Medicare Part D 2027: The Out-of-Pocket Cap Rises to $2,400. When Will You Hit It?
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For 2027 the standard deductible is $700 and drug costs stop at $2,400 a year (CMS 2027 Rate Announcement). Enter your monthly drug cost to see the month you reach the cap, what the Prescription Payment Plan bills you each month instead, and whether a $0-deductible plan with a higher premium is worth it.
The cap goes up $300 for 2027
The Inflation Reduction Act capped what people with Medicare pay for covered Part D drugs, starting at $2,000 in 2025. The cap rises each year with Part D spending. CMS’s CY 2027 Rate Announcement (April 6, 2026) sets 2027 at $2,400, up from $2,100, and the most a plan can charge as a deductible at $700, up from $615. Both rose by the same 13.65% annual update.
Under the standard benefit you pay the full price until the deductible is met, then 25% until your share reaches $2,400. That happens once your drugs cost $7,500 in the year. We ran different monthly drug costs through the calculator:
| Drug cost per month | You pay in 2027 | Cap reached |
|---|---|---|
| $100 | $825 | not reached |
| $250 | $1,275 | not reached |
| $400 | $1,725 | not reached |
| $625 | $2,400 | December |
| $1,000 | $2,400 | August |
| $2,000 | $2,400 | April |
| $3,000 | $2,400 | March |
Above about $625 a month, everyone pays the same $2,400; the only difference is how early. That’s where the Medicare Prescription Payment Plan helps most. Joined in January, it bills at most $200 that month ($2,400 ÷ 12):
| Drug cost per month | January at the pharmacy | Highest monthly bill with the plan |
|---|---|---|
| $250 | $250 | $225 |
| $400 | $400 | $341 |
| $1,000 | $775 | $261 |
| $3,000 | $1,275 | $203 |
At $3,000 a month, January drops from $1,275 to $200 and no month goes above $203.
With smaller, even costs it does the opposite. The plan bills less early and more late, so at $400 a month the December bill is $341 against $100 at the pharmacy. For choosing between a $0-deductible plan and a cheaper one, and when the payment plan is worth joining, see Part D 2027: which plan, and should you spread the bill.
How the math works
- Your share:
min(drug cost, deductible) + 25% × (drug cost − deductible), never more than $2,400 in the year - Drug cost that reaches the cap:
deductible + ($2,400 − deductible) ÷ 25%, $7,500 with the full $700 deductible - Payment plan, first month:
min(that month’s cost, $2,400 ÷ months left) - Payment plan, later months:
(unbilled balance + new costs) ÷ months left, counting the current month (42 CFR 423.137(c))
Premiums don’t count toward the cap. Insulin has its own $35-a-month limit, and Extra Help (the Low-Income Subsidy) replaces the deductible and coinsurance with small copays.
Math runs locally. Inputs never leave your browser. Source on github.
Where this doesn’t apply
- Tiered copays. Most plans charge a flat copay per tier rather than 25%. Set the share to your copay divided by the drug’s price, or use Plan Finder’s estimate.
- Drugs not on the formulary. Non-covered drugs don’t count toward the cap at all.
- Medicare Advantage with drug coverage. The same Part D cap applies, but the premium is bundled with medical coverage, so compare whole plans.
- Starting mid-year. The calculator assumes coverage and costs from January. If you join later, the cap is the same but you have fewer months to reach it.
- Employer or union retiree coverage. It may cap costs differently; compare it before switching to Part D.
What to actually do
- Enter your drugs in Medicare Plan Finder and note each plan’s premium, deductible and estimated yearly drug cost.
- Put your monthly drug cost and two candidate plans into the calculator.
- If you expect to reach the cap, the cheaper premium usually wins, since everyone pays $2,400 for drugs.
- If January would hit hard, ask your plan about the Prescription Payment Plan; for low, steady costs it isn’t worth it.
- If your income is high, check the Medicare IRMAA cliff: it adds a surcharge to Part D premiums too.