Medicare’s 2027 Drug Plan Changes Are Set. Here’s What They’ll Actually Cost You

Every fall, Medicare quietly resets a bunch of numbers that decide how much you’ll pay for health care next year. Most people don’t notice until a pharmacy bill surprises them in February. This year there’s more reason than usual to pay attention, because the changes cut in two different directions at once. Some costs are going up. Some are dropping by more than 80%. Which one applies to you depends entirely on what medications you’re taking and how you shop during open enrollment.

Start with the bad news, because it’s simple. The Part D deductible, what you pay out of pocket before your drug coverage kicks in, is rising from $615 in 2026 to $700 in 2027. That’s an $85 jump. The out-of-pocket maximum, the ceiling on what you’ll spend on covered drugs in a year, is climbing from $2,100 to $2,400. If you’re the kind of Medicare beneficiary who reliably hits that ceiling because of ongoing prescriptions, that’s $300 more coming straight out of your budget. If you’re counting on next year’s Social Security raise to cover it, the 2027 COLA is tracking near 3.6%, and Medicare costs take the first bite.

There’s a second, quieter hit. A temporary federal subsidy for stand-alone drug plans, which cut the base premium by $10 a month in 2026 and capped how much plan premiums could rise, is ending. CMS says the average stand-alone premium only inches up from about $35 to $36 a month. Averages hide a lot, though. KFF found there won’t be a single $0-premium stand-alone plan in 2027 for people without Extra Help, and people who stay in some of the biggest national plans face increases of $50 or more a month.

Here’s where it gets interesting. Medicare finished its second round of drug price negotiations, and the results are dramatic for anyone taking one of the affected medications. Here are three of the biggest cuts, per 30-day supply:

Be careful with the math, though. That $685 monthly drop is in the price Medicare and your plan pay, not what you pay at the counter. Part D already caps your out-of-pocket drug spending, at $2,400 in 2027. Under the standard benefit, someone whose only drug is Ozempic would hit that cap at the old $959 price. At $274, they’d pay about $1,350 for the year (the $700 deductible plus 25% coinsurance). That’s roughly $1,050 saved, which covers the $85 deductible increase many times over. Your plan’s actual copays will move the exact number.

The catch, and there’s always a catch, is that this only helps if you’re actually on one of the 15 negotiated drugs. If you’re not, you’re looking at the deductible increase with none of the offsetting relief. Pull up your list of prescriptions and check it against the negotiated drug list before you assume either way.

Stand-alone Part D plan options have shrunk hard. In 2021 the average beneficiary had 30 to choose from. For 2027, it’s down to 9, according to KFF, a 70% drop. Fewer choices sounds like it should make shopping easier, and in a way it does, there’s less to compare. But it also means the plan you’ve been on for years might have merged, changed its formulary, or hiked its premium, and there’s no guarantee a similar low-cost option is still sitting there waiting for you.

This is exactly the situation where auto-renewal quietly costs people money. Your current plan doesn’t ask permission to raise your premium or shuffle which drugs it covers at which tier. It just does it, and you find out when the first bill of the new year lands.

Picture two people. The first takes no prescriptions covered by the new negotiated prices and has ongoing costs that push them to the out-of-pocket max most years. They’re paying $300 more in 2027 than they did in 2026, full stop, plus whatever premium change their plan brings. The second is on Ozempic and switches to a plan that passes through the negotiated price. Under the standard benefit, they could save around $1,000 over the year on that drug alone, easily covering the deductible bump with plenty left over.

Most people fall somewhere in between, which is exactly why guessing isn’t a strategy. Pull your current plan’s 2027 Annual Notice of Change letter when it arrives, list out every medication you take, and run the numbers against at least two alternative plans before December 7.

Zoom out for a second, because the bigger number matters too. Fidelity estimates a 65-year-old retiring in 2026 will spend about $185,500 on health care over the course of retirement, up 7% from last year’s projection, an increase of roughly $13,000. Medicare doesn’t cover everything, and the gap between what it pays and what you’ll actually spend keeps widening. That’s not a reason to panic. It’s a reason to treat your annual plan review as seriously as you’d treat refinancing a loan.

If you’re already tracking your monthly spending in the SuperMoney app, this is a good time to add your Medicare premium and estimated drug costs as a recurring line item. Watching that number move in real time makes it a lot easier to catch a $300 increase in your budget before it catches you in February, and it gives you an honest baseline to compare against when you’re shopping plans.

You don’t need a financial planning degree to get through open enrollment well. You need about twenty minutes and a piece of paper. Write down every prescription you take, including dosage, and check each one against the newly negotiated drug list. If even one matches, that alone might justify switching plans.

Next, pull your current plan’s Annual Notice of Change letter. Every Medicare plan has to send one, and most people throw it out with the junk mail. It spells out exactly how your premium, deductible, and drug tiers are changing for 2027. Compare that against at least two other plans available in your area using Medicare’s plan finder tool. Pay attention to the total annual cost, not just the premium, since a plan with a lower premium and a worse formulary can easily cost more overall.

Finally, if you’re helping an aging parent with this, don’t assume they’ve already done it. A lot of people, especially those who’ve been happy with their coverage for years, skip the review entirely because change feels risky. Ironically, that’s exactly the group most likely to get quietly moved onto a worse deal.