What is Medicare Part D?

Medicare Part D is Medicare's prescription drug coverage, created in 2006. It is offered through private insurance companies, either as a standalone plan alongside Original Medicare or bundled into a Medicare Advantage plan.

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

For 2027, the annual out-of-pocket limit for covered Part D prescription drugs is $2,400. Once you reach that threshold, you pay $0 for covered drugs for the rest of the calendar year under the standard benefit. The maximum deductible is $700.

Is the Medicare donut hole gone?

Yes. The coverage gap known as the donut hole has been eliminated. The redesigned Part D benefit replaces it with a hard annual out-of-pocket cap.

What is the Part D late enrollment penalty?

If you go 63 days or more without Part D or other creditable prescription drug coverage after first becoming eligible, you may owe a late enrollment penalty. It is permanent and grows the longer you go without coverage.

When can I change my Part D plan?

During the Annual Enrollment Period, October 15 through December 7, with changes taking effect January 1. If you are in a Medicare Advantage plan, the Advantage Open Enrollment Period from January 1 through March 31 offers a second opportunity. Special Enrollment Periods may apply if you move or lose other coverage.

How do I choose the right Part D plan?

Look beyond the monthly premium. Check whether your specific medications are on the plan formulary, what tier they fall in, your copays, the deductible, which pharmacies are in network, and whether your drugs carry quantity limits, prior authorization, or step therapy requirements.

Is insulin capped under Part D?

Yes. Covered insulin is capped at $35 per month under any Part D plan, whether standalone or bundled into a Medicare Advantage plan.

Medicare Part D

Reviewed by Scott Bowling, licensed independent Medicare broker. Texas License #2882146. Last reviewed September 2026. Medicare Part D is Medicare’s prescription drug coverage. It was created in 2006 to help people with Medicare pay for prescription medications and protect against high prescription drug costs. Medicare Part D is offered through private insurance companies, giving you the ability to compare plans and choose coverage based on the medications you take, the pharmacies you use, your costs, and the plan’s formulary. Part D coverage is voluntary, but enrolling when you are first eligible can help you avoid a Part D late enrollment penalty if you do not have other creditable prescription drug coverage.

Medicare Part D Changes for 2027

Medicare Part D has undergone significant changes in recent years, and the benefit continues to evolve in 2027. One of the most important changes is the annual limit on what you pay out of pocket for covered Part D prescription drugs. For 2027, the standard Part D benefit includes:

$700 maximum deductible for plans that charge a deductible.
$2,400 annual out-of-pocket limit for covered Part D prescription drugs.
The coverage gap, commonly called the “Donut Hole,” remains eliminated.
Once you reach the $2,400 annual out-of-pocket threshold, you pay $0 out of pocket for covered Part D drugs for the remainder of the calendar year under the standard benefit.
Covered insulin remains capped at $35 per month, and recommended adult vaccines under Part D remain at $0.
Medicare Part D plans continue to offer the Medicare Prescription Payment Plan, which allows eligible enrollees to spread their out-of-pocket prescription drug costs over the calendar year rather than paying the full amount when prescriptions are filled.

The $2,400 limit applies to covered Part D prescription drugs. It does not mean that every person with Part D will spend $2,400. Your actual costs depend on the plan you choose, the medications you take, whether your drugs are covered by the plan, which pharmacy you use, and whether you qualify for programs that help with prescription costs.

Choosing a Medicare Part D Plan

Part D plans are offered by private insurance companies, and plans can vary significantly from one another. When comparing plans, it is important to look beyond the monthly premium. You should also consider:

The prescription drugs you take
Whether your medications are covered by the plan’s formulary
Your copays or coinsurance for each medication
The plan’s deductible
Which pharmacies are in the plan’s network
Preferred pharmacies that may offer lower costs
Your estimated total annual prescription costs
Whether your medications have quantity limits, prior authorization, or step-therapy requirements

A plan with a low monthly premium is not necessarily the plan with the lowest overall prescription costs for you. Your medications and pharmacy choices can make a significant difference in what you actually pay.

Enrolling in Medicare Part D

You generally become eligible for Medicare Part D when you first become eligible for Medicare. Your Initial Enrollment Period gives you an opportunity to enroll in prescription drug coverage. If you have Medicare Advantage, your plan may already include Part D prescription drug coverage. These plans are commonly called Medicare Advantage plans with prescription drug coverage (MA-PD). If you have Original Medicare and want prescription drug coverage, you can enroll in a standalone Medicare Part D plan. This is the usual setup for people who also carry a Medicare Supplement, since Medigap policies do not include drug coverage. If you do not enroll in Part D when you are first eligible and you go without Part D or other creditable prescription drug coverage for 63 days or more, you may have to pay a late enrollment penalty when you enroll later. That penalty is permanent and grows the longer you wait. You can enroll in a Part D plan directly through Medicare or work with a licensed Medicare advisor who can help you compare available options.

When Can You Change Your Part D Plan?

Each year, Medicare’s Annual Enrollment Period (AEP) runs from October 15 through December 7. During this period, you can review your current coverage and make changes to your Medicare Advantage or Part D coverage for the following year. Changes take effect January 1. If you are already enrolled in a Medicare Advantage plan, the Medicare Advantage Open Enrollment Period from January 1 through March 31 gives you a second chance to add or drop Part D coverage as part of switching plans. You may also qualify for a Special Enrollment Period if you move, lose other creditable drug coverage, or your plan is discontinued. Your medications, pharmacy, plan formulary, premiums, deductibles, and other costs can change from year to year. That is why reviewing your Part D coverage each year matters, even if your current plan worked well for you this year.

Your Prescription Drugs Matter

The right Part D plan depends on the medications you actually take. Before choosing or changing a plan, make a list of your prescriptions, including the name, dosage, and how often you take each medication. It is also helpful to know which pharmacy you prefer. We can help you compare your available Medicare prescription drug options and look at how your medications and pharmacy choices affect your estimated costs. Don’t choose a Part D plan based solely on the monthly premium. Look at the complete picture. Call Scott Bowling directly at 512-844-3983, or pick a time and I’ll call you. We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options. We are not connected with or endorsed by the United States government or the federal Medicare program.