The implementation of Medicare Part D provided insurance coverage for outpatient medications, but when persons reach the "gap," they have very limited or no medication insurance coverage until they reach a second threshold for catastrophic coverage. In addition, some patients have a low-income subsidy (LIS), and their out-of-pocket costs do not reach the threshold for the gap. Little is known about how these Part D types (LIS versus non-LIS) and benefit phases (before the gap, during the gap, after the gap) affect medication adherence and persistence of dialysis patients. To examine medication use, adherence, and persistence for Medicare-eligible dialysis patients by Part D benefit type and benefit phase. A retrospective cohort study using data from the U.S. Renal Data System (USRDS) was conducted for Medicare-eligible dialysis patients. Outcomes included medication use, adherence, and persistence. Patients were categorized into 4 cohorts based on their Part D benefit phase that the beneficiaries reached at the end of the year and LIS receipt in 2007: Cohort 1 = non-LIS and did not reach the coverage gap; Cohort 2 = non-LIS and reached the coverage gap; Cohort 3 = non-LIS and reached catastrophic coverage after the gap; and Cohort 4 = received an LIS and none of the LIS patients reached the coverage gap. Outcomes were measured separately for 5 therapeutic classes of outpatient prescription drugs: antihyperglycemics, antihypertensives, antilipidemics, phosphate binders, and calcimimetics. A total of 11,732 patients met the study inclusion criteria. Patients were distributed among the cohorts as follows: 3,678 (31.3%) patients in Cohort 1 who did not reach the coverage gap; 4,349 (37.1%) patients in Cohort 2 who reached the coverage gap but not catastrophic coverage; 1,310 (11.2%) patients in Cohort 3 who reached catastrophic coverage; and 2,395 (20.4%) patients in Cohort 4 who had an LIS (none of whom reached the gap). Overall, the percentage of patients who were adherent to their medications (≥ 80% medication possession ratio) was low: 39% for antihyperglycemics, 59% for antihypertensives, 54% for antilipidemics, 22% for phosphate binders, and 35% for cinacalcet. There were wide ranges in adherence rates depending on the cohort. For patients on antihyperglycemics, antihypertensives, antilipidemics, phosphate binders, and cinacalcet, the odds ratios for adherence to therapy were 0.76 (95% C I =0.63-0.92), 1.06 (0.94-1.19), 0.80 (0.67-0.95), 0.65 (0.55-0.76), and 0.39 (0.30-0.49), respectively; the hazard ratios for discontinuation of therapy were 1.18 (95% CI 1.06-1.31), 1.01 (0.93-1.10), 1.25 (1.12-1.40), 1.13 (1.05-1.21), and 1.61 (1.75-1.82), respectively, for Cohort 2 patients who reached the coverage gap compared with those in Cohort 4 who received an LIS. In addition, when comparing adherence before and after the benefit gap, patients in Cohort 2 were significantly more likely to be nonadherent to medications for diabetes (relative risk (RR) = 1.71, 95% CI = 1.48-1.99), hypertension (RR = 1.69, 95% CI = 1.54-1.85), hyperlipidemia (RR = 2.01, 95% CI = 1.76-2.29), hyperphosphatemia (RR = 1.74, 95% CI = 1.55-1.95), and hyperparathyroidism (RR = 2.08, 95% CI = 1.66-2.60) after reaching the coverage gap. More than half of Medicare beneficiaries on dialysis reached the Part D coverage gap in 2007. Our findings suggest that the Part D coverage gap was significantly associated with decreases in adherence and persistence for medications frequently used in patients undergoing dialysis. Patients who reached the coverage gap (Cohort 2) often decreased use of or discontinued critical medications after reaching the coverage gap. Compared with patients who had an LIS (Cohort 4), patients in Cohort 2 had significantly lower medication adherence and persistence levels. The negative impact of the Part D coverage gap (high out-of-pocket cost sharing) on medication adherence and persistence for Medicare-eligible dialysis patients has implications for currently proposed Medicare end-stage renal disease bundled reimbursement payment and requires more research.