How Part D costs add up
Each plan has a drug list, called a formulary, that sorts covered drugs into tiers. Lower tiers cost less. Your costs follow three stages:
- Deductible. You pay full price until you meet it. The most a plan can charge is $615 in 2026 and $700 in 2027. Many plans charge less or skip it for cheaper tiers.
- Initial coverage. You pay copays or coinsurance, about 25% of the cost under the standard design.
- Catastrophic coverage. Once your out-of-pocket spending hits the cap, $2,100 in 2026 and $2,400 in 2027, you pay $0 for covered drugs the rest of the year.
Spread big costs across the year
If one expensive drug would put you at the cap in January, the Medicare Prescription Payment Plan lets you pay those costs in monthly installments instead of all at once at the pharmacy. Your total stays the same. You can opt in through your drug plan.
How to compare drug plans
Plans that look cheap on premium can cost more for your exact drugs. Before you pick one:
- List every drug with dose and how often you take it.
- Check each drug's tier and any prior authorization or quantity limits.
- Price your drugs at your pharmacy. Preferred pharmacies often cost less.
- Add premium plus expected drug costs to see your real yearly total.
Plans change their drug lists every year, so a plan that fit in 2026 may not fit in 2027. A free plan review during Annual Enrollment catches those changes.
Avoid the late enrollment penalty
If you go 63 days or more without Part D or other creditable drug coverage after you become eligible, Medicare adds a penalty to your premium for as long as you have Part D. It equals 1% of the national base premium for each month you went without coverage. If you have little to no drug costs now, a low-premium plan still protects you from that penalty.