Millions of Medicare beneficiaries could face higher prescription drug plan premiums in 2027 after the federal government ends a temporary program that helped limit premium increases for standalone Medicare Part D plans.

On July 28, 2026, the Centers for Medicare & Medicaid Services (CMS) announced that the Part D Premium Stabilization Demonstration will conclude at the end of 2026. The voluntary program was created in 2025 to reduce premium volatility as insurers adjusted to major changes in the Medicare prescription drug benefit.

CMS says insurers now have enough experience with the redesigned Part D program to price their 2027 plans without the additional federal support. However, the exact effect on individual premiums will not be known until plan-specific rates are released in September.

For the nearly 25 million people enrolled in standalone prescription drug plans, the end of the program makes this fall’s Medicare Open Enrollment period especially important.

What Is the Part D Premium Stabilization Demonstration?

The Part D Premium Stabilization Demonstration was introduced after the Inflation Reduction Act changed how prescription drug costs are divided among Medicare beneficiaries, insurers, drug manufacturers, and the federal government.

The Inflation Reduction Act established new protections for Medicare beneficiaries, including an annual limit on out-of-pocket prescription drug costs. At the same time, it shifted a larger share of certain drug costs to Part D plan sponsors.

Insurers responded to the increased financial responsibility by submitting substantially higher bids for standalone prescription drug plans. CMS warned that the resulting premium changes could cause disruptive enrollment shifts as beneficiaries searched for more affordable coverage.

To help manage that transition, CMS created a temporary demonstration that provided additional federal payments to participating standalone Part D plans.

In 2025, the program:

• Reduced the base beneficiary premium by up to $15 per month.

• Limited a participating plan’s year-over-year premium increase to $35 per month.

• Provided additional risk protection to participating insurers.

For 2026, CMS reduced the premium adjustment to $10, raised the maximum permitted increase to $50, and removed the additional risk protections. CMS described that reduction as part of a return to regular market conditions.

The Program Helped Prevent Larger Premium Increases

The stabilization program involved a significant federal investment, but available evidence indicates that it prevented much larger premium increases during the initial transition.

The U.S. Government Accountability Office reported that CMS estimated the demonstration would cost approximately $9.8 billion across 2025 and 2026.

GAO also found that without the demonstration, beneficiaries who remained in the same standalone drug plans from 2024 to 2025 would have seen their premiums nearly double on average. More than one-third would have faced monthly increases greater than $40.

With the program in place, the average monthly premium for standalone plan enrollees who did not receive the low-income subsidy increased only slightly, from $42 in 2024 to $43 in 2025. GAO noted that a formal evaluation is still needed to determine how much of the stabilization was directly attributable to the demonstration rather than other market changes.

The KFF analysis of the program’s conclusion also found that the subsidies reduced the average standalone Part D premium by an estimated $26 in 2025 and $16 in 2026. Enrollment in standalone plans increased from 22.8 million in 2024 to 24.9 million in 2026.

How Much Could Medicare Part D Premiums Increase?

The most important number for beneficiaries—the premium charged by their individual plan—has not yet been released.

CMS published two preliminary national figures for 2027:

• The national average monthly bid amount will be $296.05.

• The national base beneficiary premium will be $41.33, up from $38.99 in 2026.

Neither number represents the exact premium an individual beneficiary will pay. The national bid amount is used to calculate federal payments to plans, while the base beneficiary premium is one component of the formula used to determine plan-specific premiums.

According to administration estimates first reported by The Wall Street Journal:

• About 25% of standalone plan enrollees may see premiums remain flat or decrease.

• Approximately 30% may see increases of less than $10 per month.

• Roughly 45% could see increases in the range of $11 to $20 per month.

These are projections, not final plan prices. Actual changes will vary by insurer, plan, location, formulary, and coverage structure. Plan-level information is expected in mid-to-late September.

Why a $16 Monthly Change Can Still Matter

A monthly increase of $11, $16, or $20 may appear modest compared with other health care costs. However, its impact is more significant when compared with the current price of standalone drug coverage.

KFF estimates that the average standalone Part D premium is approximately $36 per month in 2026. Losing support worth an average of $16 would therefore represent a substantial proportional change for affected beneficiaries, even before considering deductibles, copayments, coinsurance, and the cost of medications not fully covered by a plan.

For retirees living on fixed incomes, an additional $15 per month equals $180 annually. A $20 monthly increase adds $240 per year. Those costs can compound when a household is also facing higher expenses for food, housing, utilities, insurance, and medical care.

The effect will not be identical for everyone, but beneficiaries should avoid assuming that their current plan will remain their most affordable option in 2027.

Standalone Drug Plans and Medicare Advantage Are Affected Differently

The expiring demonstration applies to standalone Medicare Part D prescription drug plans, commonly used by people enrolled in Original Medicare.

It does not apply in the same way to Medicare Advantage plans that include prescription drug coverage. Medicare Advantage insurers can use federal rebate dollars to reduce or eliminate the drug-coverage portion of their premiums.

KFF estimates that average drug coverage premiums in Medicare Advantage plans are approximately $8 per month in 2026, compared with roughly $36 for standalone plans. MedPAC similarly reports that Medicare Advantage rebate payments substantially reduce the premiums charged for many plans that include drug coverage.

That difference may make Medicare Advantage appear more attractive to some beneficiaries. However, premiums should not be the only consideration.

Medicare Advantage plans may include:

• Provider-network restrictions.

• Prior-authorization requirements.

• Different cost-sharing rules.

• Plan-specific prescription drug formularies.

• Geographic service-area limitations.

Original Medicare combined with a standalone Part D plan may provide broader provider access, but beneficiaries may also purchase Medigap coverage and pay separate premiums.

Switching coverage solely because of a lower drug premium could create other costs or restrictions. Beneficiaries should compare the entire health and prescription drug package before making a change.

Some Low-Income Beneficiaries May Be Protected

People who receive Medicare’s Low-Income Subsidy, also called Extra Help, may be protected from much of the premium increase.

Extra Help assists eligible beneficiaries with Part D premiums, deductibles, and prescription drug cost-sharing. The amount of assistance depends on income, resources, and the plan selected.

People who believe they may qualify should review the eligibility requirements rather than assuming enrollment is automatic. Beneficiaries may apply through the Social Security Administration and can also request assistance from a State Health Insurance Assistance Program.

What Is Not Changing in Medicare Part D

The end of the premium demonstration does not eliminate the broader prescription drug protections enacted under the Inflation Reduction Act.

The annual cap on beneficiary out-of-pocket drug spending remains in place and will continue to adjust over time. The cap limits what beneficiaries pay for covered Part D medications during the year, even if premiums rise.

Other protections, including the $35 monthly cap on covered insulin products and Medicare’s prescription drug negotiation program, are also separate from the temporary premium subsidy.

This distinction matters: the policy change affects the monthly price of maintaining standalone drug coverage. It does not repeal the underlying limits on certain out-of-pocket prescription expenses.

Dates Medicare Beneficiaries Should Watch

Mid-to-Late September 2026

CMS is expected to release finalized 2027 Medicare Advantage and Part D plan information, including plan-specific premiums.

Fall 2026

Current enrollees should receive an Annual Notice of Change from their insurer. This document explains how premiums, deductibles, covered drugs, pharmacies, and other plan terms will change for the next year.

October 15 to December 7, 2026

Medicare Open Enrollment allows beneficiaries to compare plans and change their Medicare Advantage or prescription drug coverage for 2027.

January 1, 2027

New plan premiums and benefits take effect.

How to Review a Medicare Drug Plan for 2027

Beneficiaries should evaluate more than the monthly premium when comparing Part D plans.

Important questions include:

• Are all current prescriptions covered by the plan’s 2027 formulary?

• Did any medications move to a more expensive coverage tier?

• Are preferred pharmacies still included?

• What deductible applies?

• What are the copayments or coinsurance amounts?

• Does the plan require prior authorization or step therapy?

• What is the estimated total annual cost, including premiums and prescriptions?

• Is the current plan still competitive with other available options?

A plan with a low premium may cost more overall if it places a necessary medication on a high-cost tier. Conversely, a plan with a higher premium may offer better drug coverage and lower annual expenses.

The most useful comparison is therefore the estimated total yearly cost based on the beneficiary’s actual prescriptions—not the premium alone.

The Bottom Line

The Part D Premium Stabilization Demonstration was always temporary, but its conclusion could still create meaningful cost increases for millions of Medicare beneficiaries.

CMS believes insurers now have enough experience with the redesigned Part D benefit to price plans without additional federal support. GAO, KFF, and MedPAC data show that the program helped prevent substantial premium increases while the market adjusted. The full impact of removing that support will become clearer when final 2027 plan premiums are released in September.

Medicare beneficiaries do not need to make an immediate change. They should, however, open and review their Annual Notice of Change, compare available plans during Open Enrollment, and evaluate their complete prescription drug costs before automatically renewing current coverage.

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