Medicare Part D deductible and out-of-pocket cap by year.

What changed in Part D in 2025

Until 2024 the Part D defined standard benefit had four stages: a deductible, an initial coverage phase that ended at the initial coverage limit, a coverage gap, and catastrophic coverage that began at the out-of-pocket threshold. The 2024 announcement still shows an initial coverage limit of $5,030 and an out-of-pocket threshold of $8,000. In the CY 2025 announcement the initial coverage limit is marked "Not Applicable" and the out-of-pocket threshold falls to $2,000. CMS's program instructions describe the redesign as including an annual out-of-pocket threshold and the elimination of the coverage gap phase.

Under the redesigned benefit an enrollee pays 100% of covered drug costs until the deductible is met, then 25% coinsurance until the out-of-pocket threshold is reached, and nothing more for covered drugs for the rest of the year. The table's last column shows which version applies to each year.

Part D parameters by year, 2006 to 2027

Each row from 2008 on is read from the CMS rate announcement for that year and checked against the prior-year column of the next announcement; 2006 and 2007 come from CMS's May 2006 Office of the Actuary notice. The deductible dipped only once, from $325 in 2013 to $310 in 2014, and the old out-of-pocket threshold jumped from $5,100 in 2019 to $6,350 in 2020, because for 2020 the law required it to be calculated as if the 2014 to 2019 thresholds had been indexed by the annual percentage increase.

How CMS sets the 2027 amounts

CMS multiplies the prior year's figures by the annual percentage increase (API) and rounds. For 2027 the API in the CY 2027 announcement is 13.65%: the 2026 trend of 9.37% plus 3.92% of prior-year revisions. The deductible is $615 × 1.1365 = $698.95, rounded to the nearest $5, which is $700. The out-of-pocket threshold is $2,100 × 1.1365 = $2,386.65, rounded to the nearest $50, which is $2,400.

That is a larger rise than 2026's, when the threshold went from $2,000 to $2,100. The announcement gives the method for the threshold as multiplying the 2026 amount by the API and rounding, under section 1860D-2(b)(4)(B) of the Act.

Worked example with real numbers

This is a hypothetical enrollee on the 2026 defined standard benefit with $5,000 of covered drug costs in the year. The enrollee pays the $615 deductible plus 25% of the remaining $4,385, which is $1,096.25, for a total of $1,711.25. With $10,000 of costs the 25% share would pass the cap, so the enrollee pays only the $2,100 threshold. The cap is reached once total costs hit $6,555: $615 plus ($2,100 − $615) ÷ 0.25.

In 2027 the same $10,000 of costs would cost the enrollee $2,400, the new threshold, and the cap is reached at $7,500 of total costs. A lower-cost year, such as $5,000, would cost $700 + 25% × $4,300 = $1,775. Real plans can differ from the standard benefit, so use your plan's own numbers for decisions.

Common mistakes and edge cases

• Comparing the pre-2025 out-of-pocket threshold with the 2025 cap. They measure different benefit designs, and the old threshold ($8,000 in 2024) sat on top of a coverage gap.
• Assuming every plan charges the standard deductible. CMS's 2026 program instructions list reducing or eliminating the deductible as an enhancement, and treat waiving it for a subset of formulary tiers the same way. They also say plans may not lower the out-of-pocket threshold below $2,100 for 2026.
• Counting premiums. The deductible and cap apply to covered drug costs, not to your monthly premium.
• Forgetting that the cap is for covered drugs on the plan's formulary. Drugs a plan does not cover are outside it.
• Using a 2027 amount for 2026 bills. Check the plan year of the claim.

Who this is for and what it does not cover

This page is for people choosing or reviewing a Part D plan, counsellors, and anyone who needs a historical deductible or threshold. It covers the federal defined standard benefit, not any specific plan, and does not include premiums, the Part D income-related monthly adjustment, Extra Help amounts, or Medicare Advantage drug plans. For the income surcharge use the Medicare IRMAA calculator, and for the penalty for late enrollment use the late enrollment penalty calculator.