Medicare Part D

How Medicare Part D's coverage gap ends for Irvine

Irvine, California — Starting January 1, 2026, Medicare Part D will have something it has never had before: a firm ceiling on what you pay out of pocket for covered prescription drugs. That ceiling is $2,100. Once you hit it, you pay $0 for your covered Part D drugs for the rest of the calendar year.

For anyone in Irvine who has watched a specialty drug or a growing list of prescriptions eat into a fixed income, this remains one of the biggest structural changes to Medicare in years. Here is what is changing for 2027, and what to do about it before the Annual Enrollment Period closes on December 7.

The out-of-pocket cap, in plain English

Under Part D rules, your out-of-pocket spending on covered prescription drugs cannot exceed the annual cap — $2,100 in 2026 and $2,400 in 2027. That includes your deductible and your share of the cost at the pharmacy counter. It does not include your monthly plan premium, and it does not include drugs your plan does not cover.

The cap was set by the Inflation Reduction Act and adjusts each year. It was $2,000 in 2025, $2,100 in 2026, and CMS has set it at $2,400 for 2027.

A few things to keep in mind:

• The cap resets every January 1.
• It applies to Part D drugs — the prescriptions you pick up at the pharmacy — whether your Part D coverage comes through a stand-alone drug plan or is built into a Medicare Advantage plan.
• Part B drugs (things typically given in a doctor's office) are a separate cost bucket.

The "donut hole" is gone

If you have been on Medicare for a while, you probably remember the coverage gap — the "donut hole" — where your costs would jump partway through the year after you and your plan had spent a certain amount together. That phase was eliminated in 2025 and remains gone in 2027.

Part D now has three phases instead of four:

1. Deductible phase — you pay full negotiated price until you meet your plan's deductible (no more than $615 in 2026 and $700 in 2027). 2. Initial coverage phase — you pay a copay or coinsurance for each prescription. 3. Catastrophic phase — once your out-of-pocket spending hits the annual cap ($2,100 in 2026, $2,400 in 2027), you pay nothing for covered drugs for the rest of the year.

Plans can set a lower deductible than the maximum, but they cannot set a higher one.

The Medicare Prescription Payment Plan: spreading the cost

Here is the piece a lot of people miss. Hitting the annual cap is a relief over the course of a year, but if a big bill lands in January on an expensive medication, that is still a hard month.

That is where the Medicare Prescription Payment Plan comes in. It is a free, optional program that lets you spread your out-of-pocket drug costs across the calendar year in monthly payments instead of paying the pharmacy all at once.

A few things worth understanding:

• You still owe the same total amount. The program does not lower your drug costs; it smooths them out.
• Every Part D plan and every Medicare Advantage plan with drug coverage has to offer it.
• You have to opt in — it is not automatic. You can sign up before the year starts or any time during the year.
• If you opt in, you pay $0 at the pharmacy and get a monthly bill from your plan instead.

For people with predictable high drug costs early in the year, this can be a real help with cash flow. For people with low, steady drug costs, it may not be worth the paperwork.

What this means for Irvine residents this fall

Irvine is in Orange County, where Medicare beneficiaries continue to have a wide choice of stand-alone Part D plans and Medicare Advantage plans that include drug coverage. For 2027, the county has 92 Medicare Advantage plans from 16 carriers. Every one of those plans has to follow the Part D rules — the $2,400 out-of-pocket cap in 2027, the $700 maximum deductible in 2027, and the option to enroll in the payment plan.

But plans still differ in the things the cap does not touch: which drugs are on the formulary, what tier your specific medications land on, which pharmacies are in network, and monthly premiums. Two plans can both honor the $2,100 cap and still leave you with very different bills, because it depends on whether they cover your drugs at all.

That is why the Annual Enrollment Period — October 15 through December 7, 2026 — matters. Log in to your Medicare account, run your drug list through the Plan Finder at medicare.gov, and check that your 2027 plan covers what you take.

A quick note on IRMAA

If your income is higher, you may pay an income-related surcharge (IRMAA) on top of your Part B and Part D premiums. For 2026, IRMAA kicks in above $109,000 in income for a single filer (and above $218,000 for a couple filing jointly). It is based on your tax return from two years earlier. The $2,100 cap still applies to you — IRMAA is a premium add-on, not an out-of-pocket cost at the pharmacy.