Medicare Part D
Medicare's 2027 Drug Cap: Indianapolis Guide
Starting January 1, 2027, no one with a Medicare Part D drug plan will pay more than $2,400 out of pocket for covered prescriptions in a calendar year. That figure — set by the Centers for Medicare & Medicaid Services (CMS) — rises from the $2,100 cap in 2026, and it lands right as Medicare's Annual Enrollment Period runs through December 7.
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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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Click to call 855-729-3240Key takeaways
- Starting January 1, 2027, Medicare Part D drug plans have a $2,400 yearly out-of-pocket cap, and once you hit it you pay nothing for covered prescriptions the rest of the year.
- Part D now has three phases (deductible, initial coverage, and catastrophic) since the old "donut hole" coverage gap was eliminated in 2025.
- The most a plan can charge for a Part D deductible is $615 in 2026 and $700 in 2027, though some plans set it lower.
- A free, optional Medicare Prescription Payment Plan lets you spread your drug costs into monthly bills instead of paying large amounts at the pharmacy, and you can join before the plan year starts or anytime during the year by contacting your Part D plan.
INDIANAPOLIS — A hard ceiling on drug costs takes effect Jan. 1
For Indianapolis retirees who take expensive medications, the change is significant. It also comes packaged with a smoothing option that lets you spread drug costs across the year instead of paying big bills at the pharmacy counter. Here's what's changing and how to think about your choices.
What the Part D cap actually means
The $2,400 figure is a true annual maximum on what you pay out of pocket for drugs covered by your Part D plan. Once your spending on covered drugs reaches that amount in 2027, you pay $0 for covered prescriptions for the rest of the calendar year.
A few things to keep in mind:
- The cap counts what you pay — deductible, copays, and coinsurance on covered drugs.
- It does not include your monthly Part D premium.
- It resets each January 1.
- Drugs that aren't on your plan's formulary (its covered drug list) don't count toward the cap.
The maximum Part D deductible any plan can charge in 2026 is $615, per CMS. Some plans set their deductible lower.
The "donut hole" is gone — here's the new structure
The old coverage gap (the "donut hole") was eliminated in 2025. Part D now has three simpler phases:
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 a copay or coinsurance for each prescription. 3. Catastrophic phase — once your out-of-pocket spending hits $2,400 in 2027, you pay nothing more for covered drugs that year.
There's no fourth phase. No confusing gap where prices suddenly jump. It's a cleaner path from January to December.
The Medicare Prescription Payment Plan: monthly smoothing
Hitting $2,400 in January or February can still sting if it happens all at once. That's where the Medicare Prescription Payment Plan comes in.
This is a free, optional program built into every Part D plan. Instead of paying the pharmacy directly, you let your plan bill you monthly, spreading your yearly drug costs across the calendar year. Your total cost for the year doesn't change — but the timing does.
You can opt in before the plan year starts or at any point during the year by contacting your Part D plan. It tends to help most when you have a high-cost drug early in the year. It may not help if your drug costs are low and spread evenly. Medicare has more detail at medicare.gov/prescription-payment-plan.
How to think through your choice this fall
If you live in Indianapolis, you have real choices. Indianapolis is in Marion County, where 72 Medicare Advantage plans from 11 carriers are offered for 2027. You can see the full list, side by side, using the Plan Finder at medicare.gov.
A few questions worth asking yourself before December 7:
- Are my drugs on the plan's formulary next year? Formularies change annually. Check the 2027 list, not this year's.
- What pharmacies are "preferred" under the plan? Cost-sharing can differ between preferred and standard pharmacies.
- Would monthly smoothing help me? If you take a high-cost specialty drug, likely yes.
- Does IRMAA apply to me? Higher-income enrollees pay a Part D surcharge on top of their premium. In 2026, IRMAA begins above $109,000 in modified adjusted gross income for a single filer (higher for joint filers), based on your 2024 tax return.
Your plan's Annual Notice of Change — the packet mailed in September — spells out what's different for 2027. It's worth 15 minutes of your time.
Key dates to circle
- October 15 – December 7, 2026: Medicare Annual Enrollment Period. Changes take effect January 1, 2027.
- January 1 – March 31, 2027: Medicare Advantage Open Enrollment Period. If you're already in a Medicare Advantage plan, you get one chance to switch to another MA plan or return to Original Medicare with a stand-alone Part D plan.
Missing December 7 usually means waiting a full year for another chance, unless you qualify for a Special Enrollment Period.
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 Marion County
(MA penetration in Marion 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”) is eliminated as of 2025 (three phases now). The yearly cap on what you pay out of pocket for covered drugs is $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 $2,400 cap include my Part D monthly premium?
If I sign up for the Prescription Payment Plan, do I still hit the $2,400 cap?
What if my drug isn't on the plan's formulary?
- CMS — Medicare Part D program rules (medicare.gov)
For personalized answers, contact Medicare.gov, 1-800-MEDICARE, or your local SHIP.