Medicare Part D in 2026: Key Changes Agents Need to Know

CMS has released the Final Calendar Year (CY) 2026 Part D Redesign Program Instructions, which bring a lot of changes to Medicare Part D prescription drug coverage.

These changes, mandated by the Inflation Reduction Act of 2022 (IRA), will impact how you help your Medicare clients.

Let's break down what you need to know to guide your clients confidently.

The Three-Act Structure: Understanding New Part D Phases

I like to think of the new Part D structure as a three-act play:

1. Act I: The Deductible Phase
2. Act II: Initial Coverage
3. Act III: Catastrophic Coverage

Act I: The Deductible Phase

Your client enters 2026 paying full price for medications until reaching the $615 deductible. Nothing new here – though the specific deductible amount has increased slightly from previous years.

Act II: Initial Coverage

After meeting the deductible, your client enters the redesigned Initial Coverage phase.

Here, they'll consistently pay 25% of costs while several behind-the-scenes players divide the remaining 75%:

• The plan sponsor typically covers 65% for applicable and selected drugs (75% for other covered medications)
• Drug manufacturers contribute 10% for applicable drugs through the Manufacturer Discount Program
• CMS provides a new 10% subsidy for selected drugs during price applicability periods

Act III: Catastrophic Coverage

When clients reach the $2,100 out-of-pocket threshold in 2026 (adjusted up slightly from $2,000 in 2025), they'll continue to pay $0 for covered prescriptions for the remainder of the year.

The script behind the scenes continues with specific cost-sharing among sponsors (60%), manufacturers (20% for applicable drugs), and CMS (20-40% depending on the medication type).

Related: CMS 2026 Final Rule: What Insurance Agents Need to Know

Medicare Drug Price Negotiation Program: First Wave Takes Effect

In 2026, the Medicare Drug Price Negotiation Program will reach an important milestone as the first wave of negotiated prices takes effect for 10 selected Part D drugs.

These negotiated prices (officially called "Maximum Fair Prices") will directly impact your clients who take any of these medications:

1. Eliquis (apixaban) - Used to prevent blood clots and stroke
2. Jardiance (empagliflozin) - For type 2 diabetes and heart failure
3. Xarelto (rivaroxaban) - Blood thinner
4. Januvia (sitagliptin) - For type 2 diabetes
5. Farxiga (dapagliflozin) - For diabetes, heart failure, and kidney disease
6. Entresto (sacubitril/valsartan) - For heart failure
7. Enbrel (etanercept) - For rheumatoid arthritis and psoriasis
8. Imbruvica (ibrutinib) - For certain blood cancers
9. Stelara (ustekinumab) - For psoriasis, psoriatic arthritis, and inflammatory bowel diseases
10. NovoLog/Fiasp (insulin aspart) - Insulin products

Part D sponsors must include these selected drugs on their formularies, with limited exceptions. The government subsidy equal to 10% of the drug's negotiated price (discussed in the CMS release) applies specifically to these selected drugs.

Related: Wegovy, Ozempic & Medicare: What Agents Need to Know Now

Creditable Coverage Changes

While most of your client conversations might focus on Part D plans themselves, don't forget about clients with employer or union coverage.

The rules for what counts as "creditable coverage" are evolving:

"For CY 2026 only, non-RDS* group health plans are permitted to use either the existing simplified determination methodology or the revised simplified determination methodology to determine whether their prescription drug coverage is creditable."

*Retiree Drug Subsidy

This means that for 2026 specifically, group health plans not applying for the Retiree Drug Subsidy have two options for determining if their coverage is considered "creditable":

1. The existing methodology: Where plans must cover at least 60% of participants' prescription drug expenses
2. The revised methodology: Where plans must cover at least 72% of participants' prescription drug expenses

This transitional approach for 2026 gives employers time to adjust their plans to the higher standard, but the press release suggests that beyond 2026, only the revised methodology (72% coverage requirement) will apply.

The higher threshold reflects the enhanced Part D benefits under the IRA, requiring employer plans to offer richer coverage to be considered equivalent.

Conclusion

By understanding 2026 Part D changes now, you'll position yourself as an invaluable resource for clients navigating their prescription drug coverage options.

In 2026 and beyond, your expertise will be more valuable than ever.