Millions of Medicare beneficiaries are just days away from one of the most important financial decisions they’ll make this fall. Medicare Open Enrollment begins October 15, and the federal government has already released several important cost figures for 2027. Some numbers suggest lower monthly premiums, while others reveal higher potential prescription drug expenses.
According to the Centers for Medicare & Medicaid Services, average Medicare Advantage premiums are projected to fall 16.5% next year. However, the maximum Part D deductible is increasing, and the annual out-of-pocket spending cap for covered prescription drugs is also rising. Those differences matter because a lower monthly premium doesn’t necessarily mean lower overall healthcare costs. Before deciding whether to keep your current coverage, here’s what the new 2027 Medicare costs could mean for your retirement budget.
Medicare Advantage Premiums Are Projected to Drop 16.5%
One of the biggest announcements involves monthly Medicare Advantage premiums, which CMS expects to decline next year. According to the agency’s September 2026 announcement, the enrollment-weighted average monthly premium is projected to decrease from $14.37 in 2026 to $12 in 2027. That’s a 16.5% reduction, although the figure includes different types of Medicare Advantage plans, including Special Needs Plans.
Individual premiums vary by insurer, county, plan type, and benefits, so your own coverage could become more or less expensive. Remember that most Medicare Advantage members must continue paying their Medicare Part B premium in addition to any premium charged by their plan.
Stand-Alone Prescription Drug Premiums May Rise Slightly
The outlook is different for beneficiaries who purchase stand-alone Medicare Part D prescription drug coverage. The CMS projections show average monthly premiums increasing from $35.09 in 2026 to approximately $36 in 2027. Although that’s an increase of less than $1 per month, individual plans may experience considerably different changes.
CMS is also ending its temporary Part D Premium Stabilization Demonstration after 2026, making it especially important to review next year’s plan-specific costs. When comparing 2027 Medicare costs, look beyond premiums and examine whether your prescriptions remain covered at affordable prices.
The Maximum Part D Deductible Is Increasing to $700
One of the more significant changes involves the amount beneficiaries may need to pay before certain prescription drug coverage begins. According to Medicare.gov, the maximum permitted Part D deductible is increasing from $615 in 2026 to $700 in 2027. That’s an $85 increase, or approximately 13.8%, for plans that charge the full allowable deductible.
However, not every Part D plan charges the maximum, and some offer lower deductibles or no deductible at all. If you regularly fill expensive prescriptions, compare how each plan applies its deductible rather than assuming every beneficiary will automatically pay $700.
The Part D Out-of-Pocket Cap Is Rising to $2,400
Medicare’s annual prescription drug spending cap is another important number to review before enrollment begins. The annual out-of-pocket threshold for covered Part D medications will increase from $2,100 in 2026 to $2,400 in 2027. That represents a $300 increase in the maximum amount of qualifying out-of-pocket spending before catastrophic coverage begins.
The cap doesn’t include monthly premiums or expenses for medications that aren’t covered under Part D, and certain payments made on a beneficiary’s behalf may count toward the threshold. For someone managing several costly prescriptions, this change makes checking the full year’s estimated drug expenses especially important.
Medicare Advantage Drug Premiums Are Expected to Fall
Beneficiaries enrolled in Medicare Advantage plans that include prescription drug coverage may see another notable change. The average monthly Part D premium component for these plans is projected to fall from $11.32 in 2026 to approximately $7 in 2027. That’s a reduction of about 38%, after accounting for rebates used to lower prescription drug premiums.
However, that drug premium component isn’t necessarily a separate amount billed to members, and it shouldn’t be added automatically to the overall Medicare Advantage premium estimate. When reviewing 2027 Medicare costs, compare each plan’s total premium, prescription coverage, copayments, and other expenses rather than treating these averages as your personal savings.
The 2027 Medicare Part B Premium Is Still Awaiting Final Confirmation
Another important expense involves Medicare Part B, which covers physician services, outpatient care, and certain preventive services. The 2026 Medicare Trustees Report projects that the standard monthly Part B premium could increase from $202.90 in 2026 to $209.50 in 2027. That would represent an additional $6.60 per month, or $79.20 over a full year.
However, this is a projection rather than the finalized 2027 premium, which CMS is expected to announce later in the fall. Because Part B premiums are generally deducted from Social Security payments, retirees should wait for their official benefit information before calculating how much of next year’s cost-of-living adjustment they’ll actually keep.
Most Beneficiaries Will Have Multiple Plans to Compare
The new cost figures arrive alongside information about the number of Medicare Advantage plans available for 2027. More than 99% of Medicare beneficiaries will have access to at least one Medicare Advantage plan, while 97% will have ten or more options. That doesn’t mean every plan will include your preferred doctors, hospitals, or prescription medications. Some plans may offer attractive premiums while charging higher copayments, limiting provider networks, or changing supplemental benefits such as dental and vision coverage.
Before automatically renewing your current plan, compare the available options using Medicare’s official Plan Finder.
October 15 Starts a Limited Window to Make Changes
The annual Medicare Open Enrollment period begins October 15, 2026, and ends December 7, 2026. According to Medicare.gov, beneficiaries can switch Medicare Advantage plans, move between Medicare Advantage and Original Medicare, or change their Part D coverage during this period. Changes generally take effect January 1, 2027, and people satisfied with their existing plans usually don’t need to take action if the coverage remains available.
However, anyone considering a move from Medicare Advantage to Original Medicare should investigate Medigap eligibility and underwriting rules before switching. For free, unbiased assistance, beneficiaries can contact their State Health Insurance Assistance Program or call 1-800-MEDICARE.
Don’t Let a Lower Premium Hide a More Expensive Plan
The newly released 2027 Medicare costs offer both encouraging news and reasons for caution as Open Enrollment approaches. Lower projected Medicare Advantage premiums could help some retirees, but higher Part D deductibles and out-of-pocket limits may increase expenses for people who depend on costly medications. The Centers for Medicare & Medicaid Services recommends reviewing your Annual Notice of Change and comparing plans based on your actual healthcare needs. Before December 7, gather your medication list, check your doctors’ network participation, and estimate the total annual cost of each coverage option.
Are you planning to shop for a different Medicare plan this year, or have rising healthcare expenses made you reconsider your current coverage? Share your thoughts in the comments.
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