Medicare Part D

How the 2027 Part D Cap Affects Orem Enrollees

OREM, Utah — Starting January 1, 2027, the Medicare Part D out-of-pocket ceiling on what enrollees pay for covered prescription drugs in a calendar year rises to $2,400, up from $2,100 in 2026. For Orem residents who take costly medications, that single number is one of the biggest Medicare items heading into this fall's enrollment window.

The new cap is the next step in a broader overhaul of how Part D works. The old "donut hole" coverage gap is already gone, and a new optional payment plan lets people spread their drug costs across the year instead of getting hit with a big bill at the pharmacy counter. Here is what is changing, and what to do before the December 7 deadline.

The Part D cap, in plain English

Once your out-of-pocket spending on covered Part D drugs hits the annual cap, you pay $0 for those drugs for the rest of the year. The cap is $2,100 in 2026 and $2,400 in 2027. That limit applies whether your medicines are covered through a stand-alone Part D plan or the drug portion of a Medicare Advantage plan.

A few things to keep in mind. The cap only counts spending on drugs your plan covers — the ones on its formulary. Monthly premiums don't count toward the cap. And you still have to use in-network pharmacies and follow your plan's rules for the spending to count.

These figures come straight from CMS, which sets Part D program rules each year. The maximum allowable deductible is $615 in 2026 and $700 in 2027, though individual plans can set theirs lower.

The coverage gap is gone

For years, Part D had a confusing middle stretch called the "donut hole," where costs jumped once you and your plan had spent a certain amount together. That phase was eliminated in 2025.

Part D now has just three phases:

1. Deductible phase — you pay full negotiated price until you meet the plan's deductible (up to $615 in 2026 and 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 reaches the annual cap ($2,100 in 2026, $2,400 in 2027), you pay nothing more for covered drugs that year.

Simpler math, and a real ceiling for the first time.

The Medicare Prescription Payment Plan

Even with the cap ($2,100 in 2026, $2,400 in 2027), a single fill early in the year can still be a shock — imagine a $900 prescription in January. That's where the new Medicare Prescription Payment Plan comes in.

This is a free, optional program available through every Part D plan. Instead of paying the pharmacy directly, you opt in and your plan bills you monthly for what you would have owed, spread across the remaining months of the year. Your total cost doesn't change, but your cash flow does.

It won't help everyone. If your drug costs are low and steady, monthly billing may just add paperwork. But for people facing a high-cost drug early in the year, it can prevent a painful bill at the counter. You can sign up before the plan year starts or any time during the year through your Part D plan.

What Orem residents should do this fall

Orem is in Utah County, where Medicare beneficiaries have a range of stand-alone Part D and Medicare Advantage options to compare during Annual Enrollment. The 2027 lineup is detailed in each plan's Annual Notice of Change and on Medicare.gov's Plan Finder. Plan formularies, pharmacy networks, and premiums can all change from one year to the next — even if you like your current plan, the plan itself may look different in 2027.

A few practical steps before December 7:

• Read your Annual Notice of Change. Your plan mailed it in September. It shows what's changing for 2027.
• Check that your drugs are still on the formulary and that your pharmacy is still in-network.
• Compare plans at Medicare.gov's Plan Finder, which lets you enter your specific medications.
• Ask about the Prescription Payment Plan if you expect high drug costs in any month of 2027.

If you miss the December 7 deadline, you generally have to wait until next fall to switch drug coverage, though people already in a Medicare Advantage plan get another window from January 1 to March 31.

A note on higher-income enrollees

If your income is above $109,000 as a single filer (based on your 2024 tax return for 2026 premiums), you'll pay an income-related monthly adjustment amount, or IRMAA, on top of your Part D premium. The out-of-pocket cap ($2,100 in 2026, $2,400 in 2027) still applies to you — IRMAA is separate from what you spend on drugs at the pharmacy.