Medicare Part D
Medicare's $2,400 Drug Cap for 2027 — Here's How It Works
CHICAGO — Starting January 1, 2027, no one with Medicare Part D will pay more than $2,400 out of pocket for covered prescription drugs in a calendar year. The out-of-pocket cap, which began in 2025, rises from $2,100 in 2026, and for Chicagoans who take costly medications, it lands right as Annual Enrollment wraps up on December 7.
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Click to call 855-729-3240Key takeaways
- Starting January 1, 2027, Medicare Part D out-of-pocket drug costs are capped at $2,400 per year, after which covered prescriptions cost nothing more for the rest of the year.
- The Part D "donut hole" coverage gap is gone, leaving just three phases: deductible, initial coverage, and catastrophic coverage.
- The Medicare Prescription Payment Plan is a free, optional program that lets you spread your total drug costs into monthly payments instead of paying all at once, though you still owe the same total amount.
- Annual Enrollment ends December 7, so it's worth reviewing your plan's Annual Notice of Change and comparing options on the Medicare Plan Finder before then.
Here's what's actually changing, what stays the same, and how to plan for it.
The Part D cap, explained plainly
For 2026, Medicare caps what you personally spend on covered Part D drugs at $2,100 for the year. Once your out-of-pocket costs — deductibles and copays or coinsurance on covered drugs — reach that number, you pay $0 for covered prescriptions for the rest of the calendar year.
A few things worth knowing:
- The cap resets every January 1.
- It applies whether your drug coverage comes through a standalone Part D plan or a Medicare Advantage plan that includes drug coverage.
- Monthly premiums do not count toward the cap.
- Drugs your plan doesn't cover don't count either — which is why checking your plan's formulary matters.
The maximum Part D deductible is $615 in 2026 and $700 in 2027, though individual plans can set it lower.
The "donut hole" is officially gone
If you've had Medicare for a while, you probably remember the coverage gap — the dreaded "donut hole" where costs jumped in the middle of the year. That phase was eliminated in 2025 and remains gone in 2027.
Part D now has just three phases: the deductible, the initial coverage phase (where you pay a share of costs), and the catastrophic phase (where you pay nothing more once you hit the yearly cap). Simpler, and easier to budget for.
The Medicare Prescription Payment Plan: spreading costs across the year
Even with the cap, $2,400 is a lot to face in January or February if you take expensive medications. That's where the Medicare Prescription Payment Plan comes in.
This is a free, optional program that lets you spread your out-of-pocket drug costs into monthly payments across the calendar year, instead of paying the pharmacy all at once. You still owe the same total — nothing is forgiven — but the bill arrives from your plan on a monthly schedule.
A few points to keep in mind:
- You have to opt in — it's not automatic.
- It's usually most helpful for people with high drug costs early in the year.
- You can request it before the year starts or any time during 2027.
- If you miss payments, you can be removed from the program (though you keep your drug coverage).
Your Part D or Medicare Advantage plan handles enrollment. Ask them directly, or call 1-800-MEDICARE.
What Chicago-area shoppers should check during AEP
Chicago sits in Cook County, where for 2027 there are 58 Medicare Advantage plans from 11 carriers. Plan availability, formularies, and pharmacy networks are set at the county level and can change every year.
Before December 7, it's worth pulling up your Annual Notice of Change (ANOC) — the letter your plan mailed in September — and comparing:
- Whether your specific drugs are still on the formulary.
- Which tier they're on (tiers affect what you pay before hitting the cap).
- Whether your pharmacy is still in the preferred network.
- The plan's deductible for 2027.
The Medicare Plan Finder at medicare.gov lets you enter your prescriptions and ZIP code to see how plans compare.
A note on higher-income enrollees
If your income is above $109,000 as a single filer (or $218,000 filing jointly), you'll likely pay an IRMAA surcharge on top of your Part D premium in 2026. That's set by Social Security based on your 2024 tax return. The cap ($2,100 in 2026, $2,400 in 2027) still applies to you — IRMAA affects premiums, not out-of-pocket drug costs.
Key deadlines to keep on the fridge
- October 15 – December 7, 2026: Medicare Annual Enrollment. Changes take effect January 1, 2027.
- January 1, 2027: New $2,400 cap begins. Payment Plan available.
- January 1 – March 31, 2027: Medicare Advantage Open Enrollment. If you're in a Medicare Advantage plan, you can switch to another MA plan or return to Original Medicare once.
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 Cook County
(MA penetration in Cook 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?
If I sign up for the Payment Plan, do I save money?
What if my drug isn't on my plan's formulary?
- CMS — Medicare Part D program rules (medicare.gov)
For personalized answers, contact Medicare.gov, 1-800-MEDICARE, or your local SHIP.