Medicare Part D
Medicare Part D in Prescott Valley: 2027 cap
PRESCOTT VALLEY, Ariz. — Starting Jan. 1, 2027, the federal limit on what people with Medicare Part D pay out of pocket for prescription drugs rises to $2,400 for the year. Once you hit that number at the pharmacy, your covered Part D drugs cost you nothing more for the rest of the calendar year.
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Key takeaways
- Starting January 1, 2027, the yearly out-of-pocket cap for Medicare Part D prescription drugs is $2,400, up from $2,100 in 2026.
- The Part D coverage gap, or "donut hole," is gone, leaving just three phases: deductible (up to $700 in 2027), initial coverage, and catastrophic coverage where covered drugs cost $0 for the rest of the year.
- Even with the cap, a costly prescription filled early in the year could mean paying most of the $2,100 in 2026 ($2,400 in 2027) at once, so CMS offers a free, optional Medicare Prescription Payment Plan to spread costs into monthly payments instead of lowering the total bill.
- The Annual Enrollment Period runs October 15 through December 7, giving people a chance to review their Annual Notice of Change letter and switch, join, or drop a Part D or Medicare Advantage plan before changes take effect January 1.
For older adults in Prescott Valley who take expensive medicines — think insulin, cancer pills, blood thinners, or specialty drugs for autoimmune conditions — this remains one of the biggest Medicare changes in years. Here's what's changing for 2027, and how to think it through during this fall's Annual Enrollment Period.
The Part D out-of-pocket cap, in plain English
The Part D out-of-pocket cap was $2,000 in 2025 and $2,100 in 2026. For 2027, it rises to $2,400, as set by the Centers for Medicare & Medicaid Services (CMS).
A few things to know about how the cap works:
- It only counts your out-of-pocket spending on covered Part D drugs — deductibles, copays, and coinsurance at the pharmacy.
- Monthly plan premiums do not count toward the $2,400.
- Drugs given in a doctor's office or hospital are usually covered under Part B, not Part D, so they don't count either.
- The cap resets every January 1.
The Part D maximum deductible is $615 in 2026 and $700 in 2027. Plans can charge less, but not more.
The "donut hole" is gone — for real
If you've had Medicare for a while, you may remember the dreaded coverage gap, nicknamed the donut hole. That was the middle phase where you suddenly paid a bigger share of your drug costs after hitting an early spending threshold.
As of 2025, CMS eliminated the coverage gap. Part D now has three phases instead of four:
1. Deductible phase — you pay full negotiated price until you meet the plan's deductible (up to $700 in 2027). 2. Initial coverage phase — you pay copays or coinsurance until your out-of-pocket spending hits $2,400. 3. Catastrophic phase — you pay $0 for covered Part D drugs the rest of the year.
That's it. No more donut hole math.
The Medicare Prescription Payment Plan
Here's a piece a lot of people miss: even with the $2,400 cap, you could still hit that limit in a single month if you take a pricey drug. Someone filling a large prescription in January could owe most of it right at the counter.
To help, CMS created the Medicare Prescription Payment Plan, sometimes called "M3P" or drug-cost smoothing. It's free and optional. If you opt in:
- You still owe the same total amount for the year.
- Instead of paying the pharmacy at pickup, your Part D plan bills you monthly.
- Payments are spread across the remaining months of the calendar year.
This won't lower your total drug bill. But if a big upfront cost is hard on your budget, it can turn one painful pharmacy trip into predictable monthly statements. You sign up through your Part D or Medicare Advantage plan, not through Medicare directly.
What this means during Annual Enrollment
The Annual Enrollment Period runs October 15 through December 7 each year. That's the window right now to join, switch, or drop a Part D plan or a Medicare Advantage plan for 2027. Changes take effect Jan. 1, 2027.
Prescott Valley is in Yavapai County, and plan availability — how many stand-alone Part D plans and Medicare Advantage plans with drug coverage are offered — is set at the county level. Because plans can change their formularies (the list of covered drugs), pharmacy networks, and cost-sharing every year, it's worth reviewing your Annual Notice of Change letter, which arrived in September. The 2027 lineup is detailed in each plan's ANOC and on Medicare.gov's Plan Finder.
A few things worth checking before Dec. 7:
- Are all your current prescriptions still on the plan's formulary for 2027?
- Is your preferred Prescott Valley pharmacy still in-network?
- Does the plan use "preferred" pharmacies that charge less?
- If you're on a costly drug, would the payment plan help you manage cash flow?
If you miss AEP, there's also the Medicare Advantage Open Enrollment Period from Jan. 1 through March 31, when Advantage enrollees can switch once.
A quick note on higher earners
Most people pay the standard Part B and Part D premiums. But if your income is above $109,000 as a single filer (or $218,000 filing jointly) on your 2024 tax return, you may owe an Income-Related Monthly Adjustment Amount (IRMAA) on top of your Part D premium in 2026. Social Security notifies you by mail if this applies.
By the numbers
Medicare Part B premium, 2006–2026
The standard monthly Part B premium has climbed from $88.50 in 2006 to $202.90 in 2026. Hover any point for that year’s premium.
Source: CMS. Standard premium shown; in some hold-harmless years many existing enrollees paid less. Confirm at Medicare.gov.
By the numbers
How people get Medicare in Yavapai County
(MA penetration in Yavapai County)
MA penetration from CMS enrollment data; Medigap share is an estimate. U.S. average is about 54% Medicare Advantage. These are area-level figures, not plan-specific.
Prescription coverage
How Medicare Part D works in 2027
The old coverage gap (“donut hole”) was eliminated as of 2025 (three phases now). There's a hard yearly cap of $2,400 on what you pay out of pocket for covered drugs in 2027, and you can spread those costs across the year with the Medicare Prescription Payment Plan.
Try it
How the 2026 Part D drug cap works
Slide to your estimated yearly prescription costs and see how the new $2,100 out-of-pocket cap protects you. This illustrates the standard Part D benefit; your plan may structure costs differently.
Once your out-of-pocket spending on covered drugs reaches $2,100, you pay nothing more for the rest of 2026. Confirm details at Medicare.gov.
Explore
When can you enroll? An interactive year
Enrollment windows are federal and the same nationwide. Confirm your personal dates at Medicare.gov or 1-800-MEDICARE.
Good to know
Frequently asked questions
Does the $2,400 cap include my monthly plan premium?
If I sign up for the payment plan, do I pay less overall?
What if my drug isn't on my plan's formulary in 2027?
- CMS — Medicare Part D program rules (medicare.gov)
For personalized answers, contact Medicare.gov, 1-800-MEDICARE, or your local SHIP.