Part D is the only part of Medicare with a hard annual ceiling on what you can be made to spend, and since the 2025 redesign the coverage gap — the “donut hole” — no longer exists. What remains is a short, legible structure, and one important limitation in how the cap is worded.
How a Part D plan is built
Every Part D plan has four moving parts, and they vary between plans within limits Medicare sets.
- A monthly premium, set by the plan. Higher-income households also pay a Part D IRMAA surcharge on top.
- A deductible, which the plan may set anywhere from $0 up to the annual maximum — $700 for 2027, $615 for 2026.
- A formulary: the list of drugs the plan covers, arranged in tiers that determine your share.
- An out-of-pocket cap: $2,400 for 2027. Once your spending on covered Part D drugs reaches it, you pay nothing for covered prescriptions for the rest of the calendar year.
What the cap is written against
Medicare’s wording is specific: you pay coinsurance until your out-of-pocket spending on covered Part D drugs reaches the cap. Two consequences follow, and both are routinely missed.
- A drug not on your plan’s formulary is not a covered Part D drug. What you spend on it does not move you toward the cap.
- Drugs paid under Part B are outside that sentence. Anything a clinician administers — an infusion, an office injection — is generally Part B, and Part B has no annual ceiling at all.
Payments made on your behalf, including through Extra Help, do count toward the cap.
Two protections that sit outside the deductible
Covered insulin products are capped at $35 for a one-month supply and carry no deductible — under Part D that limit applies to everyone who takes insulin, including people getting Extra Help. A three-month supply is no more than $35 for each month’s supply of each covered product.
Adult vaccines recommended by the Advisory Committee on Immunization Practices and not covered under Part B are $0 under Part D, with no copayment and no deductible.
Premiums move for reasons that are not your plan
The national base beneficiary premium is a reference figure Medicare publishes each year; it is what the Part D late enrollment penalty is calculated from, and it is not what you pay. It was $38.99 for 2026 and $41.33 for 2027.
Your own plan premium is set by the plan and can change at the turn of the year even when nothing about your prescriptions has changed. That is what the Annual Notice of Change in September is for.
Choosing a plan on your own drug list
The premium is the least useful number for comparing Part D plans, because the formulary and the tier your drugs sit on usually matter more to the annual total. Price your actual medication list rather than the headline premium — how to check your doctors and drugs sets out the method.
Also on this site
Dated coverage of this topic, where the figures move year to year:
Frequently asked questions
What is the Part D out-of-pocket cap for 2027?
It is $2,400, up from $2,100 in 2026. Once your out-of-pocket spending on covered Part D drugs reaches it, you pay nothing for covered prescriptions for the rest of the calendar year.
Can a Part D plan charge any deductible it likes?
No. Medicare sets a maximum each year and a plan may charge anything from $0 up to it. The maximum is $700 for 2027 and $615 for 2026.
Does everything I spend on medication count toward the cap?
No, and this is the most common misunderstanding. The cap is written against covered Part D drugs. A drug that is not on your plan’s formulary does not count, and drugs paid under Part B — infusions and office-administered injections — sit outside it entirely.
Is there still a donut hole?
No. The coverage gap was eliminated in the 2025 Part D redesign. What replaced it is the hard annual out-of-pocket cap described above.
Sources
- Medicare drug coverage (Part D) costs — Medicare.gov · read 2026-10-19
- Medicare Part D 2027 national average monthly bid amount — Centers for Medicare & Medicaid Services · read 2026-10-12
- Insulin — Medicare.gov · read 2026-10-16
This guide explains published rules and figures, with the source for each one. It is not advice about your own situation.