Medicare's 2027 plan year is here, and it brings one of the most significant shifts in prescription drug costs in years: your Part D out-of-pocket spending cap rises to $2,400, up from $2,100 in 2026. At the same time, plan choices are shrinking — the average beneficiary will see fewer standalone drug plans and Medicare Advantage options than last year — even as CMS projects broad premium stability for 2027. With Medicare's Annual Enrollment Period open until December 7, 2026, the decisions you make now lock in your coverage for all of next year.
As a Medicare insurance professional with more than 20 years in the field, I've seen what happens when beneficiaries assume last year's plan will simply carry over. It usually doesn't. This guide walks through the concrete 2027 changes — Advantage plan shakeups, the Part D out-of-pocket cap, discontinued drug plans, newly negotiated drug prices, and Medigap limits — so you can review your own coverage before the deadline.
How is the Medicare Advantage market changing for 2027?
Medicare Advantage (Medicare Part C), the private-plan alternative to Original Medicare, is holding steady on price while shrinking on choice. CMS projects the weighted average monthly Advantage premium will drop from $14.37 in 2026 to $12.00 in 2027, a decline of 16.5% (CMS). But the number of plans is falling: the average beneficiary now has about 28 Medicare Advantage plans with drug coverage to choose from, down from 32 in 2026 (KFF).
That lower average is not uniform. Plan availability varies sharply by county — roughly one in five beneficiaries has more than 40 Advantage drug-plan options for 2027, while a small share of enrollees have none at all (KFF). Insurers are also pulling plans out of individual counties, so your neighbor may have plenty of choices even as your own plan disappears.
What does the $2,400 Part D out-of-pocket cap mean for you?
The headline change for 2027 is the rise in the annual out-of-pocket spending limit for covered Part D drugs, which climbs to $2,400, compared with $2,100 in 2026. Once your qualifying drug spending hits that threshold, you generally owe no further cost-sharing for covered prescriptions for the rest of the calendar year. The standard benefit's maximum deductible also increases, from $615 in 2026 to $700 in 2027 — though individual plans can set lower deductibles.
Those numbers push more of the cost upfront. With a higher deductible and a higher cap, beneficiaries with costly specialty drugs should compare plans on their actual medications, not on the lowest monthly premium. A plan with a slightly higher premium may cover your specific drugs far more generously than a cheaper one that leaves you paying a larger share out of pocket.
Why are standalone Part D plans disappearing?
Standalone Part D prescription drug plans are thinning out for a fourth consecutive year. The average beneficiary's options fall from 11 plans in 2026 to 9 in 2027, with most states offering 8 or 9 plans rather than 10 or more (KFF). Alongside the shrinking lineup, there will be no zero-premium standalone plans for enrollees who don't receive low-income subsidies in 2027, and some enrollees staying put could face premium jumps of $50 or more a month (KFF).
Across both Medicare Advantage and standalone drug plans, an estimated 4.3 million beneficiaries will see their current plan terminated at the end of 2026 (KFF). If your carrier notifies you that your plan is being discontinued, read the notice carefully: some carriers automatically move you to a replacement plan, while others require you to act. A gap in drug coverage means full-price prescriptions in January.
One option those affected should weigh: people whose Medicare Advantage plan is terminated qualify for a guaranteed-issue (Medigap) special enrollment period, meaning they cannot be denied a supplemental policy or charged more for a pre-existing condition (KFF). That protection is time-limited, so it's worth deciding early whether you want to switch to Original Medicare with a Medigap plan.
One reassurance for those with Original Medicare plus a Medigap policy: switching your standalone Part D plan does not require changing your Medicare Supplement coverage. You can keep your existing Medigap policy while choosing a different drug plan.
Should you lean on a Medicare Supplement plan in 2027?
With Advantage plans disappearing and drug costs rising, more beneficiaries are weighing Original Medicare paired with a Medicare Supplement (Medigap) policy — a private plan that covers many of the deductibles and coinsurance Original Medicare doesn't pay. A key advantage is freedom: most Medigap policies let you see any doctor or hospital nationwide that accepts Medicare, without being locked into an Advantage provider network. For 2027, Medigap plans K and L carry out-of-pocket limits of $8,360 and $4,180 respectively, adjusted upward by CMS from the prior year (CMS). Beneficiaries who already hold a Medigap policy generally don't need to change it just because Advantage or Part D plans are shifting — but those considering a move should act within any guaranteed-issue window to avoid medical underwriting.
How is Medicare's drug price negotiation expanding in 2027?
Medicare's Drug Price Negotiation Program adds another batch of drugs in 2027. Beginning that year, negotiated prices take effect for an additional 15 prescription drugs under the program, spanning treatments for diabetes, obesity-related conditions, and other chronic illnesses. Actual savings vary by medication and plan, but the goal is to lower what Medicare — and by extension many beneficiaries — pays for some of the most expensive prescriptions on the market.
These negotiated prices pair with the broader Part D reforms already reshaping drug costs. The $2,400 out-of-pocket cap means that even with rising drug prices, you now have a defined ceiling on what you'll spend on covered prescriptions in a given year.
What should you do before the December 7 deadline?
Medicare's Annual Enrollment Period runs from October 15 through December 7, 2026, with any changes you make taking effect January 1, 2027. During this window you can review and switch Medicare Advantage and standalone Part D plans, but you cannot adjust your Medigap policy the same way — Medigap changes are subject to underwriting outside guaranteed-issue windows.
Before deciding, check three things in your Annual Notice of Change: whether your doctors and hospitals stay in-network, whether your medications remain covered, and whether your plan still exists in 2027. If your plan is discontinued or consolidated, act early rather than waiting — a gap in coverage means full-price care and prescriptions in January.
Switching from Medicare Advantage back to Original Medicare does not automatically guarantee you a Medigap policy. Depending on your state and circumstances, medical underwriting may apply. The safest rule is simple: review your coverage carefully, understand what's changing, and avoid unnecessary changes to a plan that's already working for you. If you need help comparing options, Medicare.gov's Plan Finder and 1-800-MEDICARE are available around the clock.
1How do I know if my plan is being discontinued?
Your plan's Annual Notice of Change letter — sent each fall — tells you if your plan is ending, consolidating, or changing premiums, networks, or formularies for the coming year. Compare any replacement offer against Medicare.gov's Plan Finder rather than accepting it automatically.
2Can I change plans outside the December 7 deadline if mine is discontinued?
Yes, for most people the Annual Enrollment Period (October 15 to December 7) is the only window to switch Medicare Advantage or Part D plans. A terminated plan, however, triggers a special enrollment period that can open additional windows, including guaranteed-issue rights for a Medigap policy.
3Does the $2,400 Part D cap cover all my healthcare costs?
No. Your Part D out-of-pocket cap applies to covered prescriptions, and the $2,400 limit does not extend to medical services, doctor visits, or hospital care — those are governed by your Part A/B deductibles and your Medigap or Advantage cost-sharing.
Don't assume your 2026 coverage will carry over to 2027
The Medicare marketplace for 2027 is stable on price but narrower on choice. Some beneficiaries will pay less — the average Advantage premium is projected to fall, and drug-premium increases are modest for many — while others face higher deductibles, shrinking networks, or a plan that no longer exists. Your single most important move is to review your Annual Notice of Change before December 7, 2026 and confirm your doctors, drugs, and plan itself survive the transition.
If your plan is being discontinued or consolidated, don't wait — the guaranteed-issue window for a Medigap switch is time-limited, and a gap in drug coverage means full-price prescriptions in January. And for anyone whose current coverage still works well, the simplest advice is also the best: avoid unnecessary changes.
As a Medicare insurance professional with more than 20 years of experience, my goal is the same for every client — to help you understand your options and make informed decisions that protect both your health and your finances.
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