Medicare Part D
Part D's $2,400 Cap Reaches Iowa City in 2027
IOWA CITY, Iowa — Starting Jan. 1, 2027, the way Medicare pays for prescription drugs will look a little different again for millions of people. The out-of-pocket cap on Part D drug costs rises to $2,400, and once you hit that number, you pay nothing more for covered drugs for the rest of the year. The cap sits at the center of Fall Open Enrollment, which runs Oct. 15 through Dec. 7.
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Key takeaways
- Starting Jan. 1, 2027, the most you'll pay out of pocket for covered Part D drugs in a year is $2,400, and after that your cost drops to $0 for the rest of the year.
- The old "donut hole" coverage gap is gone, leaving Part D with just three phases: deductible, initial coverage, and catastrophic.
- A new optional, free Medicare Prescription Payment Plan lets you spread your drug costs into level monthly payments instead of paying a big amount at the pharmacy all at once.
- Fall Open Enrollment runs Oct. 15 through Dec. 7, giving you a chance to compare plan premiums, deductibles, and drug lists using the Medicare Plan Finder before the cap ($2,100 in 2026, $2,400 in 2027) takes effect.
Here's what's changing, what stays the same, and how to think it through before the deadline.
The Part D cap, explained plainly
In 2027, no one enrolled in a Medicare Part D plan will pay more than $2,400 out of pocket for covered prescription drugs in a calendar year. That's the ceiling set by CMS under the Inflation Reduction Act. It applies whether you have a stand-alone Part D plan or drug coverage bundled into a Medicare Advantage plan.
Once your out-of-pocket spending on covered drugs reaches $2,400, you move into what Medicare calls the "catastrophic" phase, and your cost-sharing for covered drugs drops to $0 for the rest of the year.
The cap is per person, per year. It resets every January.
The "donut hole" is gone
For years, Part D had a confusing middle stage called the coverage gap — the "donut hole" — where your share of drug costs jumped once your total spending crossed a certain line. That gap was eliminated in 2025.
Part D now has three phases instead of four:
1. Deductible phase — you pay full negotiated price until you meet your plan's deductible (the maximum allowed deductible is $700 in 2027, though plans may set it lower). 2. Initial coverage phase — you pay a copay or coinsurance, and the plan pays the rest. 3. Catastrophic phase — once your out-of-pocket spending hits $2,400, you pay nothing for covered drugs.
That's the whole structure. No middle step, no surprise price jump partway through the year.
The Medicare Prescription Payment Plan
Here's the piece a lot of people miss: even with a $2,400 cap, some folks could still face a big bill in a single month — for example, if an expensive drug is filled in January and you hit the deductible right away.
To help with that, Medicare now offers the Medicare Prescription Payment Plan. It's optional and free to join. Instead of paying your share at the pharmacy counter, you spread that cost across the remaining months of the calendar year in level monthly payments billed by your Part D plan.
A few things to know:
- It doesn't lower what you owe — it just smooths the timing.
- You can sign up before the plan year starts or any month during the year.
- It's likely most helpful for people with high drug costs early in the year.
- You enroll through your Part D or Medicare Advantage drug plan, not through Medicare directly.
If your drug costs are modest and spread evenly, the payment plan may not add much value. If one prescription would blow through your deductible in a single fill, it's worth a look.
What this means during Open Enrollment
Iowa City is in Johnson County, where Medicare beneficiaries can compare stand-alone Part D plans and Medicare Advantage plans that include drug coverage. Fall Open Enrollment (Oct. 15–Dec. 7, 2026) is the main window to switch, join, or drop drug coverage for 2027. The 2027 lineup is detailed in each plan's Annual Notice of Change and on Medicare.gov's Plan Finder.
Because the $2,400 cap applies across all Part D plans in 2027, the differences between plans will show up in other places: premiums, deductibles, which drugs are on the formulary, which pharmacies are preferred, and prior authorization rules. Those details matter more than ever when the cap is the same everywhere.
The Medicare Plan Finder at medicare.gov lets you enter your prescriptions and ZIP code to see how each plan would handle your specific drug list.
A quick word on IRMAA
Higher-income beneficiaries pay an income-related surcharge (IRMAA) on top of standard Part B and Part D premiums. For 2026, IRMAA begins for single filers with income above $109,000 (and married couples filing jointly above $218,000), based on your 2024 tax return. The cap and the payment plan apply regardless of income.
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 Johnson County
(MA penetration in Johnson 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
Do I have to do anything to get the $2,100 cap?
Does the $2,100 include my monthly premiums?
Is the Medicare Prescription Payment Plan the same as extra help or a subsidy?
- CMS — Medicare Part D program rules (medicare.gov)
For personalized answers, contact Medicare.gov, 1-800-MEDICARE, or your local SHIP.