Medicare Plan D News: Higher Monthly Premiums in 2027

Takeaways

• Medicare’s Part D Premium Stabilization Demonstration will end after the 2026 plan year, one year earlier than expected.
• Monthly prescription drug premiums are likely to increase in 2027, although the amount will vary by plan and region.
• The national base beneficiary premium is projected to rise about 6 percent, from $38.99 per month in 2026 to $41.33 per month in 2027.
• The $2,000 annual out-of-pocket cap for prescription drugs remains in place, although the cap may increase to approximately $2,400 in 2027.
• Medicare beneficiaries can reduce their costs by comparing plans during the Open Enrollment period and checking whether they qualify for Extra Help or other assistance programs.

Medicare beneficiaries could face higher Part D prescription drug premiums in 2027 after the Trump administration announced in late July that it will end a federal subsidy program that has helped hold premiums down for the past two years. The Centers for Medicare & Medicaid Services (CMS) said the program, known as the Part D Premium Stabilization Demonstration, will end after the 2026 plan year, one year earlier than originally planned.

The premium stabilization program was created during the Biden administration to cushion an unexpected side effect of the Inflation Reduction Act’s 2022 drug pricing reforms. Those reforms shifted more financial risk for high drug costs onto insurance companies, and they responded by raising Part D premiums. The subsidy program stepped in to hold those increases down while insurers adjusted.

CMS says insurers have now had enough time to adjust their plans on their own, so the subsidy is no longer necessary. CMS Administrator Dr. Mehmet Oz stated that most Medicare recipients will see premium increases of less than $10 a month, with some enrollees potentially seeing lower premiums.

The Numbers Behind the 2027 Premium Increase

• Roughly 56 million people are enrolled in Medicare Part D drug plans. About 25 million of them are enrolled in stand-alone Medicare Part D prescription drug plans, which are the plans directly involved in the federal premium stabilization program.
• The national base beneficiary premium will rise about 6 percent from $38.99 per month in 2026 to $41.33 per month in 2027. A separate Inflation Reduction Act provision limits increases in the national base beneficiary premium to no more than 6 percent a year through 2029. This limit does not mean that every Part D plan’s premium will rise by exactly 6 percent.
• Analysts at KFF, an independent health policy research organization, note that the subsidy had lowered the average drug plan premium to about $36 a month this year. This means that some enrollees, particularly those in plans that relied heavily on the subsidy, could see increases larger than the administration’s $10 estimate.

How Ending the Program Could Affect Older Adults

For many people on Medicare, the effect will be modest. They will likely pay a few dollars more per month. But because Part D premiums vary widely by plan and region and because insurers set their own final prices, increases could be uneven. Enrollees in plans that had received a larger subsidy to keep premiums competitive may notice a bigger bump in their premiums.

It’s worth noting that this change only affects monthly premiums. It does not affect the $2,000 ($2,100 for 2026) annual cap on out-of-pocket prescription costs created by the Inflation Reduction Act, which remains in place. The annual cap may rise to about $2,400 in 2027. So, though some people may pay more in monthly premiums, there is still a ceiling on what they might have to spend at the pharmacy counter.

Even so, for older adults on fixed incomes, even a modest increase in their monthly premium and annual out-of-pocket cap can matter, especially when layered on top of other rising costs.

What Older Adults Can Do

• Use Medicare Open Enrollment to shop around. Plan costs vary by insurer and region, so the October 15 to December 7 open enrollment window is the best time to compare the next year’s Part D plans and switch if a better-priced option covers the same medications.
• Check the Medicare Plan Finder tool. At Medicare.gov, enrollees can enter their specific medications and pharmacy to see personalized cost estimates across available plans, rather than relying on national averages.
• Ask about the Extra Help program. Also called the Medicare Part D Low-Income Subsidy, this federal program helps cover Part D premiums, deductibles, and copays for people with limited income and resources. Many eligible people don’t realize they qualify.
• Contact a State Health Insurance Assistance Program (SHIP). SHIPs offer free, unbiased, one-on-one Medicare counseling in every state and can help compare plans or apply for assistance programs.
• Ask pharmacists about manufacturer and nonprofit assistance programs. Many drug manufacturers and nonprofit organizations offer separate cost-relief programs, particularly for expensive brand-name medications.
• Watch for the official 2027 plan announcements this fall. CMS releases finalized plan premiums and coverage details before Open Enrollment begins, which will show how a given plan’s costs are changing.

Preparing for 2027 Part D Premium Changes

Although the end of the premium stabilization program may raise some Part D premiums in 2027, the impact will vary by plan and region. Medicare beneficiaries should compare coverage and costs during Open Enrollment, use Medicare’s Plan Finder tool, and check whether they qualify for Extra Help or other assistance. The annual out-of-pocket drug cost cap remains in place, although its amount may increase.

Reviewing plan options carefully can help beneficiaries choose coverage that meets their health needs without adding unnecessary costs.

For additional reading on issues related to Medicare, check out the following articles:

• Entering and Leaving Medicare Advantage Plans
• Medigap: Plugging the Holes in Medicare