Millions of older and disabled Americans with Medicare prescription drug coverage could face higher monthly premiums in 2027 after the Trump administration decided to end a temporary federal subsidy. The Centers for Medicare & Medicaid Services said the Part D Premium Stabilization Demonstration will conclude after 2026, returning standalone drug plans to regular market conditions.
The Biden administration introduced the voluntary nationwide program in 2025 as Medicare implemented major drug-benefit changes from the 2022 Inflation Reduction Act. Those changes shifted more financial responsibility to private insurers. CMS used additional payments and risk protection to prevent abrupt premium increases while plans adjusted their bids and gained experience with the redesigned benefit.
The Associated Press reported that beneficiaries paid an average Part D premium of about $36 a month in 2026 with the support in place. Citing the Medicare Payment Advisory Commission, it said the subsidies offset the average premium by $16 this year. The Government Accountability Office said CMS estimated the program would cost $9.8 billion over 2025 and 2026, including $3.6 billion in 2026.
CMS argues that insurers have had time to adapt and that ending the demonstration will encourage competition and discipline in plan pricing. Administrator Mehmet Oz said low-cost plans remain available and pointed to other federal drug-price measures. Critics and consumer advocates warn that ending the extra assistance may expose people on fixed incomes to steeper premiums, although the precise effect will vary by plan and location.
The decision does not remove Medicare's separate annual limit on what beneficiaries pay out of pocket for covered medicines. AP reported that the cap, set at $2,100 for 2026, is projected to rise to $2,400 in 2027. It also does not end the federal negotiation program for selected high-cost medicines, so premium changes and pharmacy spending protections remain distinct parts of the Part D system.
Final 2027 plan premiums and offerings are expected in September, giving beneficiaries their clearest view of the impact before Medicare open enrollment. Enrollees will need to compare premiums, covered-drug lists, pharmacy networks and total expected costs rather than assume their current plan remains the cheapest. Open enrollment runs from October 15 through December 7, with new selections taking effect in January.
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