Medicare Part D
Medicare Part D in 2027 — Lakeville, MN
LAKEVILLE, Minn. — If you take prescription drugs, here's a plain-English walk-through of how Medicare Part D works in 2027. The out-of-pocket cap, the end of the old "donut hole," and a way to spread your drug costs across the year all carry forward, with updated figures for 2027, so you can plan with confidence.
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Will your prescriptions still be covered in 2027?
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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Key takeaways
- In 2027, Part D drug plans have a deductible phase (up to $700), an initial coverage phase, and a catastrophic phase where you pay nothing more once you reach $2,400 in out-of-pocket costs.
- The "donut hole" coverage gap is gone as of 2025, so these three phases replace it.
- Only your deductible, copays, and coinsurance for covered drugs count toward the $2,400 cap in 2027—premiums and non-covered drugs don't count.
- A new optional program called the Medicare Prescription Payment Plan (M3P) lets you spread your drug costs into monthly bills instead of paying large amounts at the pharmacy, though it doesn't lower your total costs.
The 2027 basics: one cap, one deductible, three phases
Part D is Medicare's prescription drug coverage. You get it either through a stand-alone Part D plan (added to Original Medicare) or built into a Medicare Advantage plan.
Two program-wide numbers matter most in 2027:
- The maximum Part D deductible is $700 in 2027. Plans can charge less, but not more.
- The out-of-pocket cap is $2,400 in 2027. Once your out-of-pocket spending on covered drugs hits that number, you pay $0 for covered prescriptions the rest of the year.
These figures come straight from CMS, which sets Part D rules each year (medicare.gov).
The three phases, in order
Since 2025, the coverage gap — the old "donut hole" — has been eliminated. That leaves three simple phases in 2027:
1. Deductible phase. You pay the full negotiated price of your covered drugs until you meet your plan's deductible (up to $700 in 2027). Some plans have no deductible, or a smaller one, or apply it only to certain drug tiers.
2. Initial coverage phase. After the deductible, you pay a copay or coinsurance for each prescription. Your plan pays the rest. You stay in this phase until your out-of-pocket spending reaches $2,400 in 2027.
3. Catastrophic phase. Once you hit the $2,400 cap in 2027, you pay nothing more for covered drugs for the rest of the calendar year. This is the safety net that replaced the donut hole.
What counts toward the $2,400 cap
Only your out-of-pocket costs for covered Part D drugs count — your deductible, copays, and coinsurance. Monthly plan premiums do not count. Drugs your plan doesn't cover don't count, either. That's one reason it pays to check whether your specific medications are on a plan's formulary before you enroll.
The Medicare Prescription Payment Plan: smoothing the year
New in 2025 and continuing in 2027: the Medicare Prescription Payment Plan, sometimes called "M3P" or drug cost smoothing. It's optional and free to join.
Here's the idea. Instead of paying a big pharmacy bill in January or February (which can happen if you hit the deductible on an expensive drug), you pay $0 at the pharmacy and get a monthly bill from your plan that spreads your drug costs across the remaining months of the year.
It doesn't lower your total drug costs. It just changes when you pay. That can be a big help for people on a fixed monthly budget or those with a high-cost specialty drug early in the year. You can sign up through your Part D or Medicare Advantage drug plan.
IRMAA: higher-income surcharges
Most people pay the standard Part D premium set by their plan. But if your income is above certain levels, you'll pay an Income-Related Monthly Adjustment Amount (IRMAA) on top of that premium, paid directly to Medicare.
In 2026, IRMAA for Part D starts when a single filer's income is above $109,000 (based on your 2024 tax return). Married couples filing jointly have higher thresholds. Social Security notifies you if IRMAA applies, and you can appeal if a major life event — like retirement or the death of a spouse — has lowered your income.
Enrollment windows to know
- Annual Enrollment Period (AEP): Oct. 15 – Dec. 7, 2026. This is when you can join, switch, or drop a Part D plan for 2027 coverage.
- Medicare Advantage Open Enrollment: Jan. 1 – March 31. If you're already in a Medicare Advantage plan, you can switch to another Advantage plan or return to Original Medicare (with a Part D plan) once during this window.
Lakeville is in Dakota County, where residents can compare stand-alone Part D plans and Medicare Advantage plans with drug coverage. The number of plans available in your county changes year to year — the 2027 lineup is in each plan's Annual Notice of Change and on Medicare.gov's Plan Finder — so it's worth checking each fall, even if you've been happy with your current plan.
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 Dakota County
(MA penetration in Dakota 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). In 2027 there's a hard yearly cap of $2,400 on what you pay out of pocket for covered drugs, 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 sign up for Part D if I don't take any drugs?
Does the $2,400 cap reset every year?
Can I switch plans if my drug is no longer covered?
- CMS — Medicare Part D program rules (medicare.gov)
For personalized answers, contact Medicare.gov, 1-800-MEDICARE, or your local SHIP.