Medicare Part D 2027: The $2,400 Out-of-Pocket Cap, $700 Deductible and How to Compare Plans Before December 7

Quick answer: For Medicare Part D 2027, no drug plan may charge a deductible above $700 (up from $615 in 2026), and once your out-of-pocket spending on covered drugs reaches $2,400 (up from $2,100), you pay nothing more for covered drugs for the rest of the year, according to Medicare.gov. Medicare’s fall open enrollment runs October 15 to December 7, 2026, and that is the main window to switch drug plans for coverage that starts January 1.

The higher cap helps people with very expensive prescriptions, but it also means the most you could owe in a bad year is $300 higher than it was in 2026. At the same time, a federal program that held down premiums is ending, so the plan that was cheapest for you this year may not be cheapest next year. This guide explains what changed, shows a worked comparison with made-up plans, covers Extra Help, the Medicare Prescription Payment Plan and the late enrollment penalty, and finishes with a step-by-step checklist. It is general education, not personal medical, insurance or financial advice.

In this guide

• What changes in Medicare Part D for 2027
• How Part D works stage by stage in 2027
• Why your premium and plan choices may change
• Worked example: low premium or no deductible?
• What is the Medicare Prescription Payment Plan?
• Could you qualify for Extra Help?
• The late enrollment penalty, with an example
• Part D open enrollment checklist
• Other 2027 Medicare costs to keep separate
• Frequently asked questions
• Sources reviewed

What changes in Medicare Part D for 2027

Part D is Medicare’s prescription drug benefit. You can get it as a stand-alone plan that you pair with Original Medicare, or as drug coverage built into a Medicare Advantage plan. Either way, the federal government sets the outer limits, and each plan then builds its own premium, drug list and pharmacy network inside those limits.

Here is how the main numbers compare, using the official sources named in the last column. “Checked” means we read the page on October 24, 2026.

Two of these figures deserve context. The base beneficiary premium is not what you pay. It is a national benchmark that CMS uses to set certain amounts, including the late enrollment penalty discussed below. CMS lists it at $41.33 for 2027, and its page notes that the year-to-year increase in this benchmark is limited to 6% for 2024 through 2029 under the Inflation Reduction Act. The 2026 figure of $38.99 multiplied by 1.06 is about $41.33, so the 2027 number sits right at that limit.

The $36 average for stand-alone plans is a national average that moves by less than a dollar from 2026, according to CMS. Averages hide a wide spread. Some plans cost far less than $36 and some cost far more, which is exactly why comparing your own plan with the alternatives matters more than reading the headline.

How Part D works stage by stage in 2027

Under the standard benefit, your year has three stages. Medicare.gov describes them this way for 2027:

1. Deductible stage. Some plans have no deductible. No plan may have one above $700. Until you meet it, you generally pay the full negotiated price for covered drugs.
2. Initial coverage stage. After any deductible, you pay 25% coinsurance on covered generic and brand-name drugs until your out-of-pocket spending reaches $2,400. Certain payments made on your behalf, such as through Extra Help, count toward that total.
3. Catastrophic stage. After you reach $2,400, you pay nothing out of pocket for covered Part D drugs for the rest of the calendar year.

Many plans do not use the standard design exactly. Instead of 25% coinsurance, a plan may charge a flat copay of, say, $10 for a generic and $45 for a preferred brand, grouped into “tiers.” These alternative designs must be worth at least as much as the standard benefit, so the $2,400 cap still protects you, but the path to the cap looks different. Your plan’s Annual Notice of Change and its Evidence of Coverage show the exact structure, the drug list (called a formulary) and each drug’s tier.

What counts toward the cap is what you pay for covered drugs. Drugs that your plan does not cover, or that you buy outside the plan, do not help you reach it. The monthly premium is a separate cost, so you pay it whether you reach the cap or not. Confirm the details in your plan documents, because rules about what counts can have exceptions.

Why your premium and plan choices may change

CMS says it is ending the Part D Premium Stabilization Demonstration at the end of 2026. In its July 28, 2026 announcement, the agency explained that plan sponsors had gained enough experience under the redesigned Part D benefit to support their own bid assumptions. In plain terms, a temporary arrangement that was used to hold down premium increases will not be there in 2027, and plans will price on their own.

That does not mean every premium rises. CMS reports that the average stand-alone premium moves from $35.09 to $36, and that Medicare Advantage plans that include drug coverage see the Part D portion of the premium fall from $11.32 to $7 on average after plan rebates. CMS also says 88% of non-low-income beneficiaries can find a basic Part D plan with a premium of $10.30 or less, and 93% can find an enhanced plan with a premium under $6 (these are CMS’s own statistics from its September 28, 2026 release, and the definitions of “basic” and “enhanced” are CMS’s).

The picture can look different at the local level. A KOMO News report published October 17, 2026, citing KFF analysis, says the average number of stand-alone Part D plan options per area falls from 11 to 9 nationally, and that some areas lose $0-premium choices. Those are secondary-source figures, so treat them as a signal to check your own area, not as a prediction for your plan. The KFF analysis the report cites also says some people who do not switch plans could see much larger premium increases than the average.

The practical takeaway is simple. Averages describe the market, not your bill. The plan you have now may have changed its premium, its deductible, its drug list or its pharmacy network, and the only way to know is to read your notice and then compare it with what Medicare Plan Finder shows for your drugs and your pharmacy.

Worked example: low premium or no deductible?

The two plans below are invented to show how the math works. They are not real products, and your own prices will differ. Both use the standard design: Plan X has a $15 monthly premium and a $700 deductible, and Plan Y has a $45 monthly premium and no deductible. After any deductible, each charges 25% coinsurance until your out-of-pocket drug spending hits the $2,400 cap. Assume every drug is covered and every dollar is the plan’s negotiated price.

Three lessons come out of this table. First, the cheapest premium wins at both ends: when you take almost nothing, you barely feel the deductible, and when you take very expensive drugs, you hit the cap either way, so the premium is the only difference. Second, the zero-deductible plan wins in the middle, where a deductible takes a big bite out of moderate spending. Third, the winner can change from year to year if your prescriptions change, which is why comparing every fall is worth the 30 minutes.

Real plans add wrinkles that this example leaves out. A drug may sit on a higher tier, need prior authorization, or not be covered at all. Your pharmacy may be “preferred” in one plan and not in another, which can change your price. Plan Finder takes your actual drugs and pharmacy into account, and the plan’s own documents are the final word on a price.

What is the Medicare Prescription Payment Plan?

The Medicare Prescription Payment Plan is an optional way to pay. According to Medicare.gov, it works with your current drug coverage and spreads your out-of-pocket drug costs across the calendar year, from January through December. It can make monthly budgeting easier. It does not lower your costs or save you money, and Medicare.gov’s Part D costs page points to a separate page, medicare.gov/prescription-payment-plan, for enrollment details.

The plan matters most for someone who expects to hit the cap early. With a $2,400 cap, a person who fills an expensive prescription in January could face a large pharmacy bill at once. Spreading the cost can smooth that out. For scale, $2,400 divided across 12 months is $200 a month, though the actual monthly bills depend on when you fill prescriptions and when you join, so ask your plan how it would apply to you. If you are on a tight budget, decide before January whether you would use it, and keep in mind that spreading payments is a cash-flow tool, not a discount. Our 50/30/20 budgeting guide is one way to find room in a monthly budget for a predictable health cost.

Could you qualify for Extra Help?

Extra Help, also called the Part D Low-Income Subsidy, lowers drug costs for people with limited income and resources. Medicare.gov lists these 2026 limits, and you generally must be at or below both the income and the resource limit:

You qualify automatically if you have full-benefit Medicaid, get help paying Part B premiums through a Medicare Savings Program, or receive Supplemental Security Income. Otherwise you can apply through the Social Security Administration at ssa.gov/medicare/part-d-extra-help, and your local State Health Insurance Assistance Program (SHIP) can help you apply for free. For 2027, Medicare.gov says Extra Help brings a $0 plan deductible and a $0 plan premium. Generic drugs cost up to $5.80 per prescription and brand-name drugs up to $14.40, and after total drug costs reach $2,400 you pay $0 for covered drugs. People with full Medicaid and a Qualified Medicare Beneficiary (QMB) status pay up to $4.90 per covered drug. You also do not pay a Part D late enrollment penalty while you receive Extra Help.

If your income sits near the limit, apply rather than guess. An approved application can be worth hundreds of dollars a year, and the worst outcome of applying is a denial.

The late enrollment penalty, with an example

If you are eligible for Part D and go 63 or more days in a row without Medicare drug coverage or other creditable prescription drug coverage after your Initial Enrollment Period ends, you may owe a late enrollment penalty. Medicare.gov says it is permanently added to your Part D premium and generally lasts as long as you have Part D, even if you switch plans.

The formula is 1% multiplied by the national base beneficiary premium, multiplied by the number of full months you went without coverage, rounded to the nearest $0.10. The base premium can change each year, so the penalty can change too.

Example, using the 2027 benchmark of $41.33: a person with 14 uncovered months owes 14 × 1% × $41.33 = $5.79 a month, which rounds to $5.80. That is about $69.60 a year, added to whatever premium the plan charges, for as long as the person has Part D. The amount looks small in year one, but because it is permanent, it keeps coming. A drug plan that costs little may therefore be a better deal than going without drug coverage, even for someone who takes no medicines today. If you have drug coverage from an employer or union, check with the plan administrator whether it counts as creditable coverage before you drop it or decline Part D.

Part D open enrollment checklist

Medicare’s annual window to change drug coverage closes December 7, 2026, according to CMS. Here is a sequence that fits in about an hour:

1. Find your plan’s notice. Plans send an Annual Notice of Change in the fall. Read what changes in premium, deductible, drug tiers and pharmacy network for 2027.
2. List every prescription. Write down the drug name, dose and how often you fill it. Include drugs you take only a few times a year.
3. Pick your pharmacy. Decide which pharmacy you actually use. A pharmacy that is “preferred” in one plan can be out of network in another.
4. Run Medicare Plan Finder. Enter your drugs and pharmacy at Medicare.gov and compare your current plan with at least two alternatives, using the estimated total yearly cost and not just the monthly premium.
5. Check the drug rules. Look for prior authorization, step therapy or quantity limits on each drug, because they can delay or block coverage even when the drug is listed.
6. Decide about the payment plan. If you expect a large early-year bill, ask the plan how the Medicare Prescription Payment Plan would work for you.
7. Check for Extra Help. Compare your income and resources with the table above, and apply if you are close.
8. Ask for free help. Your local SHIP offers free, unbiased Medicare counseling. A licensed agent can also help, but check how the agent is paid and ask whether the options they show cover all plans in your area.
9. Enroll before the deadline. Make your choice by December 7, then confirm your new plan’s ID card and effective date arrive before January 1.

If you are happy with your current plan after reading the notice, you generally do not need to do anything, but compare anyway if your drugs or your pharmacy have changed. Watch out for unsolicited calls or texts pushing a plan: Medicare generally does not call you to sell coverage, and you should not share your Medicare number with someone you did not contact. For a wider look at insurance decisions this season, see our insurance hub, and for tax-advantaged health spending, our guide to the FSA deadline in 2026.

Other 2027 Medicare costs to keep separate

Part D is only one piece of the Medicare bill, and it is easy to mix the numbers up. The Part B premium, which pays for doctor visits and outpatient care, is a different charge. As of October 24, 2026, we did not find an official 2027 figure. An AARP article published October 5, 2026, reports a projected standard Part B premium of $209.50 a month, up from $202.90 in 2026, and a projected $292 deductible, based on the Medicare Board of Trustees report, and says CMS will announce the official numbers later this fall. Treat $209.50 as an estimate until CMS publishes the final amount.

You may also have heard about a one-time $90 payment. The Medicare Rights Center reports that CMS announced one-time $90 payments to people in Original Medicare Part B who do not pay an income-related premium and do not get state help with premiums, funded by the Medicare Improvement Fund, and that Medicare Advantage enrollees are excluded. It is a Part B matter and it does not change your Part D plan or premium. Because eligibility rules apply, check the CMS announcement before assuming you will receive it.

Keeping these costs separate helps you budget. A realistic annual health-cost plan for someone on Medicare includes the Part B premium, the Part D premium, any plan deductible, drug costs up to $2,400, and any Medigap or Medicare Advantage costs. A change in one of these does not tell you anything about the others.

Frequently asked questions

When is Medicare open enrollment for 2027 coverage?

October 15 to December 7, 2026, according to CMS. Changes you make in that window generally take effect January 1, 2027.

What is the Part D out-of-pocket cap for 2027?

$2,400, up from $2,100 in 2026, according to Medicare.gov. After you reach it, you pay nothing for covered Part D drugs for the rest of the calendar year.

What is the highest Part D deductible in 2027?

$700, up from $615 in 2026. Some plans charge less, and some have no deductible.

Do I have to switch plans every year?

No. If you keep your plan, it generally continues. But plans change premiums, drug lists and networks each year, so reading your notice and comparing options is the best way to avoid a surprise.

Do premiums count toward the $2,400 cap?

The cap is based on what you pay for covered drugs. The monthly premium is a separate cost that you generally pay regardless. Check your plan documents for exceptions.

Can I change my drug plan after December 7?

Usually only if you qualify for a special enrollment period, for example after a move or a loss of other coverage. Medicare Advantage enrollees have separate rules for changes early in the year. Confirm the current rules on Medicare.gov or with your SHIP before you rely on a date.

Does Extra Help change in 2027?

Medicare.gov lists 2027 cost-sharing amounts for Extra Help: up to $5.80 for generics and $14.40 for brand-name drugs, and $0 after total drug costs reach $2,400. The income and resource limits shown on the page are the 2026 limits, so confirm the limits that apply to you when you apply.

Your next steps

This week, find your plan’s notice, write down your prescriptions and your pharmacy, and run Plan Finder for at least one alternative. If your drugs are mostly low-cost generics or your costs are close to the cap either way, a plan with a low premium may win. If you take a handful of regular brand-name medicines, a plan with no or a low deductible is worth a close look. If your income is limited, check Extra Help before anything else. Our free financial calculators can help you add up yearly costs, and our 2026 personal finance guide covers the wider budget picture.

Sources reviewed

All sources were read on October 24, 2026. Figures marked as projections are not final.

• Medicare.gov: How much does Medicare drug coverage cost? (2026 and 2027 deductible and out-of-pocket cap, 2027 coverage stages, Prescription Payment Plan summary, late enrollment penalty rules)
• Medicare.gov: Help with drug costs (Extra Help) (2026 income and resource limits, 2027 Extra Help cost-sharing)
• CMS press release, September 28, 2026: Medicare Advantage and Part D expected to remain stable in 2027 (open enrollment dates, average premiums)
• CMS fact sheet: Medicare Part D 2027 national average monthly bid amount information (July 28, 2026; base beneficiary premium and 6% limit)
• CMS Parts C and D announcement, July 28, 2026 (end of the Premium Stabilization Demonstration)
• AARP: Medicare Part B premium projected to rise slightly in 2027 (October 5, 2026; secondary source citing the Medicare Trustees report; projections)
• KOMO News: Major changes for Medicare open enrollment 2027 (October 17, 2026; secondary source citing KFF; local plan-count examples)
• Medicare Rights Center: CMS announces one-time $90 payments to some Medicare beneficiaries (October 8, 2026; secondary source)

Disclaimer: This article is for general education and is not medical, insurance, legal or financial advice. Medicare rules, prices and plan details change and vary by area and plan. Confirm current terms with Medicare.gov, 1-800-MEDICARE, your State Health Insurance Assistance Program or a licensed professional. See our full disclaimer.

FinovativeHub Editorial Team

FinovativeHub Editorial Team publishes personal finance guides for American readers, covering budgeting, credit cards, loans, and retirement accounts. We aim to explain how things work in plain English and to cite official sources, such as the IRS, where they apply. Rates, fees, and limits change, so confirm current terms with the provider or agency before you act.