What is the Medicare Part D out-of-pocket cap for 2027?

The Medicare Part D out-of-pocket cap for 2027 is $2,400, up from $2,100 in 2026. Once what you have paid for covered drugs in the calendar year reaches that figure, your covered prescriptions cost you nothing for the rest of the year. CMS set the number on April 6, 2026 in its Calendar Year 2027 Rate Announcement, alongside a new deductible ceiling of $700, up from $615.

If you live in north Peoria and your Annual Notice of Change arrived last week, that $2,400 is the figure it is quoting. The plan has known it since spring. What the plan decided to do with its own premium and its own formulary in response is the part of the letter worth reading, and it is the part most people skip.

I will take the cap first, because it is the question people type, and then the premium, because that is the question the fall will actually ask of you.

What the cap is, and what counts toward it

Part D has had a hard annual ceiling on drug spending since 2025, when the Inflation Reduction Act’s redesign of the benefit took full effect. Before that, the catastrophic phase still charged 5 percent coinsurance with no upper limit, and a specialty drug could run into five figures of coinsurance in a single year. The redesign removed the cost sharing in that phase entirely and put a dollar figure on the threshold that gets you there.

The threshold is indexed. Each year CMS increases it by the growth in average Part D drug spending per person and rounds to the nearest $50 — which is how $2,000 in 2025 became $2,100 in 2026 and $2,400 for 2027. The deductible ceiling moves on the same index, rounded to the nearest $5.

What counts toward the cap is the money you spend on drugs your plan covers:

• Your deductible, whatever your plan sets it at, up to the $700 ceiling.
• Your copays and coinsurance in the initial coverage phase.
• Certain payments made on your behalf — Medicare names Extra Help specifically, and payments from a state pharmaceutical assistance program or a charity count as well.

What does not count is a longer list, and it is where people miscalculate:

• Your monthly premium. Never. A plan with a $100 premium and a plan with a $0 premium have the same $2,400 cap on top of it.
• An IRMAA surcharge. The income-related amount added to Part D for higher earners — $14.50 a month at the first tier in 2026 — is paid to Medicare, not to the plan, and is not drug spending.
• A drug that is not on your plan’s formulary. If the plan does not cover it, what you pay for it is not Part D spending and does not move the meter. This is the single most common way a household that “should have hit the cap” did not.
• Drugs billed under Part B — chemotherapy infused at a clinic, injections given in the office, most drugs used with durable medical equipment. Those sit under Part B’s 20% coinsurance and, on Original Medicare, have no cap at all unless you hold a supplement.
• The discount the manufacturer gives on a brand-name drug. Under the redesigned benefit, that discount is paid behind the scenes and no longer counts toward your threshold the way the old coverage-gap discount did.

The practical consequence: the cap is a ceiling on covered drugs at network pharmacies, and the formulary decides which side of the line each of your prescriptions is on. That is why an Annual Notice of Change that moves one drug off the list matters more than one that raises a copay by five dollars.

The 2027 figures, next to this year’s

Sources: CMS, Announcement of Calendar Year 2027 Medicare Advantage Capitation Rates and Part C and Part D Payment Policies, April 6, 2026 (Attachment VI); CMS, annual release of the CY 2027 Part D national average monthly bid amount, July 28, 2026. The 2026 figures are the current CMS amounts.

Two things about that table. The cap rose by $300, or a little over 14 percent, which is a bigger jump than the $100 step from 2025 and reflects that Part D spending per person is climbing quickly. And the base premium rose by exactly 6 percent — not because costs rose 6 percent, but because 6 percent is the most the law allows the base figure to rise in a year through 2029. CMS’s own arithmetic put the uncapped figure at $94.06. The gap between those two numbers is the pressure the rest of this article is about.

Why the premium is the 2027 story, not the cap

The cap is set by statute and the plan cannot touch it. The premium is the plan’s to set, and 2027 is the year the training wheels come off.

For 2025 and 2026, CMS ran a voluntary Part D Premium Stabilization Demonstration: a federal payment to standalone drug plans that agreed to limit how much their premiums rose year over year, meant to cushion the transition to the redesigned benefit. On July 28, 2026 CMS announced it will not continue that demonstration into 2027, on the grounds that plans now have enough experience under the new benefit to price it on their own. From January, standalone drug plans operate under what CMS calls traditional market conditions.

What that means for you depends entirely on the plan you hold, and the only document that answers it is the Annual Notice of Change. A few things to expect when you open it:

1. The premium line may move by more than 6 percent. The 6 percent limit applies to the national base figure. An individual plan’s premium is the base adjusted by its own bid, its supplemental benefits and its rebates, and can move in either direction by more than that.
2. The deductible may go to $700. A plan that sat at $615 this year will very likely follow the ceiling up, because that is what a ceiling invites.
3. The formulary and the tiers may have moved. Plans facing higher costs tend to solve them on the drug list before they solve them on the premium, because the premium is the number people compare.
4. A plan may have been withdrawn or merged. If your letter says the plan is ending, you have a guaranteed path to a new one, but you also have a decision to make, and December 7 is the last day to make it cleanly.

On the standalone menu here, the range is wide. For 2026 the Part D region that covers every Arizona county lists ten standalone drug plans, with monthly premiums running from $0 to just under $120 — and deductibles from $0 up to the $615 ceiling — according to the CMS plan landscape data behind the Medicare Plan Finder. The same cap sits on top of all ten. What separates them is the premium, the deductible, the formulary and the pharmacy network, in roughly reverse order of how much attention each gets.

Does the cap apply to a Medicare Advantage plan with drug coverage?

Yes, identically. The $2,400 is a feature of the Part D benefit, so it applies to the drug side of a Medicare Advantage plan exactly as it applies to a standalone drug plan paired with Original Medicare or a Medicare Supplement.

The distinction worth holding onto is that an Advantage plan gives you two separate ceilings. The medical side has its own in-network out-of-pocket maximum — set by the plan, within a federal limit — that covers hospital stays, surgery, specialist visits and Part B drugs. The drug side has the $2,400. Neither counts toward the other. A year with a knee replacement and an expensive brand-name drug can run you to both ceilings independently, and the plan is not being difficult when it says so; that is how the benefit is built.

For someone on Original Medicare with a supplement, the picture is different in shape: Plan G closes the medical side almost entirely after the Part B deductible of $283, and the standalone drug plan carries the $2,400 on its own. The Advantage versus Medigap explainer covers the trade in full; the point here is only that the drug cap is the same number on both sides of it.

Spreading the cap across the year

Since 2025 every Part D plan has had to offer the Medicare Prescription Payment Plan. Opt in, and instead of paying the pharmacy at the counter you receive a monthly bill from your plan, with the year’s out-of-pocket drug costs spread across the remaining months.

Medicare’s own description is the honest one: it “might help you manage your monthly expenses, but it doesn’t save you money or lower your drug costs.” It is a cash-flow tool. Where it earns its keep is the household with one high-cost brand-name drug whose first fill of the year would otherwise land most of the $2,400 in January. Spread over twelve months, that is $200 a month rather than a single large bill in the first week of the year. Where it does little is the household on three generics that never comes near the cap.

You do not need to decide this during enrollment. You can opt in at any point in the year through your plan, and the earlier you do, the more months there are to spread the cost across.

How this reads at the two ends of Peoria

The north end and the south end of the city hear this news differently, and the difference is worth spelling out.

In Vistancia, Trilogy at Vistancia and the 85383 corridor, the household I usually sit across from is a recent arrival, often still on a drug plan chosen in another state, frequently with a seasonal address somewhere else, and more often than not on the wrong side of the IRMAA line. Three things follow for them:

• A standalone drug plan is the same across Arizona. Medicare Advantage menus are set county by county, which is why the Peoria–Glendale–Sun City ZIP seam produces different medical plan line-ups a mile apart. Standalone Part D is set by region, and the region is the whole state. If you are on Original Medicare with a supplement, the seam does not apply to your drug plan at all — and the plan travels with you to the summer place, with mail-order and a national pharmacy network.
• The IRMAA surcharge sits on top of the premium and outside the cap. Above $109,000 for a single filer or $218,000 filing jointly, based on your 2024 return, Part D carries a monthly surcharge that starts at $14.50. It is billed by Medicare, not the plan, and no amount of drug spending reduces it. If a one-off event drove that year’s income — the sale of the house you left behind, a Roth conversion — Form SSA-44 exists for exactly that, and it is a question for your tax advisor as much as for me. The IRMAA estimator shows where you land in about a minute.
• A plan bought in another state still works here, but it was priced for there. A standalone drug plan follows its region, and if you moved from a state in a different region, you were entitled to a Special Enrollment Period to pick an Arizona plan when you arrived. If you never did, this fall is the clean moment to compare — moving to Arizona has the mechanics.

In 85345 and Westbrook Village, the household has more often been on the same plan and the same pharmacy for a decade, and the risk runs the other way: the plan has changed underneath a person who stopped reading the letter years ago. The premium demonstration ending is precisely the kind of change that lands on a plan you have not compared since 2019. The pharmacy you have used for twenty years may have moved from preferred to standard in the network, which changes the copay without changing the plan’s name. And a formulary that dropped one drug is invisible until the January refill.

Either way, the number on the letter is not the decision. The decision is whether the plan that carries that number still fits the prescriptions in your kitchen drawer. Medicare in Peoria has the local version of all of this, and Medicare in Glendale the far side of the seam.

What to do between now and December 7

The Annual Enrollment Period opens October 15 and closes December 7. Whatever you hold on January 1 is what carries the $2,400 for the year. Between now and then:

1. Find the Annual Notice of Change. It was due to you by September 30. If it went to the recycling with the rest of the plan’s mail, call the plan and ask for another copy, or log in and download it. What the letter is and how to read it takes twenty minutes.
2. Check each of your drugs against the 2027 formulary, not the 2026 one. The letter lists the changes; the plan’s website has the full list. A drug that came off the list is a drug that no longer counts toward your cap.
3. Check your pharmacy’s network status for 2027. Preferred versus standard is the difference between two copays for the same bottle.
4. Compare the premium against the whole menu, not against last year. With the demonstration ending, a plan that was competitive at $0 in 2026 may not be at its new number, and one you dismissed may have become reasonable.
5. If you are near the cap most years, look at the Prescription Payment Plan. Not during enrollment — after, once you know which plan you are on for 2027.
6. If you have no drug plan at all, this is your window. The late enrollment penalty is 1 percent of the base beneficiary premium for every month you went without creditable coverage, and for 2027 that base is $41.33 — for as long as you have Part D. Whether you need a plan when you take nothing is a fair question with a clearer answer than it used to have.

The short version

• The 2027 Part D out-of-pocket cap is $2,400, up from $2,100 in 2026. CMS set it on April 6, 2026.
• The deductible ceiling rises to $700, from $615. Plans may charge less, or nothing.
• Premiums never count toward the cap. Nor do IRMAA, non-formulary drugs or Part B drugs.
• The base premium rises 6 percent to $41.33 — the legal maximum — and the federal demonstration that held standalone premiums down ends December 31, 2026.
• Your own plan’s 2027 premium, deductible and formulary are in the Annual Notice of Change, and they can move by more than the national figures.
• The cap applies to Medicare Advantage drug coverage too, as a separate ceiling from the plan’s medical maximum.
• The Prescription Payment Plan spreads the cost across the year. It does not reduce it.
• Standalone drug plans are set statewide, so the Peoria ZIP seam does not touch them.

If you would rather have someone check it for you

This is the one part of the plan year where a half-hour of comparison reliably pays for itself, and it is the part most people do least. Bring the letter and the pill bottles — or a photo of them — and I will run every prescription against every plan on the Arizona menu for 2027, with your pharmacy and your ZIP, and tell you what each one would cost across the whole year rather than in January. If the answer is “stay where you are”, that is what you will hear; it is the answer for a great many people most years.

The office is in Anthem, roughly 25 minutes from north Peoria out the Carefree Highway and down Lake Pleasant Parkway, and most of this happens by phone anyway. Call (602) 844-6002 or book a time — and if you call or text, that is your consent for me to reply the same way.

And if you do nothing else: open the letter. The $2,400 is the part that will not surprise you.