Do Medicare Advantage Plans Have Donut Hole?

Understanding the complexities of Medicare can be challenging, especially when it comes to what used to be called the “donut hole” coverage gap. The short answer to whether Medicare Advantage plans have a donut hole is: not anymore. The donut hole was eliminated for all Part D coverage — standalone or bundled into a Medicare Advantage plan — as of January 1, 2025. Below is how prescription drug coverage works in Medicare Advantage plans in 2026, with the historical context of the donut hole preserved for reference.

An Overview of Medicare Advantage Plans

Medicare Advantage plans, also known as Medicare Part C, are comprehensive health plans offered by private insurance companies approved by Medicare. These plans provide an alternative way to receive Medicare benefits, combining the coverage of Medicare Parts A and B, and often including additional benefits such as prescription drug coverage, dental care, and vision services.

There are several types of Medicare Advantage plans, including Health Maintenance Organization (HMO) plans, Preferred Provider Organization (PPO) plans, Special Needs Plans (SNPs), and more. Each plan type has its own network of providers, rules for receiving care, and cost-sharing requirements. When a Medicare Advantage plan includes prescription drug coverage, it is often called a Medicare Advantage Prescription Drug (MAPD) plan.

What the Donut Hole Medicare Part D Was (Historical)

The donut hole, officially known as the Coverage Gap, was a phase in Medicare Part D coverage where beneficiaries paid a higher share of their prescription drug costs. Beneficiaries entered the coverage gap after their total drug costs reached a certain threshold, and they stayed in it until their out-of-pocket spending reached the catastrophic coverage threshold.

This applied to Medicare Part D coverage whether it was a standalone Part D plan or the drug-coverage portion of a Medicare Advantage plan (MAPD). The Inflation Reduction Act phased it out, eliminating it entirely as of January 1, 2025.

How Prescription Drug Coverage Works in Medicare Advantage in 2026

If your Medicare Advantage plan includes prescription drug coverage (MAPD), the Part D portion of that plan follows the same three-phase structure as a standalone Part D plan:

• Deductible phase: You pay 100% of your drug costs until you meet your plan’s deductible (up to $615 maximum in 2026). Many MAPD plans have a lower deductible or no deductible at all.
• Initial coverage phase: After the deductible, you pay copays or coinsurance (typically 25%) on covered drugs until your out-of-pocket spending reaches $2,100.
• Catastrophic coverage phase: Once your out-of-pocket spending hits $2,100, you pay $0 for covered drugs for the rest of the calendar year.

There is no longer a middle “donut hole” phase. The structure is the same whether you have a standalone Part D plan or your drug coverage is bundled into a Medicare Advantage plan.

Keep in mind that your Medicare Advantage plan’s medical out-of-pocket maximum (MOOP) is separate from the $2,100 Part D cap. The medical MOOP applies to your medical services (hospital, doctor visits, etc.), and the $2,100 Part D cap applies to your prescription drug costs.

The Medicare Prescription Payment Plan

New as of 2025: if you have an MAPD plan (or a standalone Part D plan), you can opt into the Medicare Prescription Payment Plan, which spreads your out-of-pocket Part D costs into predictable monthly installments rather than paying large amounts at the pharmacy counter. Enrollment is voluntary and free.

Strategies to Lower Your Drug Costs in 2026

• Utilize generic or preferred drugs: Talk to your healthcare provider about switching to generic or preferred brand-name drugs. These options usually have significantly lower copays.
• Explore drug assistance programs: Extra Help (Low-Income Subsidy), state pharmaceutical assistance programs, and manufacturer assistance programs can help with prescription costs.
• Review your plan every year: MAPD plans change formularies, tiers, and pricing annually. The plan that’s best for your medications this year may not be the best choice next year.
• Use the Medicare Prescription Payment Plan: If you expect to hit the $2,100 cap, spreading it into monthly installments can help with cash flow.

Additional Considerations for Medicare Advantage Beneficiaries

Extra Benefits and Cost-Sharing

Medicare Advantage plans may offer additional benefits beyond what Original Medicare provides, such as dental, vision, or hearing coverage. These extra benefits can be valuable for beneficiaries, but it’s important to understand any associated cost-sharing requirements.

Medicare Advantage Special Needs Plans (SNPs)

Special Needs Plans are Medicare Advantage plans specifically tailored for individuals with certain health conditions or characteristics, such as chronic illnesses, institutional care needs, or dual eligibility for Medicare and Medicaid. SNPs may offer specialized coverage and care coordination services.

Conclusion

The donut hole no longer exists for Medicare Advantage plans (or standalone Part D plans) as of January 1, 2025. In its place, MAPD enrollees benefit from a simpler three-phase structure with a hard $2,100 annual out-of-pocket cap on covered Part D drug costs in 2026. If you’re considering a Medicare Advantage plan with prescription drug coverage or have questions about how your current plan handles your specific medications, our licensed Medicare agents can help compare options to find the most cost-effective fit.