CMS’s Decision to End Temporary Subsidies to Medicare’s Stand-Alone Drug Plans Could Mean Larger Premium Increases for Some Beneficiaries Next Year

KFF reports that the Centers for Medicare & Medicaid Services will end a temporary premium stabilization program after 2026. The program was introduced as changes from the Inflation Reduction Act shifted more prescription drug costs to insurers. It provided subsidies that reduced premiums and limited how much they could increase from one year to the next.

The subsidies had a meaningful effect. According to KFF, they reduced the average monthly premium for stand-alone Part D plans by $26 in 2025 and $16 in 2026. Even with that assistance, the average monthly premium for these plans reached $36 in 2026, compared with about $8 for prescription drug coverage included in Medicare Advantage plans. With the additional subsidies disappearing, some stand-alone Part D plans could experience larger premium increases in 2027, although specific premiums are not yet known. Rising prescription drug prices and increased use of expensive specialty medications are also continuing to put pressure on costs.

For Medicare beneficiaries, the important takeaway is to pay particularly close attention to Part D choices during the next Medicare Open Enrollment period. Premiums are only one consideration, so it will be important to compare each plan's coverage of your medications, pharmacy network, deductibles and estimated total annual costs before making a change. Even if your current plan has worked well, 2027 may be a year when reviewing your options carefully could be especially worthwhile.

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