Is Medicare Part D Worth It in 2027? The Penalty, the $2,400 Cap and When You Can Skip It

Reviewed by Russell Noga, Licensed Medicare Insurance Broker (all 50 states) — Last updated November 11, 2026

A Medicare Supplement plan pays your share of hospital and doctor bills, but it does nothing for the pills you pick up at the pharmacy. That leaves a choice many healthy 65-year-olds weigh: pay for a drug plan you may barely use, or hold off and save the premium.

This page treats it as a decision rather than a price list. We put the late penalty next to the premiums you would skip, run a high-cost brand-drug year through the 2027 rules, and spell out the situations where buying a plan really doesn’t make sense.

Medigap policies sold since January 1, 2006 can’t include outpatient prescription coverage. So if you pair Original Medicare with a Medigap plan, the only way to get help with pharmacy costs is a standalone prescription drug plan (PDP) or other drug coverage that you already have.

Part D is voluntary, which is why the question comes up at all. Nobody forces you to buy it at 65. Instead, Medicare builds in two consequences for waiting, and they matter more than the premium itself:

Our main Medicare Part D guide covers how the program works. Below, we focus on whether it pays off for you.

The penalty is 1% of the national base beneficiary premium for each full month you went without coverage, rounded to the nearest $0.10. CMS set that base at $41.33 for 2027. Medicare.gov’s own example: 14 uncovered months means a 14% surcharge.

We compared the penalty with what you would have saved by skipping a cheap plan. Assumptions: the 2027 base premium held flat for 10 years, and skipped premiums of $6.50 a month, the projected 2027 average for the lowest-cost national plan in KFF’s review.

In every row the surcharge wipes out the savings within about two years, and you keep paying it after that. The table is conservative, too: the base premium can grow up to 6% a year through 2029, and the penalty is recalculated with it every January.

Assumptions (illustrative): Linda turns 65 in 2027, buys Medigap Plan G and takes no regular medications. She has no employer drug coverage.

Now the other end. Assumptions (illustrative): Robert takes a brand-name drug that costs $1,000 a month at full price, $12,000 for the year, and his plan covers it with the standard 2027 design: the $700 maximum deductible, then 25% coinsurance until the cap.

With no drug plan, Robert would face the full $12,000, less whatever a discount card might shave off. With Part D he pays $2,400 plus premiums. Even at the CMS projected average of $36 a month, that’s $2,832, a gap of more than $9,000.

Real plans use negotiated prices and many use flat copays, so check your own drugs. The full premium, deductible and cap breakdown is on our Medicare Part D cost page.

Robert’s year is front-loaded: $775 in January, nothing by fall. The Medicare Prescription Payment Plan is a free option inside every Part D plan that changes the timing, not the total. You pay $0 at the pharmacy for covered drugs, and your plan sends you a monthly bill instead.

If Robert opts in before his first fill in January, his $2,400 is spread across 12 bills of about $200, rather than a $775 hit followed by six $250 months. Medicare.gov is clear that it doesn’t lower drug costs, and it helps most when one expensive prescription would otherwise land early in the year.

You can skip a drug plan without a penalty if you have other creditable drug coverage, meaning coverage expected to pay at least as much as standard Part D. Common examples:

Employer and union plans must tell you each year, before October 15, whether their drug coverage is creditable. Keep those notices. If you lose that coverage, you have 63 days to join a Part D plan before the penalty clock starts.

If your income and savings are limited, Extra Help can cover most plan costs, see our Extra Help income limits page.

Readers often ask us what a Part D plan costs on average. CMS projects $36 a month for standalone plans in 2027, but KFF found no $0-premium standalone option for people without Extra Help, so the floor has moved up a little this year.

Open Enrollment for 2027 runs through December 7, 2026. The plan with the lowest premium isn’t always the cheapest once your drugs are priced in.

Compare drug plans in our list of the best Medicare Part D plans, and price your Medigap side in our guide to Medicare Supplement plans.

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