The out-of-pocket limit for Medicare Part D prescription drug coverage rises to $2,400 in 2027, up from $2,100 in 2026. Once your covered drug costs reach that amount, you pay nothing more for covered Part D drugs for the rest of the year. The maximum Part D deductible is also rising, and 15 more drugs will have Medicare-negotiated prices starting January 1.
Here is what changed, what counts toward the limit, and why your own costs depend on your plan.
The 2027 Numbers at a Glance
Once your out-of-pocket spending on covered Part D drugs reaches this amount, you pay $0 for covered drugs for the rest of the year
| Item | Annual threshold |
|---|---|
| 2026 | $2,100 |
| 2027 | $2,400 |
This is the most a person pays for covered Part D drugs in a year. Many people spend less and never reach it.
Source: Medicare.gov, "How much does Medicare drug coverage cost?"
The highest deductible any Medicare drug plan may charge
| Item | Maximum deductible |
|---|---|
| 2026 | $615 |
| 2027 | $700 |
This is a maximum, not what everyone pays. Some plans have lower deductibles or none at all.
Source: Medicare.gov, "How much does Medicare drug coverage cost?"
How the Part D Benefit Works in 2027
Medicare drug coverage, whether a stand-alone Part D plan or drug coverage built into a Medicare Advantage plan, generally has three stages:
- Deductible stage: If your plan has a deductible, you pay the full cost of covered drugs until you meet it. In 2027, no plan's deductible can exceed $700.
- Initial coverage stage: You pay your plan's copays or coinsurance until your out-of-pocket spending reaches $2,400.
- Catastrophic stage: You pay nothing for covered Part D drugs for the rest of the calendar year.
The limit resets each January 1.
What Counts Toward the $2,400 Limit
Generally, amounts you pay for covered Part D drugs count, along with certain payments made on your behalf.
| Cost | What it is | Counts toward $2,400? |
|---|---|---|
| Deductible | What you pay before the plan starts paying | Yes, for covered drugs |
| Copayment | A fixed dollar amount per prescription, such as $10 | Yes, for covered drugs |
| Coinsurance | A percentage of the drug’s cost, such as 25% | Yes, for covered drugs |
| Certain help paid for you | Such as Extra Help and some assistance programs | Generally yes |
| Monthly plan premium | What you pay each month to have coverage | No |
| Drugs not on your formulary | Drugs your plan does not cover | No |
Swipe the table sideways to see every column
Your monthly Explanation of Benefits shows how much you have paid toward the limit. Source: Medicare.gov.
Deductibles, Copays, and Coinsurance
A copayment is a fixed amount, while coinsurance is a percentage. Coinsurance can be much more expensive for high-cost brand-name drugs, so two plans with similar premiums can produce very different yearly costs for the same prescription.
Formularies and Drug Tiers
A formulary is the plan's list of covered drugs. Drugs are placed on tiers, and lower tiers usually cost less. Formularies change from year to year, so a drug covered on a low tier in 2026 may move to a higher tier, or come off the list, in 2027.
Preferred Pharmacy Networks
Many plans have preferred pharmacies with lower copays than other in-network pharmacies. If you fill prescriptions at a local pharmacy in London or Corbin, check its status for each plan you compare. Mail-order options may also cost less for maintenance drugs.
Prior Authorization and Other Plan Rules
Plans may use utilization management:
- Prior authorization: The plan must approve the drug before it is covered.
- Step therapy: You try a lower-cost drug first.
- Quantity limits: Limits on how much you can fill at once.
If a drug you take has one of these rules, your doctor may need to submit paperwork, or you can ask the plan for an exception.
15 More Drugs With Negotiated Prices in 2027
Under the Medicare Drug Price Negotiation Program, negotiated prices for 15 additional Part D drugs take effect January 1, 2027. According to CMS, they include:
- Ozempic, Rybelsus, and Wegovy
- Trelegy Ellipta and Breo Ellipta
- Janumet and Janumet XR; Tradjenta
- Xtandi, Ibrance, Pomalyst, and Calquence
- Austedo and Austedo XR; Vraylar
- Otezla and Otezla XR; Ofev; Linzess; Xifaxan
A negotiated price is the price Medicare plans pay. It is not a guaranteed copay for you. What you pay still depends on whether your plan covers the drug, its tier, your deductible, and plan rules such as prior authorization. Coverage also depends on the approved uses of each drug.
The Medicare Prescription Payment Plan
The Medicare Prescription Payment Plan lets you spread out-of-pocket drug costs over monthly payments across the calendar year instead of paying at the pharmacy counter. Medicare notes that it does not lower your total drug costs, but it can make expensive months easier to manage. Ask your plan how to sign up.
Help With Drug Costs
If your income and resources are limited, Extra Help can lower premiums, deductibles, and copays. CMS reports that about 27% of Kentuckians with a stand-alone Part D plan receive Extra Help. You can learn more at Medicare.gov.
Why People on Maintenance Medications Should Review Every Year
If you take drugs for diabetes, heart conditions, COPD, or other ongoing needs, plan changes can add up quickly. During Open Enrollment, October 15 through December 7, 2026, enter your exact drugs and doses into the Medicare Plan Finder to compare estimated yearly costs. Our article on how prescription costs change your Medicare decision explains what to look for.
Frequently Asked Questions
Will I pay $2,400 for my drugs in 2027?
Not necessarily. $2,400 is the maximum for covered Part D drugs. Many people pay much less.
Does my premium count toward the limit?
No. Monthly premiums do not count toward the $2,400 out-of-pocket threshold.
Will my Ozempic or Trelegy copay go down?
It might, but it is not guaranteed. Your copay depends on your plan's coverage, tier, and deductible.
Does every plan have a $700 deductible?
No. $700 is the maximum. Some plans have lower deductibles or no deductible.
What happens after I reach $2,400?
You pay nothing for covered Part D drugs for the rest of 2027.
How Summit Benefits Group Can Help
We can compare 2027 drug plans and Medicare Advantage plans using your actual prescriptions and pharmacy. Request a Medicare plan review, or read more about Medicare Part D coverage. For how drug costs fit into total plan costs, see our article on Kentucky Medicare Advantage premiums for 2027.
Sources
- Medicare.gov: How much does Medicare drug coverage cost?
- CMS: 2027 Rate Announcement
- CMS: Selected Drugs and Negotiated Prices
- CMS: 2027 state-by-state fact sheets
Summit Benefits Group is a licensed independent insurance agency. We are not affiliated with or endorsed by Medicare, CMS, Medicaid, or the federal government, and this article is general education, not a recommendation of any specific plan. We do not offer every plan available in your area. For information on all of your options, contact Medicare.gov, 1-800-MEDICARE (TTY 1-877-486-2048), or your State Health Insurance Assistance Program (SHIP).