Medicare Part D 2027: Deductible, Out-of-Pocket Cap, Premiums and How to Pick a Plan

In 2027 the Medicare Part D deductible can be no more than $700 (up from $615) and your out-of-pocket drug costs are capped at $2,400 (up from $2,100). Once you hit the cap you pay nothing for covered Part D drugs for the rest of the year. CMS projects the average stand-alone drug plan premium at about $36 a month, up less than $1. Open Enrollment for 2027 coverage runs October 15 to December 7, 2026. Below: the official 2027 numbers, a worked example and a plan-shopping checklist.

The Short Answer

• $700 is the highest deductible any Part D plan can charge in 2027, up from $615 in 2026. Some plans have no deductible.
• $2,400 is the 2027 cap on what you pay out of pocket for covered Part D drugs, up from $2,100. After that, you pay $0 for covered drugs for the rest of 2027.
• $35 a month is the most you pay for each covered insulin, with no deductible.
• About $36 a month is CMS's projected average premium for a stand-alone drug plan in 2027 (from $35.09). The national base beneficiary premium is $41.33.
• Not yet published as of October 11, 2026: the 2027 Part D IRMAA surcharges (expected with the Part B announcement, likely in November) and the 2027 Extra Help income and resource limits.

What Part D Covers

Part D is Medicare's outpatient prescription drug coverage, sold by private insurers either as a stand-alone prescription drug plan (PDP) next to Original Medicare or built into a Medicare Advantage plan (MA-PD). Parts A and B cover only a limited set of drugs.

Every plan has its own list of covered drugs, called a formulary. All plans must cover a wide range of drugs, including most drugs in "protected classes" such as cancer and HIV/AIDS drugs. Plans group drugs into price tiers, and a lower tier generally costs you less. A plan can change its drug list during the year if it follows Medicare's rules.

Medicare-negotiated prices for 15 more Part D drugs take effect on January 1, 2027, after the first 10 in 2026, per the Medicare & You 2027 handbook.

Part D 2027 vs 2026: The Standard Benefit

The Inflation Reduction Act rebuilt Part D starting in 2025: it set a $2,000 out-of-pocket cap that year, ended the old "donut hole," and indexed the cap and deductible to growth in Part D drug spending. That index (CMS calls it the annual percentage increase) came in at 13.65% for 2027, which is why both thresholds jumped more than in 2026.

Source: CMS CY 2027 Rate Announcement (April 6, 2026), Attachment V, Tables V-2 and V-6; CMS CY 2026 Rate Announcement, Table V-2; CMS Part D 2027 bid information (July 28, 2026); CMS press release, September 28, 2026; Medicare & You 2027. The 2025 base premium is from the Medicare & You 2027 penalty example.

The benefit has three stages:

• Deductible. You pay full price for covered drugs until you meet it. Some plans cover certain tiers before the deductible.
• Initial coverage. In the standard design you pay 25% coinsurance until your out-of-pocket spending reaches $2,400. Many plans use tier copays instead; the cap still applies.
• Catastrophic. After $2,400 you pay nothing for covered Part D drugs for the rest of the calendar year.

What Counts Toward the $2,400 Cap

The cap counts what you pay for covered Part D drugs, your deductible, copays and coinsurance, plus certain payments made on your behalf. Medicare.gov names Extra Help payments, and says State Pharmaceutical Assistance Program contributions may also count. The Explanation of Benefits your plan sends the month after you fill a prescription shows your coverage stage and what has counted so far.

Because the cap counts only spending on covered Part D drugs, these sit outside it:

• Your monthly premium.
• Drugs your plan doesn't cover, such as an off-formulary drug bought without an approved exception.
• Drugs covered under Part B, such as some given in a doctor's office.
• Any Part D IRMAA, which is paid to Medicare, not your plan.

So the 2027 worst case for covered drugs is $2,400 plus a year of premiums, plus any IRMAA.

Worked Example: One Brand-Name Drug in 2027

Our arithmetic using the 2027 standard benefit parameters from the CMS CY 2027 Rate Announcement. Premiums not included.

Add a premium at the projected $36 average and the year costs about $2,832 ($2,400 plus $432). The same drug in 2026 hit the $2,100 cap in July, so a heavy user pays $300 more in 2027. Lighter users mostly feel the $85 deductible increase.

The Medicare Prescription Payment Plan

The cap still allows a $775 pharmacy bill in January. The Medicare Prescription Payment Plan spreads your out-of-pocket drug costs across the calendar year. All Part D plans offer it, it's voluntary and free, and you get a monthly bill from your plan instead of paying the pharmacy.

Each bill is your unpaid balance plus new costs, divided by the months left in the year (the first month is capped at the remaining cap divided by the months left). It does not lower your total. In the example above, joining in January gives bills of $200, then $75 in February, rising to about $261 a month from August, still $2,400 for the year (our calculation using Medicare's formula).

Renewal for 2027: if you're already in the payment plan and stay in the same Part D plan, your participation renews automatically for 2027. Federal rules (42 CFR 423.137) require plans to renew it and send you a renewal notice. If you switch plans, you need to sign up again with the new plan. Medicare says it helps most when high costs come early in the year, and may not suit people who get or qualify for Extra Help.

There is no interest or late fee. If you don't pay after a reminder, you're removed from the payment plan but keep your drug plan.

The $35 Insulin Cap

Part D plans can't charge more than $35 for a one-month supply of each Part D-covered insulin, and there's no deductible for insulin. A three-month supply costs no more than $35 for each month's supply, so generally $105 or less. The cap applies to everyone who takes insulin, including people with Extra Help, and covers injectable and inhaled insulin and insulin used with pumps that aren't durable medical equipment. A similar $35 limit applies to insulin used in a Part B-covered pump.

Part D Premiums for 2027

CMS released the 2027 premium picture on September 28, 2026:

• Stand-alone drug plans: the total average monthly premium is projected to rise less than $1, from $35.09 in 2026 to $36 in 2027.
• Medicare Advantage plans with drug coverage: the average Part D portion of the premium is projected to fall from $11.32 to $7.
• CMS says 88% of people without Extra Help can get a basic stand-alone plan for $10.30 or less, and 93% can get an enhanced plan for less than $6.

In 45 of the 50 states plus DC, the cheapest stand-alone plan is $5.30 a month. It is $10.30 in Hawaii, $13.30 in Connecticut, Massachusetts, Rhode Island and Vermont, and $37.30 in New York, per CMS's state fact sheets. Each state has 8 to 12 stand-alone plans. Counting CMS's 2027 plan data file, we find 316 stand-alone plans across the 50 states and DC, down from 360 in 2026 by the same count. A low premium says nothing about whether your drugs are covered, so use it as a starting filter only.

Base premium and national average bid. On July 28, 2026, CMS set the 2027 national average monthly bid amount at $296.05 and the base beneficiary premium at $41.33. The base premium is the starting point for each plan's basic premium and the number used for the late enrollment penalty. The Inflation Reduction Act limits its growth to 6% a year from 2024 through 2029; 2027's figure is exactly $38.99 times 1.06. Without that limit, CMS's alternative formula gave $94.06.

The premium stabilization demonstration ends. This voluntary demonstration began in 2025 to soften stand-alone premium swings after the redesign and was narrowed for 2026. CMS will discontinue it at the end of 2026, so 2027 stand-alone premiums get no demonstration subsidy.

Part D IRMAA for Higher Incomes

Higher earners pay an income-related monthly adjustment amount (IRMAA) on top of their plan premium, including in Medicare Advantage plans with drugs. It usually comes out of Social Security, not through your plan. CMS says about 8% of Part D enrollees pay it. The 2026 amounts, based on 2024 income:

Source: CMS, 2026 Medicare Parts A & B Premiums and Deductibles fact sheet (November 14, 2025), Part D table. Married filing separately has its own table.

2027 amounts are not out yet. CMS publishes Part D IRMAA with the Part B premium announcement; the 2026 figures came out November 14, 2025. The 2027 surcharges will use your 2025 tax return (the two-year lookback). Federal rules tie the surcharge to the base beneficiary premium, which rises 6% in 2027, so the amounts will likely edge up; we'll post the official figures when released. If your income dropped because of a life-changing event such as retirement, you can ask Social Security for a new determination; our IRMAA brackets 2026 guide covers how.

The Part D Late Enrollment Penalty

If you go 63 days or more in a row after your Initial Enrollment Period without Part D or other creditable drug coverage, you'll likely owe a late enrollment penalty when you join. It is added to your premium for as long as you have Part D, even if you switch plans.

The formula: 1% of the national base beneficiary premium times the number of full months you went without coverage, rounded to the nearest $0.10. Because the base premium is reset every year, the penalty is recalculated each year too.

Creditable coverage is drug coverage expected to pay, on average, at least as much as standard Part D, such as many employer, union, TRICARE or VA plans. Your plan must tell you each year whether it is creditable, so keep those notices. You can contest a penalty within 60 days of the letter. People with Extra Help don't pay it.

Extra Help (Low-Income Subsidy) in 2027

Extra Help is a Medicare program that pays some or all of the premium, deductible and copays for people with limited income and resources. Medicare.gov lists what people with Extra Help pay in 2027:

Source: CMS CY 2027 Rate Announcement, Table V-2; Medicare.gov, Help with drug costs; Medicare & You 2027. Some people with full Medicaid pay less, and those living in certain institutions pay nothing.

Medicare.gov also lists a $0 plan premium under Extra Help, but only some plans qualify, so check in Plan Finder. You qualify automatically with full Medicaid, a Medicare Savings Program or Supplemental Security Income (SSI). Otherwise you can apply through Social Security at any time.

2027 income and resource limits are not published yet. For 2026, the limits are yearly income under $23,940 and resources under $18,090 for a single person, or under $32,460 and $36,100 for a married couple living together. Resources include bank accounts, investments and IRAs, but not your home or car. CMS says the 2027 resource limits will follow the September 2026 inflation figure. Some people with higher income still qualify, for example in Alaska or Hawaii or with dependents, so apply if you're close.

How to Pick a Part D Plan for 2027

Start with your Annual Notice of Change. Plans must get it to you by September 30 each year. Check these lines:

• Your 2027 premium, and whether the deductible moved toward the $700 maximum.
• Whether each of your drugs is still on the formulary, and on which tier.
• New prior authorization, step therapy or quantity limits on your drugs.
• Whether your pharmacy is still in the network, and still "preferred."

Then compare in Medicare Plan Finder (Medicare.gov/plan-compare). 2027 plans have been viewable since October 1, and 2027 Star Ratings since about October 8. Steps:

1. Enter every drug you take, with the exact dose and how often you fill it.
2. Pick one or two pharmacies you actually use, including mail order if you'd use it.
3. Sort by the estimated yearly drug plus premium cost, not by premium alone. A $5.30 plan that puts your brand drug on a high tier can cost far more than a $40 plan that doesn't.
4. Open each finalist's drug list to confirm the tier and any restrictions, and check its Star Rating.
5. Enroll by December 7, 2026 for coverage starting January 1, 2027.

If you want to keep your current plan, you generally don't need to re-enroll. Free one-on-one help is available from your State Health Insurance Assistance Program (SHIP) and from 1-800-MEDICARE. For dates and what you can change after December 7, see our Medicare Open Enrollment 2026 guide.

Stand-Alone Plan or Medicare Advantage With Drugs?

The same $700 deductible limit and $2,400 cap apply either way. The difference is how the rest of your coverage works.

• Stand-alone PDP: you keep Original Medicare (often with a Medigap policy) and add a separate drug plan with its own premium.
• Medicare Advantage with drugs (MA-PD): drugs are built in, and CMS projects the drug part of the premium at about $7 on average in 2027. Most plans use provider networks.
• A trap to avoid: if you join a Medicare Advantage HMO or PPO that doesn't include drug coverage, you can't add a separate drug plan. Going without creditable coverage then risks the late penalty.

The broader choice is covered in Medigap vs Medicare Advantage. For Part B costs that sit alongside your drug plan, see our Medicare Part B premium 2026 page, and for budgeting all of it, planning for healthcare costs in retirement.

Sources & Methodology

• CMS, CY 2027 Rate Announcement (April 6, 2026), Attachment V, for the 2027 deductible, out-of-pocket threshold, LIS copays and the 13.65% annual percentage increase; and the CY 2026 Rate Announcement for 2025 and 2026 parameters.
• CMS, Medicare Part D 2027 National Average Monthly Bid Amount Information (July 28, 2026) and the accompanying CMS memo, for the $296.05 bid, the $41.33 base premium, the $94.06 alternative calculation and the end of the stabilization demonstration.
• CMS press release, September 28, 2026, for projected 2027 premiums; CMS 2027 state-by-state fact sheets for plan counts and lowest premiums by state; and the CMS 2027 and 2026 plan data (source) files for our national plan count.
• CMS, 2026 Medicare Parts A & B Premiums and Deductibles, for the 2026 Part D IRMAA table.
• Medicare & You 2027; Medicare.gov pages on Part D costs, Extra Help, insulin and the Medicare Prescription Payment Plan fact sheet (September 2026).
• eCFR, 42 CFR 423.137 (payment plan auto-renewal), 42 CFR 423.286 (base premium, penalty, IRMAA) and 42 CFR 423.2267 (Annual Notice of Change by September 30).

Method notes. The worked examples, annual totals, penalty amounts, payment-plan schedule and the 2026 comparison are our arithmetic from the official parameters. The national count of stand-alone plans is our count of unique plan IDs in CMS's plan data files (50 states and DC, excluding employer plans), not a CMS-published figure. Premium averages for 2027 are CMS projections.

This article is for general information and is not financial, tax or insurance advice. Figures are from CMS, Medicare.gov and the Code of Federal Regulations, checked against the primary sources on 2026-10-11. Your own costs depend on your plan's formulary, pharmacy network and premium; Medicare Plan Finder and your plan's documents show your actual amounts. Wealthy Pot is not affiliated with Medicare or CMS, and we do not sell insurance.

FAQ

What is the Part D deductible for 2027?
No plan can charge more than $700 in 2027, up from $615 in 2026. Many plans charge less or have no deductible, and insulin is never subject to the deductible.

What is the Part D out-of-pocket cap for 2027?
$2,400, up from $2,100 in 2026 and $2,000 in 2025. After you reach it, you pay $0 for covered Part D drugs for the rest of the year. Premiums don't count toward it.

Is there still a donut hole in 2027?
No. The coverage gap ended in 2025. There are now three stages: deductible, initial coverage, and catastrophic coverage at $0.

How is the Part D late penalty calculated in 2027?
1% of $41.33 for each full month without creditable coverage, rounded to the nearest $0.10. Twenty months comes to $8.30 a month.

Do I have to re-enroll in the Medicare Prescription Payment Plan for 2027?
Not if you stay in the same Part D plan: participation renews automatically. If you change plans, sign up again with the new plan.

What are the 2027 Extra Help copays?
Up to $5.80 for each generic and $14.40 for each brand-name drug, with a $0 deductible. The 2027 income and resource limits had not been published as of October 11, 2026.

When will the 2027 Part D IRMAA amounts be announced?
With the 2027 Part B premium announcement. The 2026 amounts came out November 14, 2025. They will be based on 2025 income.

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"Medicare Part D 2027: Deductible, Out-of-Pocket Cap, Premiums and How to Pick a Plan." Wealthy Pot, 2026. https://wealthypot.com/medicare-part-d-2027/