Medicare Part D
Part D in 2027: The $2,400 Cap, Chico, Calif.
CHICO, Calif. — Starting Jan. 1, 2027, people on Medicare will pay no more than $2,400 out of pocket for their covered prescription drugs for the year. It's the third year of a hard dollar cap on Part D spending, and for Chico residents who take costly medications, it remains one of the biggest shifts Medicare has seen in years.
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Will your prescriptions still be covered in 2027?
Part D plans rewrite their drug lists every year — tiers move, pharmacies change, drugs drop off. One call checks your exact medications against the 2027 plans in your area.
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Speak to a Licensed Insurance Agent
Click to call 855-729-3240Key takeaways
- In 2027, out-of-pocket spending on covered Part D drugs is capped at $2,400 for the year.
- The old "donut hole" coverage gap is gone — Part D now has three phases instead of four.
- The Medicare Prescription Payment Plan lets you spread your drug costs across monthly bills instead of paying big amounts at the pharmacy counter.
- Review your drug plan during Annual Enrollment (Oct. 15–Dec. 7); plan formularies and pharmacy networks change every year.
The change lands in the middle of Medicare's Annual Enrollment Period, which runs Oct. 15 through Dec. 7, 2026. That's the window when you can compare Part D drug plans and Medicare Advantage plans with drug coverage for 2027.
What the Part D cap actually means
Once your out-of-pocket spending on covered Part D drugs hits $2,400 in 2027, you pay nothing for the rest of the calendar year on those covered drugs. The cap resets each January. In 2026, that cap is $2,100.
This applies whether you have a stand-alone Part D plan or drug coverage built into a Medicare Advantage plan. The Part D maximum deductible is $615 for 2026 and $700 for 2027, though many plans set a lower deductible.
A few things to know:
- The cap counts what you pay for covered drugs. Premiums don't count toward it.
- Drugs that aren't on your plan's formulary (its covered list) don't count toward the cap either.
- Part B drugs — the ones given in a doctor's office, like many infusions — are separate and not part of this annual out-of-pocket limit.
The coverage gap is gone
For years, Part D had four phases, including the dreaded "donut hole" where people paid a larger share of drug costs in the middle of the year. That gap was fully eliminated in 2025 and remains gone in 2026 and 2027.
Today, Part D has three phases: 1. Deductible — you pay full negotiated price until you meet your plan's deductible (up to $615 in 2026; up to $700 in 2027). 2. Initial coverage — you pay copays or coinsurance until your out-of-pocket spending hits the annual cap ($2,100 in 2026; $2,400 in 2027). 3. Catastrophic — you pay nothing for covered drugs the rest of the year.
The simpler structure is one reason it's worth a fresh look at your plan this fall, even if you've been on autopilot.
The Medicare Prescription Payment Plan
An annual ceiling still hurts if it lands in January. That's where the Medicare Prescription Payment Plan comes in. It's a free, optional program that lets you spread your annual drug costs into monthly payments through your plan, instead of paying the full amount at the pharmacy.
A few points worth knowing:
- You still pay the same total; the plan just smooths when you pay it.
- You have to opt in — it's not automatic. You can sign up before the plan year or during the year.
- It tends to help most if you have high drug costs early in the year, or predictable high costs throughout.
If cash flow is a concern, ask your Part D plan how to enroll.
What this means locally in Chico
Chico is in Butte County, where Medicare beneficiaries choose between Original Medicare paired with a stand-alone Part D plan, or a Medicare Advantage plan that bundles drug coverage. Plan availability, formularies, and pharmacy networks are set at the county level and change every year. The 2027 lineup is spelled out in each plan's Annual Notice of Change and on Medicare.gov's Plan Finder. The 2027 lineup is spelled out in each plan's Annual Notice of Change and on Medicare.gov's Plan Finder.
Because 2027 continues a real structural change — a hard annual cap now applies to every Part D plan — the practical step is to run your specific list of drugs through Medicare's Plan Finder at medicare.gov/plan-compare during Annual Enrollment. What worked in 2026 may not be your fit in 2027.
For free, unbiased help, California's SHIP is called HICAP (Health Insurance Counseling and Advocacy Program). HICAP counselors don't sell insurance; they help you understand your options.
A quick word on higher-income enrollees
If your income is above $109,000 as a single filer (or $218,000 filing jointly) based on your 2024 tax return, you may pay an IRMAA surcharge on top of your Part D premium in 2026. Social Security will send a notice if this applies to you. The surcharge is separate from the cap ($2,100 in 2026, $2,400 in 2027).
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 Butte County
(MA penetration in Butte 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 on what you pay out of pocket for covered drugs — $2,100 in 2026 and $2,400 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 $2,100 cap include my monthly premium?
What happens if I take a drug that isn't on my plan's list?
How do I sign up for the Medicare Prescription Payment Plan?
When can I change my Part D plan?
- CMS — Medicare Part D program rules (medicare.gov)
For personalized answers, contact Medicare.gov, 1-800-MEDICARE, or your local SHIP.
Also for Chico
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This page was last updated: October 6, 2026.