Medicare Part D
January 2027 Part D Cap Update — Paso Robles
PASO ROBLES, Calif. — Starting January 1, 2027, people with Medicare Part D will hit a firm ceiling on what they pay out of pocket for prescription drugs: $2,400 for the year. Once you reach that number, your covered Part D drugs cost you $0 for the rest of the calendar year. It's a continuation of the biggest shift Medicare's drug benefit has seen in years, and it lands right as the Annual Enrollment Period (October 15 – December 7) wraps up.
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Click to call 855-729-3240Key takeaways
- The Part D out-of-pocket cap is $2,100 in 2026 and rises to $2,400 in 2027.
- Part D has just three phases (deductible, initial coverage, and catastrophic), since the "donut hole" coverage gap was fully eliminated in 2025 and stays gone in 2027.
- The Medicare Prescription Payment Plan (M3P) is a free, optional program that lets people spread Part D out-of-pocket costs into monthly payments instead of paying it all at the pharmacy, and every Part D and Medicare Advantage drug plan must offer it.
- The Annual Enrollment Period runs October 15 through December 7, and any plan changes made during this window take effect January 1, 2027.
Here's a plain-English look at what changed, what stayed, and how to plan for the year ahead.
The Part D out-of-pocket cap, in plain terms
The Part D out-of-pocket cap is $2,100 in 2026 and $2,400 in 2027. It applies whether your drug coverage comes through a stand-alone Part D plan or a Medicare Advantage plan that includes drug coverage.
A few things to know about how the cap works:
- Only your out-of-pocket spending on covered Part D drugs counts toward the cap. Premiums do not count.
- The cap resets January 1 each year.
- After you hit $2,100 in 2026 ($2,400 in 2027), you pay nothing more for covered drugs at the pharmacy for the rest of the year.
The maximum Part D deductible a plan can charge is $615 in 2026 and $700 in 2027, per CMS. Plans can set a lower deductible, but not a higher one.
Goodbye "donut hole" — how the phases work now
The old "coverage gap," known as the donut hole, is gone. It was fully eliminated in 2025, and it stays gone in 2027. Part D now has just three phases:
1. Deductible phase. You pay 100% of your drug costs until you meet the plan's deductible (up to $700 in 2027). 2. Initial coverage phase. You pay a share (usually 25%) of the cost of your drugs. Your plan pays the rest. This phase continues until your out-of-pocket spending hits the annual cap ($2,400 in 2027). 3. Catastrophic phase. Once you reach the cap, you pay $0 for covered Part D drugs for the rest of the year.
That's a much simpler picture than what beneficiaries navigated even two years ago.
The Medicare Prescription Payment Plan: spreading costs across the year
Hitting a cap ($2,100 in 2026, $2,400 in 2027) is helpful, but a lot of that spending can pile up in the first few months if you take an expensive medication. That's where the Medicare Prescription Payment Plan comes in.
This is a free, optional program (sometimes called "M3P") that lets you spread your out-of-pocket Part D drug costs across monthly payments instead of paying the full amount at the pharmacy counter. Here's how it works in practice:
- You still owe the same total amount for your drugs — the program doesn't lower costs.
- Instead of paying, say, $600 at the pharmacy in January, you'd get a monthly bill from your plan.
- You can join before the year starts or at any point during the year.
For someone with a high-cost drug early in the year, this can smooth out cash flow. For someone with steady, low drug costs, it may not make much difference. Every Part D plan and every Medicare Advantage plan with drug coverage is required to offer it.
What this means during Annual Enrollment
Paso Robles is in San Luis Obispo County, where beneficiaries have a range of stand-alone Part D and Medicare Advantage options to compare. The Annual Enrollment Period runs October 15 through December 7, and choices you make now take effect January 1, 2027.
A few things worth checking before you lock in a plan:
- Are your prescriptions on the plan's formulary (drug list)?
- Is your pharmacy in the plan's preferred network?
- What is the plan's deductible, and how does it treat your specific drugs in the initial coverage phase?
The `Plan Finder` tool at medicare.gov lets you enter your drugs and pharmacy to compare costs side by side.
If you're already enrolled and happy, you don't have to do anything — your plan will roll over. But every plan sends an Annual Notice of Change (ANOC) in September. It's worth a careful read.
A quick note on IRMAA
Higher-income beneficiaries pay an extra amount on top of standard Part B and Part D premiums, called IRMAA. For 2026, the income-related surcharges begin above $109,000 for a single filer (based on your 2024 tax return). If your income has dropped because of a life event — retirement, loss of a spouse, divorce — you can ask Social Security to reconsider using form SSA-44.
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 San Luis Obispo County
(MA penetration in San Luis Obispo 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 apply to every drug I take?
If I join the Medicare Prescription Payment Plan, do I save money?
What if I hit $2,100 in March?
- CMS — Medicare Part D program rules (medicare.gov)
For personalized answers, contact Medicare.gov, 1-800-MEDICARE, or your local SHIP.