Medicare Part D

Medicare Drug Benefit Changes — Montpelier, VT 2027

MONTPELIER, Vt. — Starting January 1, 2027, no one with Medicare Part D will pay more than $2,400 out of pocket for covered prescription drugs in a calendar year. It's a continuation of the biggest change to Medicare's drug benefit in years, and it lands right in the middle of Fall Open Enrollment, which runs through December 7.

For Vermonters comparing plans this season, understanding how the new cap works — and how it fits together with the end of the coverage gap and a new monthly payment option — can help you avoid costly missteps.

The Part D cap, in plain English

Under Part D rules set by the Centers for Medicare & Medicaid Services (CMS), your annual out-of-pocket spending on covered prescription drugs is capped at $2,100 in 2026 and $2,400 in 2027. Once you hit that number, you pay nothing for covered drugs for the rest of the calendar year.

A few things to know:

• The cap resets every January 1.
• Only your spending on covered drugs on your plan's formulary counts toward it.
• Premiums do not count toward the cap.
• The Part D deductible can be no higher than $615 in 2026 and $700 in 2027, though some plans set it lower.

If you take even one high-cost specialty drug, this cap is a meaningful safety net. In past years, people with serious conditions could spend many thousands of dollars a year at the pharmacy counter. That ceiling is now much lower and, importantly, predictable.

The "donut hole" is gone — here's what replaced it

For nearly two decades, Part D had a confusing middle stage called the coverage gap, or "donut hole," where your share of drug costs jumped for a stretch before catastrophic coverage kicked in.

As of 2025, the coverage gap has been eliminated. Part D now has three phases:

1. Deductible phase — you pay the full negotiated price until you meet your plan's deductible (up to $700 in 2027). 2. Initial coverage phase — you pay a copay or coinsurance, and your plan pays the rest, until your out-of-pocket spending reaches $2,400 in 2027. 3. Catastrophic phase — you pay nothing for covered drugs for the rest of the year.

That's it. No more donut hole math.

The Medicare Prescription Payment Plan: spreading costs across the year

Here's a piece many people miss. Even with the cap ($2,100 in 2026, $2,400 in 2027), hitting that number early in the year can still be a shock — especially if you fill an expensive prescription in January.

To help, CMS created the Medicare Prescription Payment Plan (sometimes called "M3P"). It's optional, free to join, and available through every Part D plan, including the drug coverage inside Medicare Advantage plans.

Here's how it works:

• Instead of paying the pharmacy directly, you pay $0 at the counter for covered drugs.
• Your plan bills you monthly for what you would have owed, spread across the remaining months of the year.
• You still pay the same total amount — this just smooths it out.

It won't lower your drug costs, but it can make a big January bill feel more manageable. You can opt in at any point during the year by contacting your Part D plan.

A common mistake to avoid: signing up mid-year and being surprised that earlier out-of-pocket costs aren't refunded. The payment plan only smooths costs going forward.

What this means during Open Enrollment

Montpelier is in Washington County, where Medicare beneficiaries have a range of stand-alone Part D plans and Medicare Advantage plans with drug coverage to choose from during the Annual Enrollment Period (October 15 – December 7).

Because the rules of the road have changed, this is a good year to actually re-shop, even if you've been happy with your plan. A few things to check:

• Your drug list. Is every medication you take still on your plan's 2027 formulary?
• Your pharmacy. Is it still "preferred" under the plan? That can affect your cost share.
• Tier changes. A drug that was Tier 2 this year could be Tier 3 next year.
• Total annual cost estimate, not just the premium. The Plan Finder at medicare.gov shows this.

If you miss the December 7 deadline, you generally have to wait a full year to switch stand-alone Part D coverage. Medicare Advantage members get one more window — the Medicare Advantage Open Enrollment Period, January 1 through March 31 — to make a single change.

A quick word on higher-income beneficiaries

If your income is above $109,000 as a single filer (or $218,000 filing jointly) based on your 2024 tax return, you'll pay an income-related monthly adjustment amount (IRMAA) on top of your standard Part D premium in 2026. Social Security notifies you by mail. If your income has since dropped — because you retired, for example — you can request a reconsideration.