Enrolling in Medicare Part D isn’t a “one-and-done” decision. Leaving your plan on autopilot during open enrollment (Oct. 15-Dec. 7) could cost you hundreds in unexpected premiums and out-of-pocket fees. A different plan might offer a much better deal — especially if you’ve started new medications or your current drugs have transitioned to generic over the past year.

Between major legislative redesigns — like the permanent end of the infamous “donut hole“ — and routine plan changes, the Medicare Part D coverage landscape shifts every year. Even if your health hasn’t changed, your insurer’s formulary tiers, preferred pharmacy networks and deductibles likely have.

To make sure you aren’t overpaying, use the official Medicare Plan Finder tool to compare coverage in your area. By entering your specific medications, dosages and preferred pharmacies, you can see your true costs for 2027.

Here are the first five of 10 critical Medicare Part D rules and changes you need to know before enrolling.

1. Part D is offered by private insurers — not the government

Unlike original Medicare (Parts A and B), which is administered directly by the federal government, Medicare Part D prescription drug coverage is managed by private insurers. Similar to Medigap and Medicare Advantage (Part C), the government sets baseline rules and benefit structures, while private carriers set the actual plans, premiums, pharmacy networks and formularies.

Because private insurers compete for your business, shopping around during open enrollment is critical — two plans in the same zip code can carry wildly different monthly premiums and out-of-pocket costs for the exact same set of prescriptions.

2. Don’t rely on premium costs alone when choosing a plan

For starters, there isn’t a single “standard” Part D premium — rates vary widely by plan. The Centers for Medicare & Medicaid Services (CMS) establishes a standardized base beneficiary premium, but that figure is only a benchmark used to calculate late enrollment penalties and IRMAA surcharges. For 2027, the base premium is $41.33. Keep in mind that the cheapest plan by monthly premium is rarely the most cost-effective option overall.

When shopping via the Medicare Plan Finder tool, always sort plans by “lowest drug + premium cost.” This calculates your total estimated out-of-pocket costs (premiums + deductibles + copays) based on your specific drug list and preferred pharmacies, giving you the actual bottom-line cost

3. Formularies and preferred pharmacies change every year

Even if your medications haven’t changed, your insurer’s formulary and tier structures likely have. Look over their list of covered drugs and which tier your medication falls into — generic, preferred brand or non-preferred brand — because this affects your costs. Additionally, plans regularly change their “preferred pharmacy“ networks. Filling a drug at a standard pharmacy versus a preferred one can double or triple your copay.

4. Your deductible depends on your plan

Your deductible can vary, and you may not have to pay one at all. However, if you are subject to a Part D deductible, there is a maximum that no policy may exceed.

If your plan has a deductible, you pay 100% of your gross covered prescription drug costs until the deductible is met. For 2027, the federally mandated maximum deductible a Part D plan can charge is $700, $85 more than the 2026 amount of $615.

You pay all out-of-pocket costs until you meet your plan’s full deductible. After that, you’ll pay 25% coinsurance for both generic and brand-name drugs. This continues until your total out-of-pocket spending on covered Part D drugs reaches $2,400 for 2027.

5. The ‘donut hole’ is gone

The infamous coverage gap or “donut hole,” in which beneficiaries faced steep out-of-pocket costs after reaching a certain limit, was officially eliminated as of January 1, 2025.

Under the Inflation Reduction Act (IRA), the absolute limit you will spend out-of-pocket on covered formulary drugs in 2027 is $2,400, a $300 increase over the 2026 limit of $2,100. Once you hit the $2,400 out-of-pocket cap, your copays and coinsurance drop to $0.

(Donna LeValley is a retirement writer for Kiplinger.com.)

©2026 The Kiplinger Washington Editors, Inc. All rights reserved. Distributed by Tribune Content Agency, LLC.