The $2,400 Part D cap in 2027: what counts toward it, what does not, and why two people with the same plan hit it in different months
Once your spending on covered drugs reaches $2,400, you pay nothing more for them until January. The catch is in the word covered, and most people do not find that out until the pharmacy counter.
The short answer
The 2027 Medicare Part D out-of-pocket maximum is $2,400, up from $2,100 in 2026. Once your spending on covered Part D drugs reaches it, you pay nothing more for those drugs for the rest of the calendar year. Premiums do not count. Neither do drugs your plan does not cover, or drugs billed under Part B. The count resets every January 1.
- The number: $2,400 for 2027, up from $2,100 in 2026 and $2,000 in 2025.
- What counts: Your own payments on covered formulary drugs, plus the deductible, plus payments made for you by Extra Help, a State Pharmaceutical Assistance Program, or most charities.
- What does not: Your monthly premium, drugs off your plan's formulary, and medications billed under Part B.
- Deductible: The 2027 standard deductible is $700, and every dollar of it counts toward the cap.
Applies to anyone with Part D drug coverage, whether through a standalone plan alongside Original Medicare or built into a Medicare Advantage plan. It matters most if you take a brand-name or specialty medication.
What the $2,400 cap actually promises
Once your out-of-pocket spending on covered Part D drugs reaches $2,400 in a calendar year, you pay nothing more for those drugs until December 31. The plan covers the rest.
That is a real protection and it is new. Before 2025 there was no annual limit at all, and someone on a specialty medication could spend ten thousand dollars or more in a year with no ceiling. The Inflation Reduction Act set the cap at $2,000 for 2025, and it is indexed annually. CMS finalized $2,100 for 2026 and $2,400 for 2027.
The number people miss is where it sits relative to the deductible. The 2027 standard deductible is $700, and it counts toward the $2,400. So the cap is not $2,400 on top of the deductible. It is $2,400 total.
What counts toward the cap
Medicare calls the running total your true out-of-pocket costs, or TrOOP. Four things feed it:
- Your deductible
- Your copays and coinsurance on covered drugs
- Payments made on your behalf through Extra Help, the low-income subsidy
- Payments from a State Pharmaceutical Assistance Program or most charity assistance
That last pair surprises people. Money someone else pays for your covered drugs still moves you toward the cap. It is not limited to what leaves your own bank account.
What does not count, and this is where it gets expensive
| Does not count | Why |
|---|---|
| Your monthly premium | Premiums are the cost of having coverage, not a cost of drugs. You keep paying them every month of the year, including after you hit the cap |
| Drugs not on your plan’s formulary | If the plan does not cover it, spending on it generally sits outside the Part D benefit entirely |
| Medications billed under Part B | Most infusions and drugs given in a doctor’s office are Part B. Separate benefit, separate rules, no Part D cap |
| What your plan pays | Only your share counts, not the insurer’s |
The formulary line is the one that costs real money. If your drug is not covered, the $2,400 ceiling never engages for it. You could spend well past $2,400 on that medication and the cap would not help, because none of it counted.
So a plan can advertise the same $2,400 protection as every other plan and still be the wrong plan for you, purely because of what it covers.
Why two people on the same plan hit the cap in different months
Because the cap is a spending threshold, not a schedule.
Someone taking three generics may spend a few hundred dollars across a whole year and never come near $2,400. For them the cap is theoretical, and premium is close to the whole decision.
Someone on one specialty medication for rheumatoid arthritis, multiple sclerosis or cancer can clear the deductible and reach the cap within the first two months of the year. For them the premium is almost irrelevant to total cost, because they will land at roughly $2,400 on covered drugs under any plan that covers the drug. What differs between plans is whether it is covered at all, what they must clear to get it filled, and what they pay in premiums on top across twelve months.
Those are two completely different shopping problems, and the same advice does not serve both.
The cash flow problem nobody mentions
Hitting the cap in February is better than having no cap. It is still a very expensive January and February.
The Medicare Prescription Payment Plan exists for exactly this. It lets you spread your out-of-pocket drug costs across monthly payments through the year instead of paying it at the counter in one or two large amounts. It is free to join and it does not change what you owe in total, only when you owe it.
Two details matter. Join before your first expensive fill, because it smooths costs forward rather than refunding what you have already paid. And if you switch plans, you have to elect it again with the new plan; staying put means automatic re-enrollment.
How to use the cap when comparing plans
Four checks that matter more than the premium
- Is every medication you take on the plan’s formulary for 2027? Not on a similar plan. That one.
- What tier is each drug on, and does the plan require prior authorization, step therapy or a quantity limit?
- What is the deductible, and does it apply to your drugs or only to brand tiers?
- Run your actual list through the plan finder at Medicare.gov and compare the estimated annual total, not the monthly premium.
If you take an expensive drug, rank the plans by whether they cover it properly, then by premium. If you take only generics, the premium matters more and the cap probably will not affect you at all.
What else changed for 2027
The deductible rose to $700 from $615, which is a larger jump than usual. Plans can set a lower deductible or none, and many exempt generic tiers, so the $700 is a ceiling rather than a certainty.
Separately, the federal subsidy that held down standalone drug plan premiums ended after 2026. That affects the premium line rather than the cap, and we covered the mechanism in why your 2027 Part D premium is going up.
Both figures are printed in the Annual Notice of Change your plan mailed by September 30. If you have not read it, start there rather than with plan shopping.
The deadline
Changes for 2027 have to be made between October 15 and December 7, with coverage starting January 1. The rules for that window, and the narrower one that follows in January, are in our guide to the Annual Enrollment Period.
If your plan is being discontinued entirely, you have different and better options than the standard window allows, including a path to Medigap without medical underwriting. Our page on Part D has the broader picture, and our Medicare page is the place to start if you would rather talk it through.
Questions people ask
Does my monthly premium count toward the $2,400?
No. Premiums never count, and neither does the share your plan pays. Only your own spending on covered drugs counts, along with amounts paid on your behalf by Extra Help, a state pharmaceutical assistance program, or most charity assistance.
What if my drug is not on the formulary?
Then what you spend on it generally does not count toward the cap at all, and the cap never engages for that drug. This is the single most expensive misunderstanding about the $2,400 figure. Check the formulary before you check the premium.
Does the deductible count toward the cap?
Yes. The 2027 standard deductible is $700 and every dollar of it counts. Nothing you spend on covered drugs is wasted.
Do drugs from my doctor's office count?
Usually not. Medications administered in a clinical setting, including most infusions, are typically billed under Part B rather than Part D, and Part B spending does not count toward the Part D cap.
Does the cap reset if I switch plans mid-year?
No. If you change Part D or Medicare Advantage drug coverage during the year, the amount already counted toward your true out-of-pocket total transfers to the new plan. It resets only on January 1.
What happened to the doughnut hole?
It was eliminated beginning in 2025. The benefit now has three phases: deductible, initial coverage, then catastrophic coverage once you reach the cap. There is no longer a coverage gap between them.
Sources
- CMS, 2027 Medicare Advantage and Part D Rate Announcement, April 2026
- CMS, Medicare Part D 2027 National Average Monthly Bid Amount Information, July 28, 2026
- Medicare.gov, Costs for Medicare drug coverage, accessed September 19, 2026
- Medicare.gov, Find health and drug plans, accessed September 19, 2026
Want to know when you would actually hit the cap?
Send your medication list and the pharmacy you use. A licensed advisor will show you what each plan would cost you across the year, including which month you would reach the cap. One business day, no cost.
Check my drug costsCall or text (773) 657-9140Smart Insurance Agents LLC is an independent, licensed insurance agency and is not connected with or endorsed by the U.S. government or the federal Medicare program. We do not offer every plan available in your area. Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Assistance Program for information on all of your options. Content is for general information and is not a guarantee of coverage or rates; figures are subject to change by CMS and carriers.