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Drug prices & Part D

Medicare Part D Deductible Rises to 700 Dollars and Out-of-Pocket Drug Cap Reaches 2,400 Dollars for 2027

The Inflation Reduction Act tied the Medicare Part D annual deductible and catastrophic spending limit to drug cost growth, and both parameters rise again for 2027, continuing an upward pattern as specialty and GLP-1 drug spending climbs across the program.

By the Goodsurance editorial teamAugust 4, 2026

The standard Medicare Part D drug plan deductible will rise to 700 dollars in 2027, up from 615 dollars in 2026, and the annual out-of-pocket spending cap will increase to 2,400 dollars from 2,100 dollars, according to the CMS 2027 Medicare Advantage and Part D Rate Announcement.

Both thresholds are set by a formula in the Inflation Reduction Act of 2022 that links the parameters to the annual growth rate of per-capita drug spending across the Part D program. Because program-wide drug spending has continued to rise, driven partly by the spread of high-cost specialty medications and GLP-1 drugs, both figures move upward each year.

The 2027 Medicare Part D deductible rises to 700 dollars and the annual out-of-pocket cap reaches 2,400 dollars, both adjusted upward by the IRA drug cost formula.

At the same time, the IRA permanently eliminated the Medicare Part D coverage gap, known as the doughnut hole, beginning in 2025. Before that change, beneficiaries could face thousands of dollars in additional cost-sharing mid-year when their spending entered the gap. Now, the benefit moves through three phases: a deductible phase, an initial coverage phase, and a catastrophic phase in which the enrollee pays nothing more for covered drugs for the rest of the calendar year.

The IRA also limits the annual increase in the base Part D beneficiary premium to no more than 6 percent through 2029. CMS confirmed the 2027 base premium at 41 dollars and 33 cents in late July 2026.

For most Part D enrollees, reaching the 2,400-dollar threshold requires very high-cost medications. Those treating cancer, multiple sclerosis, or rheumatoid arthritis with specialty drugs are most likely to reach the catastrophic phase and benefit from the zero cost-share protection that follows.

In plain words

Medicare Part D helps pay for prescription drugs. In 2027, you will pay the first 700 dollars of drug costs yourself before Part D starts paying. This is called the deductible. It goes up from 615 dollars in 2026. There is also a yearly cap on drug costs. Once you reach 2,400 dollars in covered drug spending in 2027, you pay nothing more for covered drugs that year. The cap was 2,100 dollars in 2026. Both numbers rise each year based on how much drug costs grow across the program. The old coverage gap, which used to add costs mid-year, is permanently gone under the 2022 law.

Understand the basics first

Source: CMS
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