Part D is Medicare's prescription drug coverage, offered through private plans, either as a stand-alone plan alongside Original Medicare or built into most Medicare Advantage plans. For 2027, once your out-of-pocket costs for covered drugs reach $2,400, you pay nothing more for covered Part D drugs for the rest of the year. Each plan has its own drug list, pharmacy network, and costs, so the right plan depends on exactly what you take.
How Part D works
Medicare does not sell drug coverage directly. Private insurance companies approved by Medicare do. You can get Part D two ways:
- A stand-alone Prescription Drug Plan (PDP), added to Original Medicare, with or without a Medigap policy.
- A Medicare Advantage plan with drug coverage, often called MAPD.
Each plan sets its own premium, deductible, drug list, and pharmacy network, within Medicare's rules.
The 2027 out-of-pocket cap
| Year | Annual out-of-pocket cap on covered Part D drugs |
|---|---|
| 2026 | $2,100 |
| 2027 | $2,400 |
The cap counts what you pay for covered drugs, including your deductible and copays. It does not count your monthly premium, and it does not count drugs your plan does not cover. That last part is why checking the drug list matters so much.
Spreading costs over the year
If you take expensive medications, you could hit most of your out-of-pocket costs in the first month or two of the year. The Medicare Prescription Payment Plan lets you pay those costs in monthly amounts across the year instead of all at once at the pharmacy. It does not lower the total you pay. It smooths it out. You sign up through your Part D or Medicare Advantage plan.
Drug lists, tiers, and the fine print
Every plan has a formulary, the list of drugs it covers, sorted into tiers. Lower tiers usually cost less. Three rules can affect you even when a drug is on the list:
- Prior authorization: the plan must approve the drug before it pays.
- Step therapy: you may need to try a lower-cost drug first.
- Quantity limits: the plan limits how much it covers at one time.
Pharmacies matter too. Many plans have preferred pharmacies where your copays are lower. The same drug can cost noticeably different amounts at two pharmacies on the same street.
The late penalty that does not go away
If you go 63 days or more in a row without Part D or other creditable drug coverage after your Initial Enrollment Period ends, Medicare can add a late enrollment penalty to your Part D premium. It is calculated from how many months you went without coverage, and you generally pay it for as long as you have Part D. If you have drug coverage from an employer or union, ask for the yearly notice that tells you whether it is creditable, and keep it.
Help with costs
If your income and resources are limited, Extra Help can lower your Part D premiums, deductibles, and copays. You apply through Social Security. People who qualify for Medi-Cal, or for a Medicare Savings Program, generally qualify for Extra Help automatically.
How to check a plan
- Write down every drug, dose, and how often you take it.
- Confirm each drug is on the plan's formulary, and note the tier.
- Check for prior authorization, step therapy, or quantity limits.
- Confirm your pharmacy is in network, and whether it is preferred.
- Look at the total estimated yearly cost, not just the premium.
Bring that list to a review and I can run it against the plans I am appointed to offer in your ZIP code.
Common questions
What is the Part D out-of-pocket maximum for 2027?
$2,400. It was $2,100 in 2026. After your out-of-pocket spending on covered Part D drugs reaches the cap, you pay nothing more for covered drugs for the rest of the calendar year.
Is the donut hole gone?
Yes. The old coverage gap was eliminated as part of the Part D redesign. Today the structure is simpler: a deductible if your plan has one, cost sharing on covered drugs, and then the annual out-of-pocket cap.
What is a formulary?
A formulary is a plan's list of covered drugs. Each plan has its own, and a drug that is covered by one plan may not be covered by another, or may sit on a more expensive tier. Plans can change their formularies each year.
What is Extra Help?
Extra Help is a Medicare program that helps people with limited income and resources pay Part D premiums, deductibles, and copays. You can apply through Social Security. If you qualify, you may also get a Special Enrollment Period to change drug plans.
Do I need Part D if I do not take any prescriptions?
Many people still enroll, because if you go 63 days or more without Part D or other creditable drug coverage after you are first eligible, a late penalty can be added to your premium for as long as you have Part D.
Where these facts come from: CMS 2027 Part D announcements; Medicare.gov: Medicare costs 2026, Part D late enrollment penalty, Medicare Prescription Payment Plan, Extra Help. Rules and dollar amounts change. Page reviewed October 4, 2026.