In short
- Bill starts every Medicare review with your medications, then your doctors, because that's where plans differ most.
- One high-cost medication, and how each plan tiers it, often decides which plan costs least.
- The Part D out-of-pocket cap is $2,100 in 2026 and $2,400 in 2027. The highest allowed deductible goes from $615 to $700.
- Retiring before 65 can hinge on medication costs, because your employer plan has been paying a large share.
Every Medicare review I do starts the same way. Before premiums, before plan names, before anything with a logo on it, I ask for your medications. Then your doctors.
People sometimes think that's a little odd. You came in to talk about Medicare, and here's this guy asking what's in your medicine cabinet. Here's why.
Why do I start with your medications?
Because medications are the one health care cost you know you'll have every month, and they're where plans differ the most.
Most people come to me because they're turning 65 and losing their group health, or because they want to retire at 62 and want to know their options. Either way, the first thing we always look at is medications. A hospital stay might happen. Your prescriptions are going to happen, every month, all year.
Premiums are easy to compare because they're printed right at the top. What you'll actually pay for a medication is buried in the plan's formulary (its list of covered drugs), its tiers and its deductible, and every plan has its own formulary. Two plans with the same premium can cost you very different amounts by December. That's true for a standalone Part D plan and for a Medicare Advantage plan with drug coverage.
What do I look for on your medication list?
I look past how many medications you take to which one is going to cost the most.
Some people are on nothing. Then I've got a client on dozens of medications, and at that point we're like, okay, you're going to hit the max. It doesn't matter. For that person, the yearly cap does the heavy lifting, and we pick the plan on other things, like doctors and hospital costs.
Most people are in between. Sometimes you're only on five or six medications, but one of those medications is going to throw you over the top. That's the one I focus on. What options do we have to bring the cost of that prescription down? Does another plan put it on a lower tier, or keep it out of the deductible?
Here's how that plays out. With one kind of blood thinner, two carriers would have maxed out a client's drug costs for the year. At a third carrier, oh, wait a second. They tiered that medication differently, and it was a $40 copay per month instead of $200. Same medication, different plan. That's an example from my own table, not a price for any plan you can buy this year.
| What I check | Why it matters |
|---|---|
| Each medication's name, strength and dose | Plans cover and price specific versions differently |
| The tier on each plan you're considering | The same drug can land on a different tier from plan to plan |
| Whether the deductible applies to it | Some plans put more tiers under the deductible than others |
| Your pharmacy | Preferred in-network pharmacies may charge you less |
| Your doctors | In Medicare Advantage, a network change can matter as much as a drug price |
What's changed with drug deductibles?
Drug deductibles have spread. A few years ago, it was hard to find a Medicare Advantage plan with a drug deductible attached. Now I see one on most of the plans I review. I've even looked at a plan that put every tier, 1 through 5, under the deductible. Is that the trend we're going to see? I don't know.
What I do know are the federal limits. No Medicare drug plan can have a deductible higher than $615 in 2026, and that limit goes up to $700 in 2027. CMS also announced in July that the Part D Premium Stabilization Demonstration, which had been helping hold down standalone drug plan premiums, ends after 2026. The money's got to come from somewhere. It's the same dollar amount. It's just what pocket it's coming out of, which is one more reason to look at your plan again every fall.
What do the 2026 and 2027 drug caps mean for you?
Once your out-of-pocket spending on covered Part D drugs reaches the yearly cap, you pay nothing more for covered drugs for the rest of that year.
| Part D limit | 2026 | 2027 |
|---|---|---|
| Out-of-pocket cap on covered drugs | $2,100 | $2,400 |
| Highest allowed deductible | $615 | $700 |
The cap is a real help if you take expensive medications, but it's still a lot of money for one person to cover. If paying it in big chunks is the problem, the Medicare Prescription Payment Plan lets you spread those costs into monthly payments across the year. It doesn't lower what you pay. It changes when you pay it. More in the Part D out-of-pocket cap and the Medicare Prescription Payment Plan.
Why can't some people afford to retire before 65?
Nine times out of ten, if you're under the age of 65 and you're trying to retire early, sometimes you can't, because you can't afford the medications, because your group health plan is paying a large portion of that prescription medications.
Your employer plan has been quietly picking up a big part of the bill. The day you leave, that changes. Before Medicare, your choices are usually COBRA, a Health Insurance Marketplace plan or a spouse's plan. With COBRA, you can be charged up to 102% of what the plan costs, which means your share plus the share your employer used to pay. Losing job-based coverage also opens a Marketplace Special Enrollment Period, from 60 days before to 60 days after you leave.
So before you circle a retirement date, price your medication list under each option. One expensive prescription can be the difference between retiring at 62 and working to 65. The details are in health insurance if you retire before 65 and ACA Marketplace vs COBRA.
What should you bring me?
Bring your medications, or a list of them, and your doctors. That's where we start, every time.
- Every prescription: the name, strength and how often you take it
- Anything your doctor has said you may start soon
- The pharmacy you use, and whether you use mail order
- Your doctors and specialists, and the hospital you'd want
- Your plan's Annual Notice of Change, if you're already on Medicare
There's a full list in what to bring to your Medicare review.
One thing I won't do is tell you to change a medication. I'm not a doctor. My job is to find the plan that covers what your doctor prescribed for the least amount of money. If one medication is wrecking the budget, ask your doctor whether there's a lower-cost option, and we'll price it out together.
Medicare.gov's plan finder is a great website to get started on, and it's worth a look even if you work with me. Just don't stop at the plan that comes up first. Check what it charges for a hospital stay or an MRI before you fall for the shiny button. Plan availability, premiums, networks and benefits vary by county and change every year. For unbiased help, 1-800-MEDICARE (1-800-633-4227), available 24 hours a day, 7 days a week (TTY 1-877-486-2048), and Nebraska SHIP (formerly SHIIP) at 1-800-234-7119 are good places to start. If you want me to run your list, talk to me.
Frequently asked questions
Because your medications are the most predictable part of your health care costs and the part that varies most between plans. Each plan has its own formulary, puts drugs on different tiers, and applies its deductible differently, so the same prescription can cost very different amounts from one plan to the next. An agent needs the exact name, strength and dose of each medication to compare plans accurately for you.
For 2027, once your out-of-pocket spending on covered Part D drugs reaches $2,400, you pay nothing more for covered drugs for the rest of the year. The cap was $2,100 in 2026. It applies to standalone Part D plans and Medicare Advantage plans with drug coverage. Premiums are a separate cost, and a medication your plan doesn't cover is a separate problem to solve.
No Medicare drug plan can have a deductible higher than $700 in 2027, up from $615 in 2026. Many plans charge less than the maximum, and some apply the deductible only to certain tiers of drugs. That's why it's worth checking which of your own medications fall under the deductible on each plan, instead of comparing deductibles alone.
You can, but run the numbers first. Before Medicare, your choices are usually COBRA, a Health Insurance Marketplace plan or a spouse's plan. COBRA can cost up to 102% of the plan's cost because you pay the share your employer used to cover. Losing job-based coverage gives you a Marketplace Special Enrollment Period from 60 days before to 60 days after you leave. Price your medications under each option before setting a date.
No. The Medicare Prescription Payment Plan spreads your out-of-pocket costs for covered drugs into monthly payments across the calendar year, but it doesn't save you money or lower what your drugs cost. Anyone with a Medicare drug plan or a Medicare Advantage plan with drug coverage can use it. It helps most when large costs would otherwise hit all at once early in the year.
Yes. After medications, doctors are the next thing to check, especially if you're considering Medicare Advantage, where plans use provider networks. Bring the names of your primary care doctor, your specialists and the hospital you would want to use. Networks can change from year to year, so it's worth checking them again at every annual review.
Sources
- Medicare.gov: Part D costs (2026 and 2027 cap and deductible) (opens in a new tab)
- Medicare.gov: Pharmacies and drug plans (opens in a new tab)
- Medicare.gov: Medicare Prescription Payment Plan (opens in a new tab)
- U.S. Department of Labor: COBRA continuation coverage (opens in a new tab)
- HealthCare.gov: Health coverage for retirees (opens in a new tab)
- CMS: Part D 2027 bid information and end of the premium stabilization demonstration (opens in a new tab)
