Generally, Medicare drug plans and Medicare Advantage Plans with drug coverage have 3 stages:

Deductible Stage

If your Medicare plan has a deductible, you pay all out-of-pocket costs until you reach the full deductible. No Medicare drug plan may have a deductible more than $615 in 2026. Some Medicare drug plans don’t have a deductible.

Initial Coverage Stage (up to $2100)

Initial coverage stage: After you reach your full deductible (if your plan has a deductible), you’ll pay 25% of the cost as coinsurance for your generic and brand-name drugs until your out-of-pocket spending on covered Part D drugs reaches $2,100 in 2026 (including certain payments made on your behalf, like through the Extra Help program). Then, you’ll automatically get “catastrophic coverage.”

Catastrophic Coverage Stage

You won’t have to pay out-of-pocket for covered Part D drugs for the rest of the calendar year.

When you have Medicare drug coverage, you’ll get an Explanation of Benefits (EOB) the month after the pharmacy bills your plan. Your EOB shows the prescriptions you filled, what your plan paid, what you and others have paid, your coverage stage, and what counts toward your out-of-pocket costs and your total drug costs. 

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