Medicare’s Drug Spending Cap Jumps 14% to $2,400 in 2027. Even After She Hits It, Monthly Premiums Keep Coming

Imagine a 70-year-old retiree who takes an expensive brand-name drug. She opens her plan’s Annual Notice of Change (ANOC) and starts working out next year’s budget. The maximum Part D deductible rises from $615 to $700 in 2027, and the annual out-of-pocket cap climbs from $2,100 to $2,400. The Centers for Medicare & Medicaid Services (CMS) finalized both figures in April. She expects to hit the cap, but wonders whether that ends her monthly premium payments too. It doesn’t. Any premium her plan charges keeps coming after her covered prescriptions stop costing her at the pharmacy.

Open enrollment closes December 7, so she still has time to act on these numbers.

Your Plan’s Deductible May Sit Well Below $700

The $700 figure is a ceiling. No drug plan may charge more, and some plans have no deductible. Under Part D’s standard benefit, you pay 25% of covered drug costs after the deductible. Your actual plan can use different copays or coinsurance, so check what it charges for your prescriptions. When your out-of-pocket spending on covered Part D drugs reaches $2,400, catastrophic coverage starts and you owe nothing for covered drugs for the rest of the calendar year. Certain payments made on your behalf, such as Extra Help, count toward the threshold.

Your deductible payments count toward the $2,400. Adding the two into a $3,100 limit overstates your risk. In 2027, the most you can pay for covered drugs is $2,400, which is $300 more than in 2026.

Four Bills That Keep Coming After You Hit the Cap

• Your plan premium. You pay it whether you get covered drugs or not. Catastrophic coverage leaves it alone, and premiums never count toward the $2,400.
• The Part D income surcharge. Higher-income enrollees pay an income-related monthly adjustment amount (IRMAA) on top of their plan premium. In 2026, it ranges from $14.50 to $91 a month, starting above $109,000 of income for individual filers and $218,000 for married couples filing jointly. Medicare uses adjusted gross income plus tax-exempt interest. For 2027, Social Security generally looks at your 2025 tax return, but the 2027 brackets and surcharge amounts determine the bill.
• Drugs excluded from your plan. A prescription outside your plan’s covered drug list generally doesn’t count toward the cap unless the plan approves coverage through an exception. Purchases made with a discount card outside your Part D coverage generally don’t count either.
• Everything outside Part D. The standard Part B premium was $202.90 a month in 2026, or $2,434.80 a year, and the Part B deductible was $283. CMS has not released the 2027 figures yet.

IRMAA surcharges join other Medicare costs that hit retirees after the headline premium. We mapped out the surcharges, coverage gaps, and premium traps in a free Medicare guide if you want the full picture before December 7.

Heavy Users Feel the $300 While Light Users Feel the Premium

Consider two hypothetical enrollees whose plan charges a $45 monthly premium and applies the full $700 deductible to their prescriptions, followed by 25% coinsurance. Neither receives Extra Help or other assistance, and their drug prices stay the same all year.

Heavy user: Her covered brand-name drug has a negotiated pharmacy price of $1,500 a month. In January, she pays the $700 deductible plus 25% of the remaining $800, totaling $900. She pays $375 a month from February through May, reaching the $2,400 cap. From June through December, she owes nothing for covered Part D prescriptions, but her premium payments continue.

Light user: His two generics cost $360 a year. He never gets past even the old $615 deductible, so neither 2027 increase impacts him.

The best deal depends on their prescriptions. If the heavy user expects to reach the cap in every plan she compares, a lower premium can reduce her annual bill. But she still needs to check that the plan covers her drug, works with her pharmacy and has no access restrictions she cannot meet. Any income surcharge comes on top.

Three Moves Before December 7

1. Run Medicare Plan Finder with your actual drug list. Enter every drug, dose, and pharmacy, then sort by estimated total annual cost, which adds premiums to drug costs. Doing nothing means you roll into your current plan’s 2027 version, with whatever formulary and pharmacy changes came with it.
2. Check each drug against the 2027 formulary, the plan’s covered drug list. If yours is missing, compare other plans or ask whether your prescriber can support a coverage exception. If it moved to a more expensive tier, ask about a separate tiering exception to lower your share, where available. Verify prior authorization and step therapy requirements too.
3. Spread the bill if January hurts. If you expect high drug costs early in the year, ask about the Medicare Prescription Payment Plan before your first expensive fill. Once enrolled, you pay the plan in monthly installments instead of paying the pharmacy. It changes when you pay, not how much, and installments for earlier prescriptions can continue after you reach the cap.

Contact [email protected] for any questions or corrections.