Medicare Part D Explained: 2027 Drug Coverage in New Jersey

Medicare Part D is prescription drug coverage sold by private companies, either as a standalone plan alongside Original Medicare or built into a Medicare Advantage plan. For 2027, CMS has set the maximum standard deductible at $700 and the yearly out-of-pocket cap at $2,400, up from $615 and $2,100 in 2026 (CMS CY2027 Rate Announcement). Once you reach the cap, you pay nothing more for covered drugs that year. New Jersey has 11 standalone Part D plans for 2027 in the CMS Landscape file, from 6 organizations, with premiums from $5.30 to $217.90 a month, and each covers drugs differently. The plan that fits depends on exactly what you take and where you fill it. New Jersey residents with limited income should also know about PAAD and Senior Gold, the state programs that work alongside Part D.

How a year of Part D works

• Deductible: if your plan has one, you pay the plan price for covered drugs until you meet it. For 2027 it can be no more than $700. Some plans charge less, and many enhanced plans keep some drug tiers outside the deductible.
• Initial coverage: you pay copays or coinsurance set by the drug's tier, and the plan pays the rest. Under the standard benefit CMS defines, that share is 25 percent of the drug's cost.
• Catastrophic coverage: once your out-of-pocket spending reaches $2,400 in 2027 ($2,100 in 2026), you pay $0 for covered Part D drugs for the rest of the calendar year.
• The count starts over every January 1, so the deductible and the cap reset each year.

Source: CY2027 Medicare Advantage and Part D Rate Announcement.

What counts toward the $2,400 cap

Your deductible, copays and coinsurance for covered Part D drugs all count. So do payments made for you by Extra Help and by most State Pharmaceutical Assistance Programs, which in New Jersey means PAAD and Senior Gold.

Your monthly premium does not count, and neither does anything you pay for a drug your plan does not cover, or a drug bought outside the plan. A drug that is not on your plan's formulary can cost you the full price all year without moving you closer to the cap, which is why the drug list matters more than the premium.

A worked example: one brand drug and two generics in 2027

Here is an illustration using the 2027 standard benefit, not a quote. Say you take one brand-name drug that costs your plan $800 a month and two generics that cost $10 each, so $820 a month or $9,840 a year at plan prices. Real plans use their own copays and tiers, so your path will differ, but the cap works the same way in every plan.

Illustration, not a quote: a hypothetical example using figures from CY2027 Medicare Advantage and Part D Rate Announcement.

A second example: three low-cost generics

Now take someone with three generics that cost a plan $12 a month together, $144 a year. This person will never get near the cap. In a plan whose deductible applies to every drug, they pay the full $144 at plan prices; in a plan that keeps generics outside the deductible, they may pay only small copays. Add the premium and the gap between plans is mostly premium: about $435.60 for the year in Wellcare Classic, against more than $2,700 in the highest-premium plan (illustration only).

The lesson from both examples: for light users the premium and the deductible matter most, and for heavy users the formulary and the cap matter most. That is why Jackie prices your actual drugs at your actual pharmacy for all twelve months.

All 11 standalone Part D plans in New Jersey for 2027

Standalone Part D plans are priced by region, and all of New Jersey is one region (PDP region 04), so the same 11 plans are offered in Cherry Hill, Vineland, Toms River and Westfield. These are the figures in the September 2026 release of the CMS CY2027 Landscape file, via THE BRAIN. Plans are listed for information, not as a recommendation, and the lowest premium is not always the lowest-cost year.

Source: CY2027 Medicare Advantage and Part D Rate Announcement.

Formularies, tiers and coverage rules

Each plan has its own formulary, the list of drugs it covers, sorted into tiers. Lower tiers (usually generics) cost less; higher tiers (brand-name and specialty drugs) cost more. Two plans can put the same drug on very different tiers.

Watch for coverage rules: prior authorization (the plan must approve the drug first), step therapy (you try a lower-cost drug first) and quantity limits. If your doctor believes you need a drug the plan restricts, you can ask the plan for an exception, and your doctor can send a supporting statement.

Pharmacies matter too. Many plans have preferred pharmacies with lower copays, and the same plan can cost different amounts at two pharmacies in the same town. Mail order can lower the price of drugs you take every day.

New Jersey help: PAAD, Senior Gold and Extra Help

New Jersey runs two State Pharmaceutical Assistance Programs. PAAD (Pharmaceutical Assistance to the Aged and Disabled) is for residents 65 and older, or 18 to 64 on Social Security Disability, with 2026 income under $54,943 single or $62,390 married. Members pay $5 for a covered generic and $7 for a covered brand drug, must enroll in a Part D plan, and PAAD pays the premium for certain basic Part D plans priced at or below the regional benchmark (nj.gov). Senior Gold covers incomes just above that, up to $64,943 single or $72,390 married in 2026, at $15 plus 50 percent of the remaining cost of each covered drug.

Extra Help is the federal program that lowers Part D premiums and copays for people with limited income and resources. If you qualify for a New Jersey Medicare Savings Program, you automatically qualify for Extra Help (Medicare.gov). Our guides to PAAD and Senior Gold and to Extra Help and Medicare Savings Programs in New Jersey explain who qualifies and how to apply through NJSave or the hotline at 1-800-792-9745.

The Medicare Prescription Payment Plan

Every Part D plan, standalone or inside Medicare Advantage, must offer the Medicare Prescription Payment Plan. Instead of paying your drug costs at the pharmacy counter, you pay $0 there and get a monthly bill from your plan that spreads the cost across the rest of the year. It does not lower what you owe in total, and it has no interest or fees.

If you opt in for January and your costs reach the 2027 cap, the most you would owe in any month is about $200, which is $2,400 spread over twelve months. If you join later in the year, the remaining costs are spread over fewer months. It helps most when one expensive fill early in the year would otherwise land in a single month. If you switch plans for 2027, opt in again with the new plan.

Other protections built into Part D

• Covered insulin costs no more than $35 for a month's supply, and the deductible does not apply.
• Vaccines recommended by the CDC's advisory committee, such as shingles, cost $0 under Part D.
• Many plans offer a Medication Therapy Management review at no extra cost if you take several drugs for chronic conditions.
• If you are new to a plan and take a drug it does not cover, the plan generally must give you a temporary transition supply while you and your doctor switch drugs or request an exception.

Drug coverage inside Medicare Advantage

Most Medicare Advantage plans include drug coverage: 34 of the 41 standard plans in Camden County for 2027 (CMS CY2027 Landscape). The same $700 deductible limit, $2,400 cap, $35 insulin limit and $0 recommended vaccines apply inside them.

If you have Original Medicare, with or without a supplement, you need a standalone Part D plan. If you choose a Medicare Advantage plan, you usually get drug coverage inside it and cannot add a separate Part D plan to most HMO and PPO plans. What differs is the formulary, the tiers and the pharmacy network, which are set plan by plan.

The late enrollment penalty

If you go 63 days or more in a row without Part D or other creditable drug coverage after your Initial Enrollment Period ends, a penalty is added to your premium for as long as you have Part D. It is 1 percent of the national base beneficiary premium for each full month you went without, rounded to the nearest 10 cents.

Two years without coverage means 24 percent. With the 2026 base premium of $38.99 that is about $9.40 a month. CMS set the 2027 base premium at $41.33, so the same 24 months adds about $9.90 a month in 2027. Creditable coverage includes many employer and union plans, TRICARE and VA coverage. Keep the yearly creditable coverage notices from your employer, because Medicare may ask for proof later.

Higher income and Part D

Part D has an income-related surcharge, like Part B. In 2026 it starts above $109,000 of modified adjusted gross income for a single filer or $218,000 joint, and ranges from $14.50 to $91.00 a month on top of your plan premium, based on your 2024 tax return (CMS, 2026). It is paid to Medicare, not to your plan, and applies even inside a Medicare Advantage plan with drug coverage. Our IRMAA guide explains how to appeal it after retirement.

What to ask before you pick a plan

• Is every one of my drugs on the 2027 formulary, and on which tier?
• Do any of my drugs need prior authorization, step therapy or have a quantity limit?
• Is my pharmacy in network, and is it a preferred pharmacy?
• What is the deductible, and does it apply to my generics?
• What will twelve months of premiums plus my drug costs add up to?
• Do I qualify for PAAD, Senior Gold or Extra Help, and which plans work with them?

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The bottom line

Part D is capped: in 2027 you will pay no more than $2,400 out of pocket for covered drugs, and the deductible can be no more than $700. Within those limits, New Jersey's 11 standalone plans differ a lot, from $5.30 to $217.90 a month, and their formularies and pharmacies differ even more. Price your actual drugs at your actual pharmacy for the whole year, avoid gaps that trigger the penalty, and review every fall. Send Jackie your drug list and she will run the comparison with you: (856) 727-4221.