Medicare Part D covers prescription drugs, and 2027 is a significant year for drug coverage due to changes from the Inflation Reduction Act. If you’re on Original Medicare with a standalone Part D plan — or evaluating a Medicare Advantage Prescription Drug (MAPD) plan — here’s what to know before AEP ends December 7.
The $2,000 Out-of-Pocket Drug Cap
One of the most important changes: Medicare Part D now has a $2,000 annual out-of-pocket cap on drug costs. Once you’ve paid $2,000 in covered drug costs in a calendar year, your plan covers 100% for the rest of the year. This replaces the old “donut hole” structure and is a major benefit for people on expensive medications.
How Part D Formularies Work
Every Part D plan has a formulary — a list of covered drugs organized into tiers:
| Tier | Drug Type | Typical Cost |
|---|---|---|
| Tier 1 | Generic drugs | $0–$5 |
| Tier 2 | Preferred generics | $5–$15 |
| Tier 3 | Preferred brand | $35–$60 |
| Tier 4 | Non-preferred brand | $75–$100+ |
| Tier 5 | Specialty drugs | 25–33% coinsurance |
The #1 Mistake People Make With Part D
Choosing the lowest-premium plan without checking whether their specific drugs are on the formulary. A $10/month premium plan that doesn’t cover your $400 medication costs far more than a $35/month plan that covers it at Tier 2.
Always run a drug-by-drug comparison before choosing a Part D plan.
Part D Late Enrollment Penalty
If you don’t enroll in Part D when first eligible and go without creditable drug coverage, you’ll pay a permanent penalty: 1% of the national base premium for every month you delayed. This adds up quickly over the years.
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Paul Z. Olah · Licensed Medicare Broker · NPN 20795999 · 856-880-6340
Do You Need a Standalone Part D Plan?
If you’re on a Medicare Advantage plan that includes drug coverage (MAPD), you already have Part D. A standalone Part D plan is for people who choose to stay on Original Medicare.
Review your drug coverage before December 7. Book a free consultation and I’ll run a full formulary comparison for your specific medications.