Medicare Part D in 2027: The $2,400 Cap, the $700 Deductible, and What to Do Before December 7

On January 1, 2027, two numbers in every Medicare drug plan move up. The most a plan can charge as a deductible goes from $615 to $700. The yearly cap on what you pay out of pocket for covered drugs goes from $2,100 to $2,400. Both figures are already posted on Medicare.gov.

Neither change needs your signature. If you do nothing this fall, your plan renews on its new terms, and the first time you notice may be at the pharmacy counter in January.

Plenty of people find out exactly that way. KFF, the health policy research group, found that 69% of people in stand-alone drug plans didn't compare their plan's drug coverage with any other plan during a recent open enrollment, and among people who get drugs through a Medicare Advantage plan, 82% didn't.

There's a third change that's had far less attention. For two years the federal government paid drug plan insurers extra money to hold premiums down. That program ends December 31, 2026. CMS announced it on July 28, in the same release that set the 2027 national base premium at $41.33, up 6% from $38.99.

A higher deductible, a higher ceiling and less protection against premium jumps, all on the same day. Open Enrollment runs October 15 to December 7. For most people, that's the only window to do anything about it.

What the new numbers do to three drug budgets

Under the standard Part D design, you pay the full price of your drugs until you meet the deductible. After that you pay 25% until your own spending hits the cap, and then you pay nothing for covered drugs for the rest of the year.

Real plans tinker with that. Many skip the deductible for cheap generics and charge flat copays instead of 25%. So treat the table as a picture of the standard design, not a quote for your plan.

The middle row is the one that surprises people. In 2026 that person hits the cap in November and pays nothing in December. In 2027 the same drug at the same price never reaches the new cap, so they're paying their 25% right through the last refill of the year.

The out-of-pocket cap rises from $2,100 to $2,400. For anyone whose drugs cost enough to reach it, that's $300 more in 2027 for the same prescriptions.

The cap is still the best thing that's happened to Part D. Until 2024 there was no limit at all on what you could spend in a year; the flat dollar cap started in 2025 at $2,000. It climbs a little each year because the law ties it to growth in Part D spending per person.

When does the bill show up?

Timing matters as much as the total. With a $700 deductible, the pain comes early.

Take the person on the $1,500-a-month drug. Under the standard design, their January pharmacy bill in 2027 is about $900: the full $700 deductible plus 25% of the remaining $800. February, March and April run $375 each. In May they reach $2,400, and after that the drug costs them nothing until next January.

Over twelve months that's a good deal. In the first week of January, with the holiday bills still open on the kitchen table and the winter heating bill on its way, a $900 pharmacy receipt is a hard one to absorb, especially if you've spent the last year paying the same modest copay every month and budgeting around it. There's a way to smooth it out, covered further down. You have to ask for it.

The subsidy that ends December 31

When Congress wrote the cap into law, insurers became responsible for more of the cost of expensive drugs, and stand-alone drug plan premiums were set to jump. To soften the landing, CMS ran a temporary program called the Part D Premium Stabilization Demonstration.

In 2026 it cut the base premium of participating plans by $10 a month and barred them from raising anyone's premium by more than $50 a month. KFF, citing MedPAC, says it lowered the average stand-alone plan premium by $16 a month in 2026 and $26 in 2025. About 24.9 million people are in stand-alone drug plans.

For 2027 both protections are gone. CMS says insurers now have enough experience with the redesigned benefit to price it without help. KFF reads it more cautiously: some stand-alone plan members could see bigger premium increases than they've had in recent years. Individual plan premiums weren't public as of this writing.

You'll also have fewer plans to pick from. KFF counted 360 stand-alone drug plans nationwide in 2026, 22% fewer than a year earlier, which left people with roughly 8 to 12 choices in their state. If your plan is being folded into another one, your Annual Notice of Change will say so.

You can't do anything about the federal numbers. What you control is which plan you're in when they take effect.

About an hour. One letter, one website.

Your October check, step by step

Do this once between October 15 and December 7. It takes less time than waiting at the pharmacy drive-through.

1. Find your Annual Notice of Change. Your plan had to send it by September 30. It has a table comparing this year with next. Can't find it? Call the member number on your plan card and ask for another copy, or look in your online plan account.
2. Read four lines. The monthly premium. The deductible, and which drug tiers it applies to. The copay or coinsurance for the tier each of your drugs sits on. The list of preferred pharmacies. A plan that keeps a $0 deductible on tiers 1 and 2 can matter more to someone on generics than any premium difference.
3. Check each drug against the 2027 formulary. The notice lists some changes, not always every drug you take. Look up each one by name and strength in the plan's 2027 drug list, and note the tier and any new flags: prior authorization, step therapy or quantity limits.
4. Write your drug list down. Every prescription, exact name, dose, how often you fill it. If you have a Medicare.gov account, last year's list may still be saved there.
5. Run the Medicare Plan Finder. Enter your ZIP code, your drugs and the pharmacies you use, then sort by lowest drug plus premium cost. That one figure rolls the premium, the deductible and your copays into a full-year estimate.
6. Line up the top two or three against your current plan. Total yearly cost first. Then whether your pharmacy is preferred. Then the star rating.
7. Enroll by December 7 if you're switching. Joining a new drug plan automatically ends the old one, so there's nothing to cancel. Coverage starts January 1.

Then there's the bigger comparison. KFF puts the average stand-alone drug plan premium at about $36 a month in 2026, against about $8 for Medicare Advantage drug plans. That gap is one reason people start looking at Medicare Advantage plans with drug coverage built in.

It's a real price difference, and it comes with a real trade. A Medicare Advantage plan changes how you get all your medical care, with its own network and its own approval rules, and if you've got a Medigap policy now, dropping it to join Medicare Advantage can be hard to undo, because in most states Medigap insurers can ask health questions if you want back in later. I wouldn't let a drug premium make that decision for you.

An independent agent or broker can run these comparisons at no charge to you. Ask how many insurers they represent in your county first. They can only show you plans they're contracted to sell.

Extra Help has its own rules

If your income is limited, much of this article may not apply to you, in a good way. Extra Help, also called the Low-Income Subsidy, pays the Part D premium for benchmark plans, wipes out the deductible and swaps the 25% coinsurance for small flat copays.

Who qualifies? For 2026, Medicare.gov lists yearly income up to $23,940 for one person or $32,460 for a married couple, with resources up to $18,090 or $36,100. Your home, car and personal belongings aren't counted, and limits are higher in Alaska and Hawaii.

You apply through Social Security, online, by phone or at a local office. If you already get Medicaid, Supplemental Security Income or help from a Medicare Savings Program, you qualify automatically. KFF counted about 13.9 million people getting Extra Help as of 2025, and outreach groups have said for years that more are eligible and haven't applied.

Spreading the January bill out

The Medicare Prescription Payment Plan lets you pay your out-of-pocket drug costs in monthly installments instead of all at once at the counter. No fee. No interest. You sign up through your drug plan by phone, mail or on its website, before January 1 or any time during the year.

It doesn't lower what you owe. It changes when you owe it. For the person facing a $900 January and nothing from June on, it turns that lump into smaller monthly bills from the plan, spread over the rest of the year. It helps most if you sign up early in the year, and it does little for someone whose costs are small and steady.

Mistakes to avoid this fall

Staying put because the premium barely moved. The deductible, the tier of a single drug or the preferred pharmacy list can swing your yearly cost by hundreds of dollars while the premium sits still.

Dropping drug coverage because you take nothing. Go 63 days or more without Part D or other creditable coverage and you'll owe a late enrollment penalty when you come back: 1% of the national base premium for every month you went without, added to your premium for as long as you have Part D. At the 2027 base of $41.33, two years without coverage adds about $9.90 a month. For life.

Forgetting what didn't change. Covered insulin still costs no more than $35 for a month's supply, with no deductible. Recommended adult vaccines covered under Part D are still $0.

Missing the new negotiated prices. Medicare's negotiated prices for a second group of 15 drugs take effect January 1, 2027. If you take one of them and pay coinsurance rather than a flat copay, your share may drop. Check the tier in the 2027 formulary.

Waiting until December. Plan phone lines and counseling slots fill up in the last two weeks, and the Plan Finder has had 2027 data since October.

If you only do one thing this week, find the Annual Notice of Change and circle the deductible line. Then put a reminder on the calendar for October 15 to run the Plan Finder with your drug list in hand.

This article is general information, not financial, legal, tax or medical advice.