What the Medicare Part D Subsidy News Could Mean for Your 2027 Coverage
Revised on August 3, 2026
You may have seen recent reports about changes to a federal program that helped limit increases in Medicare Part D premiums.
Although the headlines may sound concerning, Medicare Part D prescription drug coverage is not going away. The change affects a temporary federal program that provided additional support to insurance companies offering standalone Part D plans.
Here is what Medicare beneficiaries should know as they prepare for 2027.
What is changing?
The Centers for Medicare & Medicaid Services, commonly known as CMS, recently announced that the Part D Premium Stabilization Demonstration will end on December 31, 2026.
The program began in 2025 following significant changes to the Medicare Part D benefit. Its purpose was to help prevent unusually large premium increases for standalone Part D prescription drug plans while insurance companies adjusted to the new rules.
The program provided additional federal funding to participating insurance companies and limited how much premiums could increase from one year to the next.
CMS has now determined that insurance companies have enough experience with the redesigned Part D benefit to set their 2027 premiums without this temporary assistance.
Is Medicare Part D ending?
No. Medicare Part D prescription drug coverage is not ending.
Medicare beneficiaries will still be able to enroll in standalone Part D plans, Medicare Advantage plans that include prescription drug coverage, and employer or retiree plans that provide creditable drug coverage.
The only change is that the temporary premium stabilization program will no longer be available after 2026.
Will Part D premiums increase in 2027?
Some standalone Part D plans may have higher premiums in 2027, but the impact will vary depending on the plan and where you live.
The subsidy program reduced the average standalone Part D premium by an estimated $26 per month in 2025 and $16 per month in 2026. With the program ending, insurance companies may pass more of their costs on to members through higher premiums.
This does not mean that every beneficiary’s premium will increase by $16 or more. Each insurance company will set its own rates based on expected prescription costs, the medications covered by the plan, pharmacy networks, enrollment and the overall design of the plan.
Some beneficiaries may see relatively small increases, while others may see more significant changes. It is also possible that certain plans could have lower premiums.
Final 2027 premiums and plan details are expected to become available in September 2026.
Does this affect Medicare Advantage plans?
This temporary subsidy program mainly applied to standalone Part D prescription drug plans. These plans are often used by people who have Original Medicare along with a Medicare Supplement plan.
Medicare Advantage plans with prescription drug coverage were not supported by this program in the same way.
However, Medicare Advantage plans can still make their own changes each year. These may include changes to premiums, copayments, drug formularies, pharmacy networks and other benefits.
Whether you have a standalone Part D plan or a Medicare Advantage plan, reviewing your coverage this fall will be important.
What is not changing?
Several important Part D protections will remain in place.
The end of the temporary subsidy does not eliminate Medicare’s prescription drug benefit. It also does not eliminate the limit on annual out-of-pocket prescription drug costs for covered drugs. ($2100 in 2026, and $2400 in 2027).
It is also important not to confuse this change with Medicare’s Extra Help program.
Extra Help, also known as the Low-Income Subsidy, helps eligible Medicare beneficiaries with Part D premiums, deductibles and prescription copayments. The announcement about the Premium Stabilization Demonstration does not mean that Extra Help is ending.
What should you do now?
There is no action you need to take today.
Your current insurance company should send you an Annual Notice of Change in September. This document will explain any changes to your plan for 2027, including changes to the monthly premium, deductible, drug formulary, prescription costs and pharmacy network.
When reviewing your options, it is important to look beyond the monthly premium. A plan with a lower premium may still cost more overall if it does not cover your medications favorably or if your preferred pharmacy is no longer in the plan’s preferred network.
The Medicare Annual Enrollment Period runs from October 15 through December 7. During this time, you can review your options and make changes to your Part D or Medicare Advantage coverage for January 1, 2027.
All 2027 Part D plans will be loaded on the www.medicare.gov website on October 1st. We encourage you to review your options carefully to make sure your current coverage continues to meet your needs.
Have more questions about these changes or how they may affect your Medicare coverage? The RoseHealth team is here to help.