For 2027, Medicare Part D out-of-pocket drug costs are projected to be capped at $2,400. Once your spending on covered prescription drugs reaches that limit, you pay nothing more for those drugs for the rest of the calendar year. This is a $300 increase over the 2026 cap of $2,100, and it reflects the way the cap is indexed to the growth in Part D drug costs. The standard deductible is also set to rise to $700 in 2027, up from $615 in 2026. These figures come from the finalized Contract Year 2027 rule, and Medicare confirms the exact numbers when plans are released in the fall of 2026.
Below is a full breakdown of what Part D is expected to cost in 2027, how the benefit is structured now that the coverage gap is gone, and the tools you can use to manage your prescription spending.
The 2027 Part D Out-of-Pocket Cap
The single biggest feature of modern Part D is the hard cap on out-of-pocket spending. Before 2025, there was no annual limit, and people taking expensive drugs could spend many thousands of dollars a year. The Inflation Reduction Act changed that.
Here is how the cap has moved year to year:
| Year | Out-of-Pocket Cap | Standard Deductible |
|---|
| 2025 | $2,000 | $590 |
| 2026 | $2,100 | $615 |
| 2027 (projected) | $2,400 | $700 |
The cap applies to what you pay for covered Part D drugs: your deductible plus your copays and coinsurance during the year. It does not include your monthly plan premium. Once you hit $2,400 in 2027, you move into the catastrophic phase and pay $0 for covered drugs for the rest of the year.
The $2,400 figure is a projection based on the finalized rule. The amount is tied by law to growth in per-capita Part D spending, so it climbs each year. Medicare typically confirms the final number in the fall before the plan year begins.
How the 2027 Part D Benefit Is Structured
The old "donut hole" coverage gap is gone. Since 2025, Part D has three phases instead of four, and that structure continues in 2027.
Deductible phase. You pay the full negotiated price for your drugs until you meet the annual deductible, projected at $700 for 2027. Some plans set a lower deductible or none at all. Insulin and adult vaccines are exempt from the deductible.
Initial coverage phase. After the deductible, you pay a share of the cost, generally 25% coinsurance under the standard benefit, while your plan pays the rest. You stay in this phase until your total out-of-pocket spending reaches the $2,400 cap.
Catastrophic phase. Once your out-of-pocket spending hits $2,400, you pay nothing for covered Part D drugs for the remainder of the year.
The elimination of the coverage gap means there is no longer a stretch where your costs jump partway through the year. The path from your first fill to the cap is smoother and more predictable.
Part D Premiums in 2027
Your monthly premium is separate from the out-of-pocket cap and varies by plan. Each plan sets its own premium, and premiums differ widely depending on the plan's drug list, pharmacy network, and coverage tiers.
The Inflation Reduction Act placed a limit on how much the base beneficiary premium can rise from one year to the next. This premium stabilization provision is designed to keep insurers from passing the cost of the redesigned benefit onto enrollees through sharp premium spikes. Even so, individual plan premiums can go up, down, or disappear entirely from year to year, so comparing plans during open enrollment matters.
Higher-income enrollees also pay an income-related monthly adjustment amount, known as IRMAA, on top of the Part D premium. IRMAA is based on your modified adjusted gross income from two years earlier, so your 2027 surcharge is tied to your 2025 tax return. Medicare confirms the 2027 IRMAA brackets in the fall of 2026.
Insulin and Vaccine Costs in 2027
Two categories of drugs have special protections that continue in 2027.
Insulin. A one-month supply of a covered insulin product is capped at $35, with no deductible applied. The cap is structured as the lesser of $35, 25% of the maximum fair price where one applies, or 25% of the negotiated price. In practice, you will not pay more than $35 per month for each covered insulin.
Vaccines. Adult vaccines recommended by the Advisory Committee on Immunization Practices, including shingles, RSV, and Tdap, are free under Part D. There is no cost sharing and no deductible for these vaccines.
The Medicare Prescription Payment Plan
If a $2,400 out-of-pocket bill early in the year would be hard to absorb, the Medicare Prescription Payment Plan can spread it out. This program, sometimes called M3P, lets you pay your out-of-pocket drug costs in capped monthly installments instead of all at once at the pharmacy counter. 2027 is the third year the program is in place, and every Part D plan is required to offer it.
Here is how it works:
- You opt in through your Part D plan. Participation is voluntary and free.
- Instead of paying at the pharmacy, you get a monthly bill from your plan.
- The monthly amount is based on what you would have paid, plus your prior balance, divided by the months left in the year. All plans use the same formula.
- Your total out-of-pocket cost for the year is still capped at $2,400. The plan does not save you money; it only changes the timing of payments.
The program helps most for people who hit large drug costs early in the year. Spreading a January bill across twelve months can make an expensive prescription manageable. If your drug costs are low or spread evenly, the program offers little benefit and you may prefer to pay at the pharmacy as usual.
Who Should Pay Attention to the 2027 Changes
The 2027 cap and benefit structure matter most for certain groups:
- People taking high-cost specialty drugs. If you take a drug that once pushed you past $5,000 or more a year, the $2,400 cap is a meaningful ceiling on your spending.
- Anyone using insulin. The $35 monthly cap continues, and it applies across covered insulin products.
- People planning a fixed budget. The predictable cap and the monthly payment option make it easier to plan around drug costs.
- New enrollees turning 65. If you are aging into Medicare, comparing Part D plans on total expected cost, not just premium, is the way to avoid surprises.
How to Compare Part D Plans for 2027
Plan details for 2027 are released in the fall of 2026, ahead of Medicare Open Enrollment, which runs October 15 to December 7. During that window you can join, switch, or drop a Part D plan for the coming year.
When you compare plans, look at more than the premium:
- Check the formulary. Confirm that each of your drugs is covered and note the tier it falls on.
- Add up total cost. Combine the annual premium, the deductible, and your expected copays and coinsurance, not just the monthly premium.
- Confirm your pharmacy is in network. Preferred pharmacies often carry lower cost sharing.
- Factor in the cap. If your drug costs are high, most standard plans will get you to the same $2,400 ceiling, so the differences come down to premium and cost sharing along the way.
- Use the Medicare Plan Finder. The official tool at Medicare.gov lets you enter your drugs and pharmacy to compare real out-of-pocket estimates.
Reviewing your plan every year is worthwhile even if you are happy with your current coverage. Formularies, premiums, and pharmacy networks change annually, and a plan that fit last year may not be the best value in 2027.
Frequently Asked Questions
What is the Medicare Part D out-of-pocket cap for 2027?
The Part D out-of-pocket cap is projected to be $2,400 for 2027, up from $2,100 in 2026. Once your out-of-pocket spending on covered drugs reaches that amount, you pay nothing more for covered Part D drugs for the rest of the year. Medicare confirms the exact figure when plans are released in the fall of 2026.
What is the Part D deductible in 2027?
The standard Part D deductible is projected at $700 for 2027, up from $615 in 2026. Some plans set a lower deductible or waive it entirely. Covered insulin and adult vaccines are exempt from the deductible.
Does the $2,400 cap include my monthly premium?
No. The cap counts only what you pay for covered drugs: your deductible, copays, and coinsurance. Monthly plan premiums and any IRMAA surcharge are separate and do not count toward the $2,400 limit.
Is the Part D coverage gap or donut hole still around in 2027?
No. The coverage gap was eliminated starting in 2025 and remains gone in 2027. The benefit now has three phases: the deductible, the initial coverage phase, and the catastrophic phase, where you pay $0 after reaching the cap.
How much does insulin cost under Part D in 2027?
A one-month supply of a covered insulin product is capped at $35, with no deductible. You will not pay more than $35 per month for each covered insulin.
Can I spread my Part D costs over the year in 2027?
Yes. The Medicare Prescription Payment Plan lets you pay your out-of-pocket drug costs in capped monthly installments instead of all at once at the pharmacy. It is free and voluntary, and every Part D plan must offer it. It does not lower your total cost; it only changes when you pay.
When can I change my Part D plan for 2027?
Medicare Open Enrollment runs October 15 to December 7, 2026, for coverage that starts January 1, 2027. During that window you can join, switch, or drop a Part D plan. Plan details for 2027 become available in the fall of 2026.
