How the 2027 cap works
The Inflation Reduction Act replaced the old coverage stages with a hard yearly limit starting in 2025. Medicare.gov describes three stages:
- Deductible. If your plan has one, you pay the full cost of covered drugs until you meet it. No plan can set a 2027 deductible above $700, and some have none.
- Initial coverage. You pay your plan's copays or coinsurance for covered drugs. Under Medicare's standard benefit that's 25% of the cost; your plan's own amounts may differ.
- Catastrophic coverage. When your out-of-pocket spending on covered Part D drugs reaches $2,400, you move here automatically and pay nothing more for covered Part D drugs until December 31.
Your monthly Explanation of Benefits shows how close you are. CMS sets the cap each year in its Rate Announcement; the 2027 amount was published in April 2026.
What counts, and what doesn't
| Counts toward the cap | Doesn't count |
|---|---|
| Your deductible, copays and coinsurance for drugs on your plan's formulary (including approved exceptions) | Monthly premiums and any Part D late penalty |
| Certain payments made for you, such as Extra Help | Drugs your plan doesn't cover, or drugs bought with a discount card instead of your plan |
| Costs billed to you through the Medicare Prescription Payment Plan | Part B drugs, such as many infusions and eye injections |
| The Medicare GLP-1 Bridge copay for weight-management drugs |
Insulin has its own protection: each covered insulin costs no more than $35 for a one-month supply, with no deductible, and what you pay still counts toward the cap.
What it means in Ohio
Every one of Ohio's 9 standalone Part D plans for 2027, and every Medicare Advantage plan with drug coverage, has the same $2,400 limit; plans can't set a higher one. Plans still differ in which drugs they cover and how much you pay before you reach it, which is why the formulary matters more than the cap when you compare. If you take a high-cost specialty drug, you may hit the cap within the first months of the year; the Medicare Prescription Payment Plan lets you spread those costs over monthly bills. Try the drug cap calculator, or compare plans for your drugs on PlanMatch. You can also request a call from a licensed insurance agent.
Related questions
Is there still a Medicare donut hole?
What replaced the coverage gap.
What is the Medicare Prescription Payment Plan?
Monthly bills instead of big pharmacy charges.
How many Part D plans are in Ohio for 2027?
Ohio's 2027 plan count.
Sources
- CMS — CY 2027 Rate Announcement (2027 Part D deductible and out-of-pocket threshold)
- Medicare.gov — How much does Medicare drug coverage cost?
- Medicare.gov — Medicare Prescription Payment Plan
- CMS — Medicare GLP-1 Bridge (copay outside the Part D benefit)
- Medicare.gov — Insulin
More questions in this guide
- Do I need Medicare Part D if I don't take any drugs?
- Does Ohio have a prescription drug assistance program for seniors?
- How many Part D plans are available in Ohio for 2027?
- Is there still a donut hole in Medicare Part D?
- What is the Medicare Prescription Payment Plan?
- Which drugs have Medicare negotiated prices for 2027?
Part of the guide: Medicare Part D in Ohio · All questions
Frequently asked questions
Does my premium count toward the Part D cap?
No. Monthly premiums, including any late enrollment penalty or income-related amount, never count toward the $2,400 cap. Only what you pay for covered Part D drugs counts.
Does the Medicare Advantage out-of-pocket maximum include drugs?
No. A Medicare Advantage plan's yearly maximum covers Part A and Part B services. Its Part D drug coverage has its own separate $2,400 cap in 2027.
Does the cap reset every year?
Yes. It resets on January 1. If you reach it in 2026, you start over in 2027, and the cap amount is adjusted each year.
Does Extra Help count toward the cap?
Yes. Medicare.gov says certain payments made on your behalf, such as through Extra Help, count toward your out-of-pocket spending.
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