Medicare Drug Plan Premiums Expected to Hold Steady Despite Subsidy Loss
When the Centers for Medicare & Medicaid Services (CMS) ended subsidies for Part D premiums in August, 56.1 million Medicare Part D beneficiaries were left unsure as to what would happen to their monthly premiums. Among them are 24.1 million original Medicare enrollees and 3.4 million Advantage members who buy stand-alone drug coverage — plus 28 million who receive coverage through a bundled Medicare Advantage with drug coverage plan (MA-PD).
CMS addressed this in a recent statement, noting “encouraging signs that, as expected, the Part D program is returning to normal market conditions.” CMS projects the average total monthly premium for stand-alone Part D plans will rise by less than $1 — from $35.09 in 2026 to $36.00 in 2027. Keep in mind these are averages; unlike federally set Part B premiums, private insurers ultimately set the prices for Part D plans.
However, for 2027, Medicare beneficiaries will have a higher out-of-pocket maximum of $2,400 (up from $2,100) and will face a higher maximum deductible of $700, a $75 increase from 2026.
CMS touts stable and lower premiums for 2027
Despite concerns that there would be sharp rate hikes following the end of federal intervention, CMS attributes the modest $1 increase to the Part D market naturally re-establishing equilibrium and returning to normal competitive conditions.
CMS announced in August the discontinuation of the voluntary Part D Premium Stabilization Demonstration Project. Originally introduced to smooth pricing shifts following major structural changes under the Inflation Reduction Act — such as the out-of-pocket spending cap — the demonstration program provided direct temporary government subsidies to insurers. CMS maintains that the market no longer requires these multi-billion-dollar backstops to keep consumer costs manageable, pointing to low baseline rates as proof that insurers have adjusted their pricing models sustainably.
“CMS is fighting to keep high-quality care options affordable and accessible for the millions of beneficiaries who rely on Medicare Advantage and Part D prescription drug plans,” said CMS Administrator Dr. Mehmet Oz.
CMS also highlighted stronger price drops across integrated coverage options. For Medicare Advantage plans that include prescription drug coverage (MA-PD), the average monthly Part D premium component is projected to fall by 38%, dropping from $11.32 in 2026 to $7.00 in 2027 after applying MA rebates. CMS also noted that 88% of non-low-income beneficiaries will have access to a basic stand-alone Part D plan for $10.30 or less per month, with 93% having access to an enhanced plan option under $6.00.
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