Medicare Open Enrollment 2027: What Switching Your Drug Plan Saves

Medicare open enrollment runs from October 15 to December 7, 2026, and whatever plan you hold on December 7 is the plan you pay for all of 2027. Most people let it roll over. For some of them that is the right call; for others it quietly costs several hundred dollars a year. The difference comes down to three numbers: your drug plan's premium, its deductible, and how much your prescriptions cost in total.

The 2027 rules make that arithmetic sharper. The Part D deductible rises to $700 and the yearly cap on what you pay for covered drugs rises to $2,400, both up about 14%. The Social Security raise is 3.6%, about $75 a month on the average check, and the Part B premium takes a slice of it before it arrives. This guide puts all of it in dollars for one retiree with three different drug bills and two plan choices.

Who this is for: people on Medicare choosing a Part D drug plan or a Medicare Advantage plan for 2027, and adult children helping a parent compare plans. What it does not cover: Medigap rules, which vary by state — in most states, buying a Medigap policy outside your first enrollment window lets the insurer ask health questions (your State Health Insurance Assistance Program, SHIP, can tell you your state's rules); and eligibility details for Medicaid, Medicare Savings Programs and Extra Help — Medicare.gov/extrahelp and your state Medicaid office have the income and asset limits. Nothing here is medical advice: never change a medication because of its price without talking to the prescriber or pharmacist.

The numbersWhat changes on January 1, 2027

Three terms carry the rest of this guide:

• Part D is Medicare's prescription drug coverage. You get it either as a standalone drug plan next to Original Medicare, or built into a Medicare Advantage plan.
• Medicare Advantage (Part C) is a private plan that replaces Original Medicare's Parts A and B and usually includes drug coverage. You still pay the Part B premium on top of whatever the plan charges.
• The out-of-pocket cap is the most you pay in a year for drugs your plan covers — deductible, copays and coinsurance together. Once your share reaches $2,400 in 2027, you pay $0 for covered drugs for the rest of the year. Premiums do not count toward it, and neither do drugs your plan does not cover.

On premiums, CMS's September 28 projection is calm: the average standalone drug plan goes from $35.09 to $36 a month, the average Medicare Advantage premium falls from $14.37 to $12.00, and the average drug portion of Advantage plans falls from $11.32 to $7. CMS also says 88% of people without Extra Help can get a basic drug plan for $10.30 a month or less. Averages hide the spread, though — the federal Premium Stabilization Demonstration, which held some standalone premiums down in 2025 and 2026, ends this year, so your own plan's change is the number to check, not the average.

The raiseWhat the 3.6% COLA leaves after Part B

The Social Security Administration announced the 2027 cost-of-living adjustment on October 14: 3.6%. It estimates the average retired worker's check rises from $2,095 to $2,170 in January 2027 — $75 a month, or $900 a year. For most people on both programs, the Part B premium is deducted from that check before it is paid.

CMS has not yet announced the 2027 Part B premium; it usually does in November, and SSA says the new amount will show in your my Social Security Message Center from late November. Until then the best official figure is the Medicare trustees' June 2026 projection of $209.50, up $6.60 from $202.90.

On the projection, Part B takes 8.8% of the raise and leaves $820.80 a year. The Part B deductible also rises $9, to a projected $292, which you pay once before Part B starts sharing doctor and outpatient costs. If CMS sets the premium $10 above the projection, at $219.50, the increase would take 22% of the average raise instead. The fuller picture of who keeps the least of the COLA, including the taxation of benefits, is in the 2027 COLA in dollars.

The Part B change is the same whatever you choose. The drug plan is where a choice at open enrollment moves money.

Three drug billsStay or switch, priced out

Take the same retiree, on Original Medicare with the $2,170 check, choosing between two drug plans for 2027. The premiums are illustrative — your actual choices are on Medicare's Plan Finder — but the shapes are common:

• Plan A — stay: $40 a month (close to the national average), no deductible, 25% of the drug's cost until the cap.
• Plan B — switch: $10.30 a month (the price CMS says 88% of people can find), the full $700 deductible, then 25% until the cap.

"Drug spending" below means the total cost of your covered prescriptions for the year — what the plan and you pay together, the figure shown as the full price on the Plan Finder, not just your copays.

The result runs against intuition. The cheap plan loses for the light and middle users, because they pay the whole $700 deductible on the cheap plan before coverage starts, and it wins for the heaviest user — the person most people would steer toward a "richer" plan.

The reason is the cap. With $12,000 of drugs, both plans stop at the same $2,400, so the only thing left that differs is the premium: $480 a year against $123.60. Once you are certain to hit the cap, a lower premium is pure savings, and the deductible no longer matters. A $700-deductible plan reaches the cap at $7,500 of yearly drug spending; a no-deductible plan at $9,600.

The model's crossover points, found by testing every dollar of spending from $0 to $15,000:

• Below about $475 a year of drug spending, the cheap plan wins — the deductible barely bites and the premium gap does.
• From about $475 to $8,175, the no-deductible plan wins, by up to $168.60.
• Above about $8,175, the cheap plan wins, by up to $356.40, because both plans are at or near the cap.

Real plans are messier than these two. Many charge flat copays by tier instead of 25%, many skip the deductible for cheap generics, and prices can differ between preferred and other pharmacies. None of that changes the logic: add twelve months of premium to your estimated share of drug costs, and compare totals rather than premiums.

The whole billMedicare as a share of the check

Adding the projected Part B premium ($2,514 a year) and Part B deductible ($292) to each drug scenario gives the yearly cost of Original Medicare plus a drug plan — before any doctor or hospital coinsurance and without a Medigap policy:

Choosing the wrong plan of the two moves those totals by $94 to $356 a year. That is real money on a fixed income — for the high spender it is 4.5 times the year's projected Part B increase of $79.20 — but it is smaller than the basic cost of being on Medicare, which is why the budget line deserves more attention than the plan brochure.

Cash flowWhen the money leaves, month by month

A yearly total hides when you pay it. On the $700-deductible plan, the specialty-drug user pays $775 in January (the whole deductible plus 25% of the rest of the first fill), $250 a month from February to July, $125 in August, and then nothing until the counter resets on January 1, 2028. A no-deductible plan spreads it more evenly, but both are front-loaded.

The Medicare Prescription Payment Plan exists for this. Every Part D plan and every Advantage plan with drug coverage offers it, at no cost: instead of paying the pharmacy, you get a monthly bill from the plan, with no interest or fees. Each bill is your new drug costs plus the unpaid balance, divided by the months left in the year. For the same specialty-drug user, joined in January, the bills run $64.58 in January, rise each month, and level off at $273.72 from August to December — the same $2,400, with no month above $274 instead of a $775 January. It does not lower the total, and Medicare's own guidance says it helps least when drug costs are low or the same every month. Two details matter at open enrollment: participation renews automatically each year, but it ends if you switch plans, so a new plan means signing up again with the new plan.

Whichever way it is paid, give it a fixed line. In the Budget Tracker put Part B, the drug plan premium and the expected monthly drug share as three separate lines against the new deposit, and in the Bill Tracker set the premium and the payment-plan installment as monthly bills with due dates — a premium that is billed rather than deducted can lapse if a payment is missed. For the longer view, the Retirement Calculator shows how much of your spending the $2,170 check still covers when health costs rise faster than the COLA. Inflation at 3.7% runs that comparison for prices in general.

Medicare AdvantageThe same test with one more number

If you are in a Medicare Advantage plan, the drug arithmetic is identical — the plan's drug deductible, copays and the $2,400 cap — but two more numbers go into the total:

• The plan premium, which CMS projects averages $12 a month in 2027, often $0. You still pay the Part B premium.
• The plan's medical out-of-pocket maximum, the most you pay in a year for covered doctor and hospital care. Each plan sets its own, below a federal ceiling, and it is often several thousand dollars. A $0-premium plan with a high maximum can cost far more than a premium plan in a year with a hospital stay.

The plan's network matters as much as any of these: check that your doctors and your usual hospital are in it for 2027, because networks change from year to year. Your plan's Annual Notice of Change, sent in September, lists every change to premiums, cost sharing, drugs and network for 2027 — read it before deciding to stay.

There is a second window for Advantage members only: from January 1 to March 31, 2027 you can switch once to another Advantage plan or go back to Original Medicare and add a drug plan. Going back to Original Medicare is the step where Medigap underwriting can apply, so check your state's rules with SHIP first.

The penaltyWhat not choosing a drug plan costs

If you have no drug coverage at all — no Part D and no other "creditable" coverage, such as an employer or VA plan at least as good — skipping the drug plan is not free either. The late enrollment penalty is 1% of the national base beneficiary premium ($41.33 in 2027) for every month without coverage, rounded to the nearest 10 cents, added to your premium for as long as you have Part D. Two years without coverage adds $9.90 a month, and it is recalculated every year as the base premium moves. A $10.30 plan you barely use is often cheaper than that penalty over the rest of your life.

What to doBefore December 7

A parent's spouse who retired before 65 is not on Medicare yet; their coverage, and the subsidy cliff that decides its price, are in what ACA plans will cost in 2027.

Frequently asked questions

If I do nothing during open enrollment, what happens?

In most cases your current plan renews automatically for 2027 with its new premium, deductible and drug list. If your plan is leaving Medicare, you get a notice and a special window to pick another. Doing nothing is a choice to accept the changes in your Annual Notice of Change, so it is worth reading that notice first.

Does the $2,400 cap include my premiums?

No. The cap counts only what you pay for covered drugs — the deductible, copays and coinsurance. Premiums are on top, which is why a plan with a lower premium wins once you are certain to reach the cap: in the model, $123.60 a year in premiums against $480.

When will the 2027 Part B premium be announced?

CMS usually publishes the Part B premium and deductible in November. Until then, the trustees' projection is $209.50 a month and a $292 deductible, against $202.90 and $283 in 2026. SSA says the premium that applies to you will appear in your my Social Security Message Center from late November and on the COLA notice mailed in December.

Can I switch plans after December 7?

Only in specific cases. If you are in Medicare Advantage, you can make one change from January 1 to March 31, 2027. Moving, losing other coverage, qualifying for Extra Help or entering a nursing home can open a special enrollment period. Otherwise the next regular window is October 15, 2027.

How do I help a parent compare plans?

With permission, sit with them on Medicare.gov's Plan Finder (or call 1-800-MEDICARE together) and enter every prescription and pharmacy. Free, unbiased counseling is available from your state's SHIP. Bring the Annual Notice of Change and the list of doctors, and compare yearly totals rather than premiums.

Where these numbers come from

The model. One retiree on Original Medicare with the SSA's estimated average January 2027 check of $2,170. Drug costs follow the 2027 defined standard Part D benefit: the plan's deductible ($700 or $0), then 25% coinsurance, capped at $2,400 of out-of-pocket cost. Total drug spending is spread evenly across the year for the month-by-month example ($1,000 a month for the specialty user). The two plan premiums, $40 and $10.30, are illustrative: $40 is close to CMS's $36 projected average and $10.30 is the price CMS says 88% of people without Extra Help can find. The break-even points come from testing every dollar of drug spending from $0 to $15,000. Everything is reproduced in drafts/medicare-open-enrollment-2027-costs-numbers.mjs, which checks its own results.

Which way it leans. Real plans often use flat copays and waive the deductible for cheap generics, which makes low-premium plans look better for light users than this model shows, so the "stay" advantage for the low scenario is probably overstated. The model ignores Part B's 20% coinsurance on doctor and outpatient care, Medigap premiums and dental, vision and hearing costs, so the "whole bill" totals understate what most people spend. The 2027 Part B premium is a projection; if CMS sets it higher, the net raise is smaller than shown.

Sources (checked October 25, 2026):

• Part D 2027 deductible $700 and out-of-pocket threshold $2,400 (2026: $615 and $2,100) — CMS, CY 2027 Rate Announcement, April 6, 2026, Table V-2.
• Base beneficiary premium $41.33 — CMS fact sheet, Medicare Part D 2027 National Average Monthly Bid Amount Information, July 28, 2026; end of the Premium Stabilization Demonstration after 2026, same fact sheet.
• Average premiums (standalone Part D $35.09 → $36; Medicare Advantage $14.37 → $12.00; Advantage drug premium $11.32 → $7; basic plan at or below $10.30 for 88%) — CMS press release, September 28, 2026.
• COLA 3.6% and average retired worker $2,095 → $2,170 — SSA 2027 COLA fact sheet and press release, October 14, 2026.
• Part B 2026 premium $202.90 and deductible $283 — CMS fact sheet, November 14, 2025. 2027 projection $209.50 and $292 — 2026 Medicare Trustees Report. The official 2027 figures had not been announced on October 25, 2026.
• 2026 IRMAA threshold ($109,000 single, $218,000 joint) — same CMS fact sheet.
• Prescription Payment Plan (offered by all plans, billing formula, no interest, ends on a plan switch) — Medicare.gov publication 12211, updated October 2026. Late enrollment penalty (1% of the base premium per month, rounded to $0.10, recalculated yearly) — Medicare.gov publication 11222.
• Open enrollment dates and the January–March Advantage open enrollment period — Medicare.gov, joining a plan.