4 Changes to Both Medicare Part D and Medicare Advantage Taking Effect in 2027

A crucial part of building your retirement plan is knowing whether you can afford health care services. Medicare, the government's health insurance plan for individuals over age 65, is intended to help you do just that.

Medicare coverage can change from year to year, affecting how much you pay for prescriptions, which benefits you receive, and which insurance plans are available where you live.

Here are four important changes to Medicare Part D and Medicare Advantage to know about before choosing your coverage.

Increased Medicare Part D out-of-pocket maximum

Medicare Part D helps you pay for prescription drugs through stand-alone drug plans and Medicare Advantage plans that include prescription coverage.

For 2027, the annual out-of-pocket cap for covered Part D medications will be $2,400, an increase from $2,100 in 2026. The standard Part D deductible will also rise from $615 to $700. These are the standard benefit amounts; individual plans may offer lower deductibles.

Under the standard benefit structure, beneficiaries generally pay their plan's deductible first, followed by their share of covered prescription costs. Once eligible out-of-pocket spending reaches the annual cap, catastrophic coverage begins, and beneficiaries pay no additional cost sharing for covered Part D drugs for the remainder of the calendar year.

Not every prescription expense counts toward the cap. Drugs that aren't covered by your plan's formulary generally won't count unless the plan approves coverage through an exception or appeal.

Before enrolling, review your medications, check which drugs your plan covers, and compare the costs at your preferred pharmacies. A plan with a lower monthly premium may not necessarily be the least expensive option for your prescriptions.

Updates to the Medicare Prescription Payment Plan

The Medicare Prescription Payment Plan allows people with Part D coverage to spread eligible out-of-pocket prescription costs across monthly bills instead of paying the full amount at the pharmacy counter. The program launched in 2025 and remains available to eligible beneficiaries in 2027.

Participation is voluntary, and the program does not reduce the total amount you owe for your prescriptions. Instead, it changes when you pay those costs. Your monthly bill can vary throughout the year, and you still must pay any outstanding balance even if you leave the program.

If you're already participating, check your plan's notices and instructions before the new plan year begins. Confirm whether your participation will continue and what steps, if any, you need to take to opt out.

Potentially reduced benefits with Medicare Advantage

Medicare Advantage, also known as Medicare Part C, is an alternative to original Medicare offered by private insurers that contract with Medicare. Many plans include prescription drug coverage and may offer extra benefits, such as dental, vision, or hearing services.

For 2027, some Medicare Advantage plans are reducing benefits, changing cost-sharing requirements, or withdrawing from certain service areas. That means your current plan may not offer the same coverage next year, even if the insurer continues operating in your area.

The end of temporary federal subsidies that helped offset Part D premiums could also affect the cost of some drug coverage. Although the federal government has projected relatively modest premium increases for many beneficiaries, your actual costs will depend on the plan you select and the coverage you need.

Review your Annual Notice of Change to see whether your premiums, prescription coverage, provider network, or supplemental benefits are changing. Compare those details with other available plans before deciding.

Fewer Medicare Advantage plans to choose

Medicare Advantage plan availability is changing across the country for 2027, and some beneficiaries may have fewer options than they did this year.

According to an October 2026 analysis by KFF, UnitedHealth Group is exiting 228 counties and entering nine for 2027. Humana is exiting 62 counties and entering four. These changes reflect where the companies offer Medicare Advantage prescription drug plans and do not necessarily mean that every member in those counties will lose coverage.

KFF also found that 193 counties will have no Medicare Advantage prescription drug plans available for general enrollment in 2027, up from 123 counties in 2026.

If your plan is ending, your insurer should notify you and explain your options. You may be able to select another Medicare Advantage plan or return to Original Medicare. If you switch to Original Medicare, consider whether you need a separate Part D prescription drug plan and whether supplemental coverage is available.

Don't assume your current coverage will automatically remain the best choice. Compare the available plans in your area, including their provider networks, prescription formularies, premiums, deductibles, and out-of-pocket costs.

What you need to know about Medicare open enrollment

Medicare's annual open enrollment period runs from Oct. 15 through Dec. 7, 2026, for coverage beginning Jan. 1, 2027. Use this time to review your current coverage and decide whether another plan better fits your health care needs and budget.

There are several enrollment periods to understand:

1) Initial Enrollment Period: This generally applies when you first become eligible for Medicare. For people turning 65, it lasts seven months: the three months before their birthday month, their birthday month, and the three months afterward.

2) Annual Open Enrollment Period: From Oct. 15 through Dec. 7, eligible beneficiaries can join, switch, or drop a Medicare Advantage plan or a Medicare Part D prescription drug plan. Changes generally take effect Jan. 1. 

3) Medicare Advantage Open Enrollment Period: From Jan. 1 through March 31, people already enrolled in Medicare Advantage can generally switch to another Medicare Advantage plan or return to Original Medicare. They can also join a separate Part D plan if they return to Original Medicare.

4) Special Enrollment Period: Certain life events, such as moving outside your plan's service area or losing qualifying coverage, may give you an opportunity to change plans outside the usual enrollment windows. Eligibility and deadlines depend on the circumstances.

Review your plan's coverage documents and use Medicare's official plan comparison tools to check your options. If you need help, your State Health Insurance Assistance Program (SHIP) offers free, personalized Medicare counseling.

Bottom line

Whether you are enrolling in Medicare for the first time or considering switching plans, it pays to understand upcoming changes. Then, you can choose the best plan for your health as you prepare yourself financially for retirement. 

You May Also Like

23 Ways To Get Money Without Getting A Second Job

By FinanceBuzz Editors

How To Save Money on Car Insurance: 12 Ways to Lower Rates

By Elyssa Kirkham

10 Things Seniors Born Between 1941-1969 Could Take Advantage Of

By FinanceBuzz Editors

19 Dumbest Things Smart People Waste Money On

By Team FBZ

7 Moves If You Want to Stop Living Paycheck to Paycheck

By FinanceBuzz Editors

7 Clever Ways to Crush Your Debt

By FinanceBuzz Editors

Save Money and Get Huge Discounts on Everyday Purchases

AARP Benefits

• Huge discounts on travel, groceries, prescriptions and more
• Access to financial planning resources and health tools
• Join AARP and get 25% off with automatic renewal

Become a member now!

---

Subscribe Today

Unlock the Best Banking Deals and Bonuses

From high-yield savings accounts to cashback checking and sign-up bonuses, we bring you the best banking offers to grow your money smarter.

or

SEE TOP BANKING OFFERS →

By submitting this form you agree to receive emails from FinanceBuzz and to the privacy policy and terms