The most a person with Medicare drug coverage will pay out of pocket for covered prescriptions rises to $2,400 in 2027, up from $2,100 this year, as plans mail their annual change notices this month ahead of open enrollment on Oct. 15. The standard deductible climbs to $700 from $615, while federal limits on tier copays, including a $20 ceiling on the standard generic tier, stay where they were.
The 2027 numbers behind the cap
CMS set the figures in its 2027 Medicare Advantage and Part D Rate Announcement, released April 6, 2026. The out-of-pocket threshold for the standard Part D benefit is $2,400 for 2027, and the maximum standard deductible is $700. Both are indexed by law: CMS multiplied the 2026 amounts by the annual percentage increase in Part D drug spending, which it put at 13.65% for 2027, then rounded the cap to the nearest $50 and the deductible to the nearest $5.
Once a beneficiary’s out-of-pocket spending on covered drugs reaches $2,400, the plan pays the rest of the year’s covered prescriptions. Before that point, the standard benefit charges 25% coinsurance in the initial coverage phase after the deductible. Premiums do not count toward the cap, and neither do drugs that a plan does not cover.
For a retiree on several brand-name medications, the practical effect is a ceiling that is $300 higher than in 2026. Someone who hit the $2,100 limit this year would need to budget for the larger amount next year if their prescriptions stay the same, before accounting for any change in premium.
Before the notice goes in a drawer: Comparing next year’s deductible, tier copays and premium against what each prescription cost this year is easier with the new Part D out-of-pocket cap laid out next to a medication and cost tracker in The Medicare Cost & Coverage Protection Kit.
What plans may charge at the pharmacy counter
Within those outer limits, CMS also caps how much a plan may charge per prescription on each formulary tier. The agency’s final 2027 Part D bidding instructions, issued Feb. 6, 2026, by Vanessa S. Duran, director of CMS’s Medicare Drug Benefit and C & D Data Group, list the maximum copays CMS will accept in the initial coverage phase for plans with three or more tiers, at standard retail network pharmacies.
For 2027, those ceilings are $20 on the generic tier, $47 on the preferred brand or brand tier, $100 on non-preferred drug, non-preferred brand and injectable tiers, $11 on select-care or diabetic tiers, and $0 on the vaccine tier. Plans that use coinsurance instead of flat copays are limited to 25% on generic and brand tiers and 50% on non-preferred tiers. CMS said the thresholds are unchanged from 2026.
The limits come with conditions. They apply to standard retail cost sharing, not preferred-pharmacy or mail-order pricing, and CMS sets no separate maximum for the preferred generic tier, saying cost sharing there that is lower than on the generic tier will not face extra scrutiny. The same generic medicine can also sit on different tiers in different plans, so the $20 figure is a ceiling on one tier rather than a promised price for every generic prescription.
People enrolled in Extra Help, the low-income subsidy, face much smaller amounts. The rate announcement sets 2027 maximum copays for most full-subsidy enrollees with incomes up to 150% of the poverty level at $5.80 for generic or preferred multi-source drugs and $14.40 for other drugs, up from $5.10 and $12.65. Full-benefit dual-eligible enrollees at or below the poverty level pay no more than $1.65 and $5.00, and those living in institutions pay nothing.
One threshold did move. A drug now needs a 30-day ingredient cost above $1,080, up from $950, before a plan may place it on the specialty tier, where coinsurance can be higher. CMS said its cost analysis produced a 13.7% increase, clearing the 10% trigger required for an adjustment. The threshold had not moved since 2024, because the analyses for 2025 and 2026 fell short of that trigger.
Premiums are the part still unknown
The piece of the 2027 picture not yet public is what individual plans will charge each month. On July 28, CMS set the 2027 base beneficiary premium at $41.33, the starting point for calculating plan premiums, and said the national average monthly bid would be $296.05. The Inflation Reduction Act limits growth in the base premium to 6% a year through 2029.
CMS also said it will end the Part D Premium Stabilization Demonstration after 2026. The voluntary program for standalone drug plans began in 2025 to address volatility and variation in their premiums after the Inflation Reduction Act redesigned the Part D benefit. The agency said plan bids for 2027 showed insurers now have enough experience to price without it, and that it would publish the 2027 plan landscape and average premiums in mid-to-late September.
Without the demonstration, some standalone plans could post larger premium changes than in the past two years. That makes the annual notice more important than usual for people who kept the same drug plan through 2025 and 2026 without comparing.
What to check before Dec. 7
Medicare says plans send the Plan Annual Notice of Change in September, listing changes to coverage and costs that take effect in January. The notice shows whether a plan’s deductible will be $700 or lower, which tier each current prescription will sit on, and what the monthly premium becomes.
Open enrollment runs from Oct. 15 to Dec. 7, according to CMS, and changes made in that window take effect Jan. 1. A plan that moves a regularly filled generic from a preferred tier to the standard generic tier, or a brand drug to a non-preferred tier, can raise monthly costs well before the $2,400 cap comes into play.
Beneficiaries who do not act are generally kept in the same plan for 2027, if it is still offered, under its new terms. People who expect to reach the cap can also ask their plan about the Medicare Prescription Payment Plan, which spreads out-of-pocket drug costs into monthly bills over the calendar year rather than requiring payment at the pharmacy.
A higher cap is easier to plan for with every prescription listed
The 2027 limits set the outer bounds, but the amount a household actually pays depends on tier placement, pharmacy choice and premium, all of which can shift between now and Dec. 7.
The Medicare Cost & Coverage Protection Kit includes the new Part D out-of-pocket cap, a medication and cost tracker and 51 state Medicare cost-help packs for finding state programs that can lower drug costs.
Line up each current prescription against next year’s plan terms with The Medicare Cost & Coverage Protection Kit.
This article was prepared with AI assistance and reviewed against the linked official sources.
