How deductibles, copays and coinsurance apply to prescriptions

Four in five people in Medicare Advantage drug plans are now in a plan that charges a deductible before prescription coverage starts. KFF's analysis of 2026 Part D plans¹ found that 82 percent of Medicare Advantage drug plan enrollees were in a plan with a drug deductible this year, up from 23 percent in 2024. Among people in stand-alone drug plans, 96 percent are in a plan with one, and 78 percent are in a plan charging the full standard amount of $615.

That figure is the ceiling. Medicare.gov² says no Medicare drug plan may have a deductible higher than $615 in 2026, and it rises to $700 in 2027. Employer and marketplace plans run on the same three tools, the deductible, the copay and coinsurance, with different limits.

For a generic that costs pharmacies a dollar or two a month, the difference between those tools can matter more than the drug's price. This piece sets out how each one applies to a prescription, what the 2026 federal limits are, and how GxRadar's price data line up against typical copays.

How a plan splits the bill

HealthCare.gov's glossary gives the working definitions. A deductible³ is what you pay for covered services before the plan starts to pay, and the glossary notes that "some plans have separate deductibles for certain services, like prescription drugs." A copayment⁴ is a fixed dollar amount. Coinsurance⁵ is a percentage of the plan's allowed amount. Before the deductible is met, the glossary says, the member generally pays the full allowed amount.

At the pharmacy the allowed amount is the plan's negotiated price for that fill, which usually includes an ingredient cost and a dispensing fee. Using a hypothetical $10 negotiated price, the three tools work out like this:

A flat copay can exceed what the plan pays the pharmacy for a cheap generic, which is why our pieces on when the cash price beats the copay and tiered formularies spend time on copay design.

What pharmacies pay for a month of common generics

NADAC, the federal government's survey of pharmacy acquisition costs, shows how low the underlying drug cost can be. The table uses CMS NADAC data for October 2026⁷, analyzed by GxRadar, priced per 30 tablets or capsules. These are what pharmacies pay to buy the drug. They are not the price a customer pays at the counter, and they leave out the dispensing fee.

Against those costs, KFF's 2025 Employer Health Benefits Survey⁸ found an average first-tier copay of $12 among covered workers in plans with three or more drug tiers. Our price tracker has monthly NADAC history for 47 generics, and what NADAC measures explains the survey's limits.

Medicare Part D in 2026 and 2027

Since 2025, the standard Part D benefit has three phases, as CMS's 2025 redesign fact sheet⁹ describes them: an annual deductible, initial coverage and catastrophic coverage. In the standard design, enrollees pay 25 percent coinsurance after the deductible, a rate written into the statute at 42 U.S.C. 1395w-102(b)(2)¹³. Once spending on covered drugs reaches the yearly cap, Medicare.gov says, enrollees "won't have to pay out-of-pocket for covered Part D drugs for the rest of the calendar year."

The 2026 figures come from CMS's CY 2026 Rate Announcement¹¹ and the 2027 figures from the CY 2027 Rate Announcement¹². CMS's 2026 program instructions¹⁰ explain that the $2,100 cap is the original $2,000 adjusted by the annual increase in average spending on covered Part D drugs per Part D-eligible person.

Plans can design around the standard as long as the coverage is actuarially equivalent, and most do so with tiers. KFF found that 8 of the 10 national or near-national stand-alone plans charged a median copay of $0 for preferred generics in 2026, with median copays from $0 to $10 on the standard generic tier. Brand-name tiers have moved toward percentages. The median coinsurance for non-preferred drugs was 34 percent in stand-alone plans and 38 percent in Medicare Advantage drug plans. KFF also reported average deductibles of $544 in stand-alone plans and $371 in Medicare Advantage drug plans, and noted that enrollees with Low-Income Subsidies do not pay a deductible even when their plan has one. Our guides to Extra Help and the Medicare Prescription Payment Plan cover those programs.

Employer and marketplace plans

Most job-based plans cover prescriptions before the general deductible is met. The KFF employer survey found that among workers in plans with a general deductible, 86 percent in HMOs and 91 percent in PPOs did not have to meet it before drugs were covered. The average general deductible for single coverage was $1,886 in 2025. Ninety-two percent of covered workers were in plans with tiered drug cost sharing.

Marketplace and other ACA-compliant plans have a ceiling on in-network cost sharing for essential health benefits, set by 45 CFR 156.130¹⁴. HealthCare.gov⁶ lists the 2026 limit at $10,600 for an individual and $21,200 for a family, rising to $12,000 and $24,000 in 2027. The limit leaves out premiums, services the plan does not cover and out-of-network care. When a plan grants a drug exception, 45 CFR 156.122(c)¹⁵ requires it to count the cost sharing toward that annual limit; our explainer on formulary and tiering exceptions covers the process.

High-deductible plans paired with health savings accounts follow IRS rules. For 2026, Revenue Procedure 2025-19¹⁶ defines a high-deductible plan as one with a deductible of at least $1,700 for self-only coverage or $3,400 for family coverage, and out-of-pocket costs capped at $8,500 and $17,000. What those plans may cover before the deductible is met is the subject of our pieces on high-deductible plans and generics and preventive drugs with no cost sharing.

The next scheduled change is January 1, 2027, when the Part D deductible ceiling rises to $700 and the out-of-pocket threshold to $2,400. Which tiers a given plan applies its deductible to is listed in the plan's own benefit documents, and the plan or a pharmacist can say how a specific fill will be priced.