What Is Medicare Part D? 2026 Costs, Coverage and 2027 Changes

Medicare Part D is the part of Medicare that helps pay for prescription drugs you fill at a pharmacy. It is optional and sold by private insurers approved by Medicare, either as a stand-alone drug plan or built into a Medicare Advantage plan. In 2026, no one with Part D pays more than $2,100 out of pocket for covered drugs, and that cap rises to $2,400 in 2027.

This guide covers what Part D pays for, what it costs, how to sign up and what changes on January 1, 2027. For the bigger picture, start with our guide to what Medicare is and how its parts fit together, or browse all our health guides.

What Medicare Part D covers

Original Medicare, meaning Parts A and B, covers hospital stays and doctor visits. However, it pays for very few of the pills you pick up at a pharmacy. Part D fills that gap. As our guide to Medicare Part B explains, Part B covers mostly drugs given in a clinic, such as some infusions and injections.

Every Part D plan has a formulary, which is its list of covered drugs. Plans must cover a range of drugs in common categories, but the exact list differs from plan to plan. Drugs are sorted into tiers, and lower tiers, usually generics, cost less.

A few rules apply to all plans:

• Insulin. Since 2023, you pay no more than $35 for a month’s supply of each covered insulin, and the deductible does not apply.
• Vaccines. Adult vaccines recommended by the CDC’s advisory committee, such as the shingles shot, cost nothing under Part D.
• Negotiated prices. Lower prices Medicare negotiated for 10 brand-name drugs took effect on January 1, 2026. Prices for 15 more take effect on January 1, 2027.

Plans can also use rules such as prior authorization or step therapy, which means trying a cheaper drug first. Check these before you enroll if you take an expensive medicine.

Medicare Part D costs in 2026 and 2027

You pay up to four kinds of costs: a monthly premium, a yearly deductible, your share of each prescription, and in some cases an income-related surcharge. The table shows the federal limits.

Sources: Medicare.gov costs for drug coverage and the CMS release on 2027 plan premiums.

The deductible figures are maximums. Some plans charge less or no deductible at all. Premiums also vary widely by plan and region, so the average is only a starting point.

The base beneficiary premium is not what you pay. Instead, it is a national figure that CMS uses to calculate the late enrollment penalty and certain subsidies. For 2027, CMS set it at $41.33, a 6% rise, which is the maximum yearly increase allowed through 2029.

Higher premiums for higher incomes

If your income is above a set level, you pay an extra monthly amount on top of your plan premium. This is called IRMAA. For 2026, it applies to individuals with modified adjusted gross income above $109,000, or couples above $218,000, based on 2024 tax returns. The surcharge ranges from $14.50 to $91.00 a month, according to the CMS 2026 fact sheet. The 2027 brackets are usually announced in November.

How the out-of-pocket cap works

Before 2025, Part D had a “donut hole” coverage gap and no hard ceiling on spending. Now the structure is simpler. First, you pay full plan price until you meet the deductible. Then you pay 25% of the cost of covered drugs. Once your own spending reaches the cap, you pay nothing more for covered drugs for the rest of the calendar year.

For example, suppose you take a brand-name drug with a plan price of $800 a month in 2026. In January you would pay the $615 deductible plus 25% of the remaining $185, or about $46. After that, you would pay $200 a month. By around September, your total would reach $2,100, and the plan would pay in full through December.

If large bills early in the year are hard to manage, the Medicare Prescription Payment Plan lets you spread your costs into monthly payments over the calendar year. Medicare.gov is clear that it does not lower your total costs, though. It only changes the timing.

Help with costs: Extra Help and other programs

Extra Help, also called the Low-Income Subsidy, lowers premiums, deductibles and copays for people with limited income and savings. According to Medicare.gov, the 2026 limits are:

• Individuals: income up to $23,940 and resources up to $18,090.
• Married couples: income up to $32,460 and resources up to $36,100.

In 2027, people with Extra Help pay a $0 premium and deductible on qualifying plans. They pay no more than $5.80 for each generic and $14.40 for each brand-name drug. You qualify automatically if you have Medicaid, a Medicare Savings Program or Supplemental Security Income. Otherwise, you can apply through Social Security. People with Extra Help also do not pay the late enrollment penalty.

Starting in 2027, Medicare also offers a GLP-1 Bridge. It gives people with Part D who meet certain requirements access to some GLP-1 drugs for weight loss with a $50 copay for a one-month supply.

When to sign up and the late enrollment penalty

You can first join a Part D plan during your Initial Enrollment Period. That is the seven months around your 65th birthday month: three months before, the birthday month and three months after. After that, the main window is Open Enrollment, which runs from October 15 to December 7 each year. Changes made then take effect January 1.

You may owe a penalty if you go 63 days or more in a row without drug coverage after your first window. That means no Part D and no other creditable coverage. Creditable coverage means coverage at least as good as Part D, such as many employer or union plans. Your plan must tell you each year whether it qualifies.

The penalty equals 1% of the national base premium for each full month you went without coverage. It is rounded to the nearest 10 cents and added to your premium for as long as you have Part D. For instance, someone who went 20 months without coverage would pay 20% of $41.33 in 2027, or about $8.30 extra each month. The details are on Medicare.gov’s page on avoiding late enrollment penalties.

How to choose a Part D plan

1. List your drugs and doses. Include anything you take regularly.
2. Use Medicare’s Plan Finder. The official Medicare Plan Finder estimates your yearly cost under each plan in your area, not just the premium.
3. Check your pharmacy. Preferred pharmacies often charge lower copays.
4. Look at coverage rules. Note prior authorization, step therapy and quantity limits on your drugs.
5. Review every fall. Plans change their formularies and prices each year, so compare again during Open Enrollment.

In California, free one-on-one counseling is available through HICAP, the state’s Health Insurance Counseling and Advocacy Program, run by the California Department of Aging. Counselors do not sell insurance.

This article is general information. Check with your doctor, your plan or Medicare directly about your own situation.

Frequently asked questions

What is Medicare Part D in simple terms?

It is optional prescription drug coverage for people with Medicare. Private insurers approved by Medicare sell it, and it pays for drugs you fill at a pharmacy.

Is Medicare Part D mandatory?

No. However, if you skip it without other creditable drug coverage, you may pay a late enrollment penalty for as long as you have Part D later.

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

It is $2,400, up from $2,100 in 2026. After you reach it, you pay nothing for covered drugs for the rest of the year.

Can I change my Part D plan?

Yes. During Open Enrollment, from October 15 to December 7, you can switch plans. The new plan starts January 1.

Have a question about this topic? Ask in the comments below. Our editors read every comment and answer questions here, and we add useful answers to the guide.

Sources

1. medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage
2. medicare.gov/drug-coverage-part-d
3. cms.gov/newsroom/press-releases/medicare-advantage-medicare-pres…
4. cms.gov/newsroom/fact-sheets/medicare-part-d-2027-national-avera…
5. cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-dedu…
6. medicare.gov/basics/costs/help/drug-costs
7. medicare.gov/publications/12229-your-medicare-in-2026-what-you-need-t…
8. cms.gov/files/document/infographic-negotiated-prices-maximum-fai…
9. medicare.gov/basics/costs/medicare-costs/avoid-penalties
10. medicare.gov/plan-compare
11. aging.ca.gov/Programs_and_Services/Medicare_Counseling