It’s kick-off time for the 2027 annual Medicare open enrollment period for millions of seniors.
From Oct. 15 to Dec. 7, those who are enrolled can make changes to their coverage, which goes into effect on Jan. 1.
You can review the out-of-pocket costs you face in traditional Medicare, Medicare Advantage, and Medicare Part D — including premiums, deductibles, copays, and coinsurance.
And you have the opportunity to change from traditional Medicare to a Medicare Advantage plan or vice versa. You can also swap Medicare Advantage plans. And you can change your Part D prescription drug plan.
To find out what’s changing for your 2027 Medicare or Medicare Advantage plan, scrutinize your Annual Notice of Change (ANOC) letter you should have received last month explaining the latest shifts.
If you ignored it, rescue it from the pile.
“There are changes beyond premiums underneath the hood, including cost-sharing and coverage of benefits, which means it’s important to read the fine print,” Juliette Cubanski, director of the program on Medicare policy at KFF, told Yahoo Finance.
About 7 in 10 people with Medicare don’t comparison shop during the open enrollment period.
“Most people stick with the plan that they have from one year to the next unless the plan is withdrawn from the market, or there’s a substantial premium change,” she said. “Because of the complexity of the marketplace and of the decision making, when it comes to comparing all of these different plan options, many people feel overwhelmed and find it’s easier just to sit it out.”
What’s changing in Medicare drug costs and coverage in 2027
Medicare Advantage is the alternative to traditional Medicare, with insurance plans offered through private companies. It covers more than half of all Medicare enrollees, or about 36 million people.
Medicare Advantage changes
Average Medicare Advantage premiums are expected to decrease in 2027, but that is only one part of your overall costs.
“Even though average premiums are decreasing, you may have to pay a larger share of the costs when you do need medical care,” said Kim Lankford, author of “Medicare 101.” “Look carefully at the copayments and other out-of-pocket expenses for the type of medical care you frequently use, any procedures you expect to need in the upcoming year, and the plan’s copayments for the first several days of a hospital stay.”
Also make sure the doctors you want to use are covered, and find out how out-of-network providers are covered — Medicare Advantage PPOs usually provide some coverage out of network, but at higher copayments, while HMOs usually don’t cover out-of-network providers, except for emergencies, Lankford said.
The maximum Medicare Advantage out-of-pocket cost for 2027 will be $9,850, up from $9,250 for covered in-network services, and a total of $14,800, up from $13,900 for combined in-network and out-of-network services, such as those offered by a PPO.
These increased costs can take the glow off the enticements of Medicare Advantage plans. In addition to low or no premiums, the plans typically include benefits not covered by traditional Medicare, such as prescription coverage, eyeglasses, dental care, and fitness classes.
As enrollment in these plans has soared, costs for providers have as well. In turn, they have started to trim those extras.
Some Medicare Advantage plans are also cutting back in less-obvious ways. For example, rather than eliminating coverage for dental care, they might reduce the annual coverage maximum or eliminate coverage for some expensive procedures, such as dental implants, Lankford said.
They are also shuttering plans, meaning you may have fewer options — or find that your current coverage is no longer an option for next year. The average Medicare beneficiary has 28 Medicare Advantage prescription drug plan options for 2027, down from 31 this year, according to an analysis by KFF.
“MA plans are in full retreat mode this year, ending coverage in many local markets or even, in the case of smaller insurers, closing their MA businesses,” said Philip Moeller, a Medicare and Social Security expert.
As a result, consumers will face “turbulent market conditions and tough decisions,” he added.
Part D prescription drug plan changes
If you are enrolled in traditional Medicare, you have a Part D drug plan. The 2027 Part D base premium is $36 per month on average, an increase of less than a dollar, but actual premiums vary depending on where you live and your plan.
Meanwhile, there will be no zero-premium drug plans available in 2027 for Part D enrollees who do not receive low-income subsidies.
Some enrollees will face substantially higher Part D premiums.
“For 2027, we’re seeing monthly premiums for some standalone prescription drug plans increasing by more than $50 a month,” Cubanski said,” and some will have an increase of as much as $100 a month.”
“Plan costs overall have been increasing in recent years, in part, because people are using more medications,” she said, “and they’re using more expensive medications.”
Add that to the out-of-pocket cap on what enrollees pay for their drug coverage, and the upshot is higher premiums for seniors.
The standard Part D deductible will jump to $700 next year, up from $615.
In 2027, everyone enrolled in Part D prescription drug plans will have their annual out-of-pocket drug costs capped at $2,400, up from $2,100, for co-pays or coinsurance for the prescription drugs their plan covers — a provision in the 2022 Inflation Reduction Act.
You pay co-payments for your medications until your total out-of-pocket costs reach that ceiling.
And if you are eyeing a new plan, there will be fewer plans to shop. The number of stand-alone prescription drug plans available to the average beneficiary will fall for the fourth year in a row, from 11 in 2026 to 9 in 2027, according to KFF.
Research what drugs are and aren’t covered in your plan’s formulary, tier placement of covered drugs, deductibles, and cost-sharing requirements.
If your drug isn’t covered, it isn’t subject to the cap, Lankford added. “Insurers can change their formularies, so don’t assume your drugs are still covered next year. Also check on preferred pharmacies for the plan, which can also change from year to year.”
How to get help
The State Health Insurance Assistance Program network (SHIP) provides one-on-one counseling in every state. You can find your local SHIP here.
The Medicare Rights Center offers a free consumer helpline: 800-333-4114. You can also contact Medicare directly at 800-633-4227 to find Medicare Advantage and Part D Plans in your area and enroll directly.
Medicare’s online searchable Plan Finder on the Medicare.gov site allows you to review plan options. Every fall before open enrollment, Medicare loads all of the private plan data into this tool, including Part D drug plans, private Medicare Advantage plans, and even the Medigap plans, which are run by the states.
If you have a limited income, you might be eligible for Medicare’s Extra Help, which covers Part D premiums and deductibles and caps drug costs.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky and X.
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