Two Ways to Get Part D Coverage
Original Medicare covers hospital and medical care but, with narrow exceptions, not the prescriptions you fill at a pharmacy. You add drug coverage in one of two ways:
- A standalone Medicare drug plan (PDP). It pairs with Original Medicare, often alongside a Medicare Supplement. You need Part A or Part B to join.
- A Medicare Advantage plan with drug coverage (MA-PD). Most Medicare Advantage plans include Part D, so medical and drug benefits come from one plan. You need both Part A and Part B.
Choose your medical path first; the drug coverage follows from it. If you are in an Advantage plan that includes drugs and you join a separate drug plan, you can be disenrolled from the Advantage plan.
The Three Coverage Stages
Medicare.gov describes three stages for Part D and Advantage drug coverage:
- Deductible stage. If your plan has a deductible, you pay the full cost of covered drugs until you meet it.
- Initial coverage stage. You pay 25% coinsurance for generic and brand-name drugs (or your plan’s copays) until your out-of-pocket spending on covered Part D drugs reaches the yearly threshold. Certain payments made on your behalf, such as through Extra Help, count toward it.
- Catastrophic coverage. Once you reach the threshold, you pay nothing for covered Part D drugs for the rest of the calendar year.
The old coverage gap, often called the donut hole, is no longer part of the benefit. Each month after you fill prescriptions, your plan sends an Explanation of Benefits showing what you paid and which stage you are in.
The 2026 and 2027 Part D Numbers
| Figure | 2026 | 2027 |
|---|---|---|
| Maximum deductible | $615 | $700 |
| Out-of-pocket threshold (cap on covered drugs) | $2,100 | $2,400 |
| National base beneficiary premium (used for the penalty) | $38.99 | $41.33 |
| Covered insulin, per one-month supply | No more than $35 | No more than $35 |
Three things the cap does not include: your monthly premium, drugs your plan does not cover, and drugs bought outside the plan’s rules. That is why checking that every drug you take is on the formulary matters so much.
Higher-income enrollees also pay a Part D surcharge in addition to the plan premium. In 2026 it ranges from $14.50 to $91.00 a month; the brackets are in our IRMAA guide.
Insulin and Other Protections
Medicare caps what you pay at no more than $35 for a one-month supply of each covered insulin product, and the Part D deductible does not apply to it. Part D covers injectable insulin, inhaled insulin, insulin used in disposable patch pumps, and supplies such as syringes and needles. If you use a traditional insulin pump covered as durable medical equipment, the insulin is covered under Part B, with the same $35 monthly cap.
The cap applies to insulin your plan covers, so the shopping question becomes whether your insulin is on the plan’s list.
Formularies, Tiers and Pharmacies
Every plan has a formulary, its list of covered drugs, usually organized into tiers. Lower tiers, mostly generics, cost less; higher tiers, such as specialty drugs, cost more. Plans can also use:
- Prior authorization: your prescriber has to get approval before the plan covers a drug.
- Step therapy: the plan asks you to try a lower-cost drug first.
- Quantity limits: a limit on how much the plan covers per fill.
Plans also build pharmacy networks, often with preferred pharmacies where the same drug costs less. Formularies, tiers and networks can change every January 1, which is why a yearly review during Open Enrollment (October 15 to December 7) is worth the time. Our step-by-step method is in how to check your doctors and drugs.
The Part D Late Enrollment Penalty
If you go 63 days or more in a row without Part D or other creditable drug coverage after your Initial Enrollment Period ends, a penalty is added when you do join. It equals 1% of the national base beneficiary premium for each full month you went without coverage, rounded to the nearest $0.10, and it usually lasts as long as you have Medicare drug coverage.
Medicare.gov’s own 2026 example: someone who waited 14 months owes 14% of $38.99, which is $5.46, rounded to $5.50 a month in addition to the plan premium. Because the base premium rises to $41.33 in 2027, the same penalty grows with it. Employer or union drug coverage counts as creditable if your plan says so in its yearly notice; keep those notices. More in our late enrollment penalties guide, or run your own figure in the Medicare penalty calculator.
Help Paying for Prescriptions
Extra Help is a Medicare program that lowers Part D premiums, deductibles and copays for people with limited income and resources. In 2026 the limits are $23,940 in income and $18,090 in resources for an individual, or $32,460 and $36,100 for a married couple. People with full Medicaid, a Medicare Savings Program or SSI get it automatically, and nobody pays a Part D late penalty while they get Extra Help. See Medicaid, Medicare Savings Programs and Extra Help.
Looking for more detail on the redesign and real-life cost examples? Our blog post Medicare Part D in 2026 covers it at length.
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Request a free comparison Call 208-350-9933Frequently Asked Questions
What is the Part D out-of-pocket cap for 2026 and 2027?
Once your out-of-pocket spending on covered Part D drugs reaches $2,100 in 2026, you move to catastrophic coverage and pay nothing more for covered Part D drugs for the rest of that calendar year. For 2027 the threshold is $2,400, according to Medicare.gov and the CMS CY 2027 Rate Announcement.
What is the maximum Part D deductible?
No Medicare drug plan may have a deductible above $615 in 2026 or $700 in 2027. Some plans have a lower deductible or none at all, so the deductible is one of the things worth comparing between plans.
How much does insulin cost with Medicare?
Medicare caps the cost at no more than $35 for a one-month supply of each Part D-covered insulin product, and the Part D deductible does not apply to it. Insulin used in a Part B-covered pump is also capped at $35 a month. Your specific insulin still has to be on your plan’s formulary.
Do I need Part D if I do not take any prescriptions?
You do not have to enroll, but if you go 63 days or more without Part D or other creditable drug coverage after your Initial Enrollment Period, a lifelong late penalty is added to your premium when you do join. Medicare.gov suggests considering a low-premium plan even if your drug costs are low now.
Can I have a standalone Part D plan and a Medicare Advantage plan?
Generally not if your Advantage plan includes drug coverage, which most do. Joining a standalone drug plan can end your enrollment in a Medicare Advantage plan with drug coverage. People in Original Medicare, with or without Medigap, pair it with a standalone Part D plan.
Related Guides
Coverage pages for this topic: Medicare Advantage · Medicare Supplement · Medicare Part D. Other topics in the Learning Center: Health Insurance (ACA), Life Insurance, Final Expense, Annuities, Long-Term Care, Disability Insurance, Supplemental Health, Short-Term Medical, Travel Insurance.
Sources
- Medicare.gov — Drug coverage (Part D)
- CMS — 2026 Medicare Parts A & B Premiums and Deductibles (fact sheet)
- Medicare.gov — Costs for Medicare drug coverage
- CMS — CY 2027 Medicare Advantage and Part D Rate Announcement
- Medicare.gov — Insulin coverage
- Medicare.gov — Avoid late enrollment penalties
- CMS — Medicare Part D 2027 national average monthly bid amount (base beneficiary premium)
- Medicare.gov — Help with drug costs (Extra Help, 2026 limits)
- Medicare.gov — Joining a plan (enrollment periods)
Figures are labelled with the year they apply to and were checked against the official sources above on the review date. Rules and amounts change; confirm current figures with the agency that publishes them. This guide is general education, not individual advice.