Recent headlines about the government “ending subsidies” for Medicare prescription drug plans have understandably caused concern. Some people are wondering whether Medicare Part D is being eliminated, whether their drug coverage will disappear or whether their premiums are about to skyrocket.
The reality is more nuanced—and far less dramatic than some headlines suggest.
Medicare Part D is not ending, and the federal government is not eliminating all financial support for prescription drug plans. What is ending is a temporary program that provided additional financial assistance to insurance companies offering stand-alone Medicare Part D plans.
Here is what is changing, what is staying the same and what Medicare beneficiaries should do next.
What Is the Part D Premium Stabilization Demonstration?
In 2025, the Centers for Medicare & Medicaid Services (CMS) introduced the voluntary Part D Premium Stabilization Demonstration.
This temporary program was created for stand-alone Prescription Drug Plans, commonly called PDPs. These are the drug plans generally purchased by people who have Original Medicare, often in combination with a Medicare Supplement plan.
The program was intended to limit sudden premium increases while insurance companies adjusted to major changes in the Medicare Part D benefit created by the Inflation Reduction Act. Those changes shifted more responsibility for high prescription drug costs from Medicare beneficiaries and the federal government to the insurance companies offering Part D plans. (cms.gov)
Without the temporary program, a Government Accountability Office analysis found that average premiums for people who remained in the same stand-alone drug plan from 2024 to 2025 could have nearly doubled. CMS estimated that the demonstration would cost approximately $9.8 billion over 2025 and 2026. (GAO)
How Did the Temporary Program Lower Premiums?
In 2025, the demonstration reduced the amount used to calculate beneficiary premiums by as much as $15 per month. It also limited how much a participating plan’s monthly premium could increase from the previous year.
The financial support was reduced in 2026. The monthly premium adjustment dropped to $10, and plans were permitted to implement larger premium increases than they had been allowed in 2025. (KFF)
CMS has now announced that the demonstration will end on December 31, 2026. Beginning in 2027, stand-alone Part D plans will return to operating without this additional temporary assistance. (cms.gov)
What Is Not Ending?
This distinction is important. The end of the temporary demonstration does not mean that:
- Medicare Part D is ending.
- Prescription drug coverage is being eliminated.
- Every federal subsidy supporting Part D is disappearing.
- The Extra Help program is ending.
- Everyone’s premium will increase by the same amount.
- Medicare beneficiaries need to change plans immediately.
The regular federal funding structure supporting Medicare Part D will continue. The national base beneficiary premium will also remain subject to a statutory provision limiting its annual increase to no more than 6% through 2029. The national base beneficiary premium will be $41.33 in 2027, although that figure is only one component used to calculate individual plan premiums and is not necessarily what a beneficiary will pay. (cms.gov)
Extra Help, also known as the Part D Low-Income Subsidy, continues to assist qualifying Medicare beneficiaries with premiums, deductibles and prescription drug cost-sharing. (medicare.gov)
Will Part D Premiums Increase in 2027?
Some stand-alone Part D plans may have higher premiums in 2027 because they will no longer receive the additional temporary support.
However, it is too early to know how much any particular plan will cost.
Insurance companies must finalize their premiums, formularies, pharmacy networks, deductibles and copayments. CMS expects to release the finalized 2027 Medicare Advantage and Part D plan information in mid-to-late September. (cms.gov)
Premiums may vary significantly from one plan to another. An increase will not necessarily be the same in every state, county or plan.
It is also important to remember that the monthly premium is only one part of the cost of prescription drug coverage. A plan with a low premium could still be more expensive overall if it does not cover a particular medication favorably or if the beneficiary’s preferred pharmacy is not in the plan’s preferred network.
Other Medicare Part D Changes for 2027
The end of the premium-stabilization demonstration is not the only Part D change coming in 2027.
The standard Part D deductible will increase from $615 in 2026 to $700 in 2027. The annual out-of-pocket limit for covered Part D prescriptions will increase from $2,100 in 2026 to $2,400 in 2027. (cms.gov)
That annual limit applies to covered Part D medications. Monthly plan premiums and medications that are not covered by the plan generally do not count toward the limit.
These adjustments are separate from the decision to end the temporary premium program.
What Should Medicare Beneficiaries Do?
For now, there is no reason to panic or make a coverage change based solely on a news headline.
Medicare beneficiaries should watch for their plan’s Annual Notice of Change, which is usually mailed in September. This document explains changes to the plan’s premium, deductible, drug formulary, pharmacy network and cost-sharing for the coming year.
During Medicare Annual Enrollment, beneficiaries should compare plans based on:
- Their complete medication list
- The dosage and frequency of each prescription
- Their preferred pharmacies
- The plan’s drug formulary
- Drug tiers and coverage restrictions
- Deductibles and copayments
- The total estimated annual cost—not just the monthly premium
Medicare Annual Enrollment runs from October 15 through December 7. Coverage changes made during this period generally take effect on January 1. (medicare.gov)
The Bottom Line
CMS is ending a temporary program that helped stabilize premiums for stand-alone Medicare Part D plans. It is not ending Medicare prescription drug coverage, eliminating Extra Help or removing all government support for Part D.
Some beneficiaries may see higher premiums in 2027, but the effect will depend on their individual plan. Final plan-specific information will not be available until September.
The smartest strategy is to avoid making assumptions based on a headline. Once the 2027 plans are released, review your coverage using your actual medications, pharmacy preferences and expected annual costs.
As an independent Medicare broker, I will be reviewing the 2027 plan changes carefully. My goal is to help clients understand what has changed, determine how it affects their individual coverage and make an informed decision during Annual Enrollment.
This article is intended for general educational purposes. Medicare plan availability, premiums, formularies and costs vary by location and individual circumstances.
We don’t offer every plan available in your area. Any information provided is limited to those plans we do offer. Please contact Medicare.gov, 1-800-MEDICARE, or your State Health Insurance Program to get information on all of your options.
