Medicare Part D in 2027: the $700 deductible, the $2,400 cap and the payment plan

The big numbers for 2027

Two Medicare drug numbers go up for 2027. The highest deductible any Part D plan can charge rises to $700, from $615 in 2026. And the yearly out-of-pocket cap on covered drugs rises to $2,400, from $2,100 in 2026. Once you hit the cap, you pay $0 for covered Part D drugs for the rest of the calendar year.

The cap began in 2025 at $2,000 under the Inflation Reduction Act, and it's adjusted each year. Before 2025, people with high drug costs had no hard limit on what they paid.

The three coverage stages

Most Medicare drug plans, including Medicare Advantage Plans with drug coverage, have three stages:

• Deductible stage: if your plan has a deductible, you pay the full cost of covered drugs until you meet it. Some plans have no deductible.
• Initial coverage stage: you pay 25% coinsurance (or your plan's copays) until your out-of-pocket spending on covered drugs reaches $2,400 in 2027.
• Catastrophic coverage: you pay nothing for covered Part D drugs for the rest of the year.

What counts toward the cap

What you pay for covered drugs at the pharmacy counts, including your deductible. Certain payments made for you, like Extra Help, also count. Your monthly premium does not count. Neither do drugs your plan doesn't cover, or drugs you buy with a discount card instead of your plan.

That last point matters: Medicare.gov warns that discount cards and cash-price programs aren't creditable coverage, and what you spend through them doesn't count toward your deductible or the out-of-pocket cap.

The Medicare Prescription Payment Plan

If you face high drug costs early in the year, the Medicare Prescription Payment Plan lets you spread what you owe across monthly bills from January to December instead of paying all at once at the pharmacy. It doesn't lower your costs; it just evens them out. You sign up through your drug plan, and it's free to use.

Don't skip Part D: the late enrollment penalty

If you go 63 days or more in a row without Medicare drug coverage or other creditable drug coverage after your Initial Enrollment Period, you may owe a late enrollment penalty for as long as you have Medicare drug coverage. It's 1% of the "national base beneficiary premium" ($38.99 in 2026) for each full month you went without coverage, rounded to the nearest 10 cents. For example, going 14 months without coverage adds 14% of the base premium to your monthly premium. People who get Extra Help don't pay the penalty.

How to keep your costs down

Compare plans each fall on Medicare.gov using your actual drug list. Ask your doctor whether a generic or lower-cost brand would work. Check whether a mail-order pharmacy is cheaper with your plan. And if your income is limited, see if you qualify for Extra Help, which can bring your premium and deductible to $0.