Medicare Part D Prescription Drug Coverage: 2026 and 2027

Medicare Part D is the part of Medicare that helps pay for prescription drugs. Private insurance companies approved by Medicare sell it, and the rules for what you pay are set each year by the Centers for Medicare & Medicaid Services (CMS). Here is how it works in 2026 and what changes for 2027.

Two ways to get Part D

• A stand-alone prescription drug plan (PDP). You add it to Original Medicare (Parts A and B), often alongside a Medigap policy.
• A Medicare Advantage plan with drug coverage (MA-PD). Your medical and drug coverage come in one plan.

To join either one, you need Medicare Part A or Part B and must live in the plan's service area. Part D is voluntary, but waiting to sign up without other drug coverage can cost you a permanent penalty (see below).

2026 and 2027 at a glance

Item	2026	2027
Maximum annual deductible	$615	$700
Yearly out-of-pocket cap	$2,100	$2,400
Extra Help copay, generic drugs (most enrollees)	up to $5.10	up to $5.80
Extra Help copay, brand-name drugs (most enrollees)	up to $12.65	up to $14.40
National base beneficiary premium (used for the late penalty)	$38.99	$41.33
Projected average stand-alone PDP premium	$35.09	about $36

Your actual premium depends on the plan you pick. Some plans charge a lower deductible or none at all.

The three payment stages

The old "donut hole" coverage gap is gone. Each calendar year now has three stages.

1. Deductible

You pay the full plan price for covered drugs until you meet your plan's deductible: no more than $615 in 2026 or $700 in 2027. Covered insulin and adult vaccines recommended by the CDC's vaccine advisory committee (ACIP) are not subject to the deductible, and those vaccines cost you nothing.

2. Initial coverage

After the deductible, you pay a copay or coinsurance for each prescription and the plan pays the rest. The amount depends on which tier the drug sits on in your plan's formulary. Covered insulin costs no more than $35 for a month's supply.

3. Catastrophic coverage

Once your out-of-pocket spending on covered drugs reaches the yearly cap ($2,100 in 2026, $2,400 in 2027), you pay $0 for covered Part D drugs for the rest of that year. What you pay toward the deductible and your copays and coinsurance count toward the cap. Monthly premiums do not. For details, see What expenses count towards my Medicare Part D True Out-of-Pocket Costs (TrOOP)?

Negotiated drug prices

Under the Medicare Drug Price Negotiation Program, negotiated prices for the first 10 drugs took effect January 1, 2026. Negotiated prices for 15 more drugs, including Ozempic, Wegovy, and Rybelsus, take effect January 1, 2027. Your exact savings depend on your plan's cost sharing and where you are in the year.

Extra Help (Low-Income Subsidy)

Extra Help is a federal program that lowers Part D costs for people with limited income and resources. In 2027, most people who get it pay:

• $0 premium on a qualifying plan and $0 deductible
• No more than $5.80 for each generic drug and $14.40 for each brand-name drug
• $0 for covered drugs after total drug costs reach $2,400

People with both full Medicaid and the QMB program pay even less. For 2026, the income limits are $23,940 for an individual and $32,460 for a married couple, with resource limits of $18,090 and $36,100. You qualify automatically if you have full Medicaid, get help paying Part B premiums through a Medicare Savings Program, or receive SSI. Everyone else can apply through Social Security. People with Extra Help can generally change drug plans once a month and do not pay the late enrollment penalty. See How to Qualify for Medicare Part D Extra Help.

Medicare Prescription Payment Plan

Every Part D plan offers an optional way to spread your out-of-pocket drug costs into monthly bills across the calendar year, instead of paying the full amount at the pharmacy.

• It is free, with no interest or fees.
• It does not lower what you owe in total. It only changes when you pay.
• You can join any time during the year by contacting your plan, and you can opt out at any time.
• If you stay in the same plan, your participation renews automatically each year unless you opt out. Switching plans ends it.
• If you miss a payment, your plan sends a reminder and must give you a grace period of at least two months before removing you from the payment plan. You keep your drug coverage either way.

It tends to help most when you face a large cost early in the year, such as an expensive brand-name or specialty drug.

When you can enroll or switch

Period	Dates	What you can do
Initial Enrollment Period	7 months: the 3 months before the month you turn 65, that month, and the 3 months after	Join a drug plan for the first time
Open Enrollment	October 15 to December 7	Join, switch, or drop a drug plan; changes start January 1
Medicare Advantage Open Enrollment	January 1 to March 31	If you are in Medicare Advantage, switch plans or return to Original Medicare and add a stand-alone drug plan
Special Enrollment Periods	Varies	Triggered by events such as moving, losing other drug coverage, or getting Medicaid or Extra Help

For this year's dates and tips, see When is the 2027 Medicare open enrollment period? and What are Medicare Advantage plan and Medicare Part D Special Enrollment Periods (SEP)?

The late enrollment penalty

If you go 63 days or more in a row without Part D or other creditable drug coverage after your Initial Enrollment Period ends, you may owe a penalty when you do enroll. Creditable coverage is drug coverage, often from an employer or union, that is expected to pay on average at least as much as standard Part D. Your plan or employer will tell you each year whether yours qualifies.

How the penalty works:

• It equals 1% of the national base beneficiary premium for each full month you went without coverage, rounded to the nearest $0.10.
• It is added to your monthly premium, usually for as long as you have Part D.
• Because the base premium can change each year ($38.99 in 2026, $41.33 in 2027), the penalty amount can change too.

Example: if you went 20 months without creditable coverage, your 2027 penalty would be 20% of $41.33, or about $8.30 added to each monthly premium. More detail is in What's the Medicare drug coverage (Part D) late enrollment penalty?

Tips for choosing a plan

• Check that every drug you take is on the plan's formulary and note its tier.
• Look for prior authorization, step therapy, or quantity limits on your drugs.
• Confirm your pharmacy is in network, and whether it is a preferred pharmacy.
• Compare the total yearly cost, premium plus expected drug costs, not just the premium.
• Review your plan every fall. Formularies, premiums, and pharmacy networks can change each January.

Talk to an agent

Our licensed agents can compare Part D and Medicare Advantage plans using your actual prescriptions and pharmacy, at no cost to you.

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Questions? Submit a ticket or call us at (312) 726-6565.

Sources: CMS, CY 2027 Rate Announcement, Table V-2 (PDF); CMS, Part D 2027 national average monthly bid amount; CMS, MA and Part D expected to remain stable in 2027; CMS, Selected drugs and negotiated prices; Medicare.gov, Insulin; Medicare.gov, How drug plans work; Medicare.gov, Help with drug costs; Medicare.gov, Part D late enrollment penalty; Medicare.gov, Medicare Prescription Payment Plan; Medicare.gov, Prescription Payment Plan fact sheet (PDF); CMS, Prescription Payment Plan final guidance (PDF); Medicare.gov, Joining a plan.