Medicare’s Drug Cap Rises to $2,400 in 2027. Here’s How the Monthly Payment Option Works

Staff October 19, 2026October 19, 2026

(Source: Medicare.gov, UnitedHealthcare, Medical Daily, Richify, MedicareGuide.com)

The most people with Medicare will pay out of pocket for covered Part D drugs next year is $2,400. A free option called the Medicare Prescription Payment Plan can spread that cost across the year, but it doesn’t reduce what a person owes.

In 2027, the most anyone in a Part D plan pays out of pocket for covered drugs is $2,400, up from $2,100 in 2026. That limit applies to everyone with Medicare drug coverage, whether or not they join the payment plan. Open Enrollment is running now, and it is a good time to look at a payment option most people on Part D have never used.

What the cap covers

Under the standard benefit, a person pays the first $700 as a deductible, then 25% of the cost of each prescription until out-of-pocket spending reaches $2,400. After that, covered drugs cost nothing for the rest of the year. The cap is reached once total drug costs, plan and person together, hit $7,500. Premiums do not count toward it.

How the payment plan works

The plan lets people pay their share of drug costs in monthly installments instead of paying the full amount at the pharmacy counter.
Every Part D plan and every Medicare Advantage plan with drug coverage offers it. Participation is voluntary and free.
Members opt in through their plan, receive a monthly bill instead of paying at the pharmacy, and are billed using the same formula across plans. Each month’s bill is based on what the person owes for prescriptions, divided by the number of months left in the year, until the $2,400 maximum is reached.
For example, someone who reaches the full cap in January and stays enrolled all year would be billed roughly $200 a month.

What it doesn’t do

Medicare says the option does not save money or lower drug costs. For a person on an expensive specialty drug, the difference is cash flow, not total cost. In a calendar year, a participant never pays more than they would have paid at the pharmacy, or more than the $2,400 cap. Medicare’s own fact sheet says whether it will help depends on the person’s situation.

Two things to watch

First, timing matters. The later someone joins, the fewer months are left to spread the cost over, so each bill is larger. Second, the bills continue after the cap is reached. A person who hits the $2,400 maximum still owes their remaining monthly payments for the rest of the year, and past-due balances from earlier months can be added to a bill.

If you’re already enrolled

Participants from 2025 or 2026 who stay with the same plan are automatically re-enrolled unless they opt out. Those who switch plans must opt in again.

What to do

Estimate the year’s out-of-pocket drug costs, then see whether paying them over time would help the household budget. People who expect to spend little on drugs may not need the plan. Medicare.gov has a page on how to opt in. Plans can also explain how a given month’s bill will be calculated.