Medicare Part D

Medford Part D in 2027: phases & cap

MEDFORD, Mass. — If you take prescription drugs, Medicare Part D is the part of Medicare that helps pay for them. Since 2026, the rules are simpler than they used to be. There is a single yearly cap on what you pay out of pocket, the old "donut hole" is gone, and your drug year moves through just three clear phases.

Here is how it works, in plain English.

What Part D is, and where you get it

Part D is Medicare's prescription drug coverage. It is sold by private insurance companies that Medicare approves. You can get it two ways: as a stand-alone drug plan that sits next to Original Medicare, or built into most Medicare Advantage plans.

Medford is in Middlesex County, where a number of stand-alone Part D plans and Medicare Advantage plans with drug coverage are offered each year. The specific choices reset every fall, so it is worth checking during open enrollment even if you already have a plan.

The three phases of your drug year in 2027

Since the coverage gap was eliminated in 2025, every Part D plan now follows the same three-phase structure.

1. Deductible phase. You pay the full negotiated price for your drugs until you meet your plan's deductible. The maximum deductible a plan can charge is $615 in 2026 and $700 in 2027. Some plans charge less, and some charge nothing for certain drug tiers.

2. Initial coverage phase. After the deductible is met, you and your plan share the cost. You pay a copay or a percentage (coinsurance), and the plan pays the rest. This continues until your out-of-pocket spending reaches the yearly cap.

3. Catastrophic phase. Once your out-of-pocket costs hit the yearly cap — $2,100 in 2026 and $2,400 in 2027 — you pay nothing more for the rest of the calendar year on covered Part D drugs. This is the cap that replaced the older, more complicated system.

The Part D out-of-pocket cap, explained

This is the big one. Before 2025, there was no hard ceiling on Part D drug spending, and people with very expensive medications could pay many thousands of dollars a year. Now there is a firm limit.

Once you have spent the yearly cap out of pocket on covered prescriptions under your Part D plan — $2,100 in 2026, rising to $2,400 in 2027 — you are done paying for those drugs for the rest of the year. The cap resets each January 1.

A few things to know:

• The cap applies to what you pay for covered drugs, not to your monthly premium.
• Drugs your plan does not cover do not count toward the cap.
• The cap follows you across the year even if you change plans mid-year.

The Medicare Prescription Payment Plan

If a $2,100 in 2026 ($2,400 in 2027) bill in January feels impossible, Medicare offers a free option called the Medicare Prescription Payment Plan. Instead of paying the pharmacy in one lump sum, you can choose to spread your Part D costs across the year in monthly installments.

You do not pay more overall — it just smooths out the timing. Any Part D enrollee can ask their plan to sign them up. It is worth considering if you know you have a high-cost drug hitting early in the year.

A quick word on higher-income surcharges

Most people just pay their plan's premium. But if your income is above $109,000 as a single filer in 2026 (or the matching threshold for joint filers), Medicare adds an income-related surcharge, called IRMAA, to your Part D premium. It is billed separately by Medicare, not by your plan.

When you can enroll or switch

• Annual Enrollment Period: October 15 – December 7. Changes take effect January 1.
• Medicare Advantage Open Enrollment Period: January 1 – March 31. If you are already in a Medicare Advantage plan, you can switch to another Medicare Advantage plan or return to Original Medicare (and add a stand-alone Part D plan).

If you are new to Medicare, you also have a seven-month Initial Enrollment Period around your 65th birthday.