offering peace of mind for those managing ongoing or high-cost prescriptions.

The increase from $2,000 in 2025 to $2,100 in 2026 accounts for inflation and rising drug prices. This cap is part of the Inflation Reduction Act (IRA), which aims to make medications more affordable and includes additional measures like insulin cost caps and Medicare drug price negotiations.

How the Cap Works

Here’s an example:
Suppose Mary, a Medicare beneficiary, pays copays and coinsurance for her medications throughout 2026. Once her total out-of-pocket spending for covered Part D prescriptions reaches $2,100, she won’t have to pay anything else for those drugs for the rest of the year.

However, it’s important to note that costs for non-covered or Part B drugs won’t count toward the cap. Also, her monthly plan premiums remain separate and will continue.

Watch a YouTube video explaining the drug cap

What Beneficiaries Should Do

Even with this welcome protection, it’s crucial to review your plan each year during the Medicare Annual Enrollment Period (October 15 – December 7). Here’s what to consider:

• Check your plan’s formulary: Make sure all your prescriptions are covered.
• Compare plan costs: Premiums, deductibles, and copays can vary widely between plans.
• Track your spending: Plans will monitor your progress toward the cap, but keeping your own records is wise.
• Explore payment options: The new Medicare Prescription Payment Plan allows beneficiaries to spread out their drug expenses evenly throughout the year instead of paying large costs upfront.

A Step Toward Affordability

The 2026 Medicare drug cost cap is a milestone for millions of Americans who depend on prescription medications. While it doesn’t eliminate all costs, it offers much-needed relief and certainty for those facing high drug expenses.

By understanding how the cap works and reviewing coverage carefully, Medicare beneficiaries can make informed decisions and take full advantage of this new protection.

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Medicare TrOOP Costs: What Beneficiaries and Agents Need to Know

When it comes to Medicare Part D prescription drug coverage, there’s one term that often causes confusion but plays a big role in how much a beneficiary pays: TrOOP. In this post, we explain Medicare Part D TrOOP Costs and their effect on the client’s costs for prescription medication.

Whether you’re a Medicare beneficiary trying to understand your coverage or a Medicare agent helping clients navigate their plans, understanding TrOOP is essential.

What Is TrOOP

TrOOP (True Out-of-Pocket) costs refers to the amount a Medicare beneficiary pays for covered prescription drugs before reaching catastrophic coverage under a Part D plan. These costs include deductibles, copays, and coinsurance for medications covered by the plan.

TrOOP is used to track a beneficiary’s spending so that Medicare knows when to move them through the different Part D coverage phases.

What Counts Toward Medicare Part D TrOOP Costs

Not everything a beneficiary pays will count toward TrOOP. Only qualified out-of-pocket spending applies. Here’s what counts:

• Annual deductible (if applicable)
• Copays and coinsurance for formulary drugs (covered by your plan)
• Payments made by:
  • The beneficiary
  • A family member
  • State Pharmaceutical Assistance Programs (SPAPs) or the Federal Government’s Extra Help Program.

What Doesn’t Count Toward Medicare Part D TrOOP Costs

Some expenses don’t count toward your TrOOP total, including:

• Monthly premiums for the Part D plan
• Drugs not covered by the plan (not on the plan’s formulary). Although, if the drug is approved via exception or appeal, it does count towards the TrOOP
• Over-the-counter (OTC) drugs
• Drugs purchased outside of the U.S.
• Payments by other insurance (e.g., employer group plans or TRICARE)

TrOOP and the 3 Phases of Part D

To understand how TrOOP affects drug costs, it helps to review the stages of Medicare Part D:

1. Deductible Phase
   • The beneficiary pays 100% of their drug costs until they meet the deductible.
2. Initial Coverage Phase
   • Beneficiaries pay about 25% of the cost for formulary drugs in the form of copays or coinsurance until they reach $2,000 out of pocket (the initial coverage limit).
3. Catastrophic Coverage Phase
   • After TrOOP reaches a set amount ($2,000 in 2025, increasing in 2026), the beneficiary pays $0 for covered drugs once they have hit the TrOOP under the new 2025 rules.

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Key Takeaways for Beneficiaries and Agents

• TrOOP helps Medicare track spending to determine when beneficiaries qualify for better cost-sharing.
• Only qualified out-of-pocket costs count.
• In 2025, TrOOP maxes out at $2,000; a major win for Medicare enrollees.
• Medicare agents should explain TrOOP carefully when helping clients compare drug plans or estimate yearly costs.

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Medicare Part D IRMAA 2025 is important for beneficiaries and agents to understand. The Social Security administration adds the IRMAA costs for Medicare Part D into the plan premium for each enrollee’s plan. Part D plans have a wide range of premiums. They can range from $0 to as much as $150 or more per month. The price of each plan depends on the area each beneficiary lives in as well as the plan they choose.

What is IRMAA

IRMAA (income-related monthly adjustment amount) is a surcharge on Medicare Part B as well as Medicare Part D plan premiums. It applies to Medicare beneficiaries who have gross income over a specific amount.

Click here to learn about Medicare Part B IRMAAs

How IRMAA amounts are decided

The IRMAA Income amounts are decided annually on a sliding scale and include 5 different income brackets. In the event the Social Security administration determines a client must pay an IRMAA, they will send a premium notice that includes an explanation of the charge.

The IRMAA amounts are based on the beneficiaries’ income from 2 years before the present year.  For example: a 2025 IRMAA is based on the beneficiary’s income from 2023.  Because income changes from year to year, the IRMAA amount also changes accordingly.

The following IRMAA Part D premium surcharges are based on 2023 income amounts.

Please note: individuals enrolled in a Medicare Advantage plan that includes prescription drug coverage, will pay the Part D IRMAA as well as the plan premium. If their plan has a $0 premium, they will still have to pay the Part D IRMAA. Social Security also adds The IRMAA to the beneficiaries’ Part B premium.

How to appeal the IRMAA

Beneficiaries can appeal an IRMAA determination in the event they feel it is an error or if they experience a life changing event that results in lower income. Some events that can result in loss of income include divorce, loss of a spouse or loss of employment or other sources of income. The beneficiary can file for a redetermination with the Form SSA-44.

In the event the beneficiary disagrees with the redetermination, they can request a third level appeal through OMHA (Office of Medicare Hearings and Appeals).

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