4 Medicare Part D and Medicare Advantage Updates Arriving in 2027

A key part of retirement planning is figuring out whether you can afford medical care. Medicare, the federal health insurance program for people age 65 and older, is designed to help with that.

Medicare coverage can shift from year to year, changing prescription costs, available benefits, and the plans offered in your area.

Below are four important updates to Medicare Part D and Medicare Advantage to keep in mind when choosing coverage.

Higher Medicare Part D out-of-pocket limit

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

For 2027, the annual out-of-pocket limit for covered Part D drugs will be $2,400, up from $2,100 in 2026. The standard deductible will also increase from $615 to $700. These are baseline amounts, and some individual plans may set lower deductibles.

Under the standard benefit design, beneficiaries usually pay the deductible first and then their share of covered prescription costs. Once eligible out-of-pocket spending reaches the annual cap, catastrophic coverage begins and no additional cost sharing is charged for covered Part D drugs for the rest of the year.

Not all prescription costs count toward the cap. Medications not included on your plan’s formulary generally do not count unless coverage is approved through an exception or appeal.

Before enrolling, review your medications, confirm which drugs are covered, and compare prices at your preferred pharmacies. A plan with a lower monthly premium may not be the cheapest choice for your prescriptions.

Changes to the Medicare Prescription Payment Plan

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

Enrollment is optional, and the program does not lower the total amount you owe for prescriptions. It only changes when you pay. Monthly bills can vary during the year, and any remaining balance still must be paid even if you leave the program.

If you already take part, check your plan’s notices and instructions before the new plan year begins. Make sure you know whether your enrollment will continue and whether you need to take any steps to opt out.

Possible benefit cuts in Medicare Advantage

Medicare Advantage, also called Medicare Part C, is a private alternative to Original Medicare offered through insurers that contract with Medicare. Many plans include prescription coverage and may add benefits such as dental, vision, or hearing care.

For 2027, some Medicare Advantage plans are cutting benefits, altering cost-sharing rules, or leaving certain service areas. That means your current plan may not offer the same coverage next year, even if the insurer still operates where you live.

The end of temporary federal subsidies that helped offset Part D premiums could also affect the price 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 choose and the coverage you need.

Check your Annual Notice of Change to see whether your premiums, drug coverage, provider network, or extra benefits are changing. Compare those details with other available plans before making a decision.

Fewer Medicare Advantage choices in some areas

Medicare Advantage availability is changing nationwide for 2027, and some beneficiaries may have fewer choices than before.

According to a KFF analysis, 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 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, compared with 123 counties in 2026.

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

Do not assume your current coverage is still the best option. Compare the plans available where you live, including provider networks, prescription formularies, premiums, deductibles, and out-of-pocket costs.

What to know about Medicare open enrollment

Medicare’s annual open enrollment period runs from October 15 through December 7 for coverage that starts at the beginning of the next year. Use this time to review your current plan and decide whether another option better matches your health care needs and budget.

There are several enrollment periods to understand:

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

2) Annual Open Enrollment Period: During this window, eligible beneficiaries can join, switch, or drop a Medicare Advantage plan or a Medicare Part D prescription drug plan. Changes generally take effect at the start of the next year.

3) Medicare Advantage Open Enrollment Period: During this period, 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 allow you to change plans outside the usual enrollment windows. Eligibility and deadlines depend on the situation.

Review your plan documents and use Medicare’s official plan comparison tools to explore your options. If you need help, your State Health Insurance Assistance Program offers free, personalized Medicare counseling.

Bottom line

Whether you are enrolling in Medicare for the first time or thinking about changing plans, it helps to understand the changes ahead. That way, you can pick the plan that best supports your health needs while preparing financially for retirement.

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