Medicare Ending a Premium Support Program a Year Early — Here’s What That Means for Your 2027 Drug Costs

(Source: CMS.gov, KFF, Center for Medicare Advocacy)

Medicare is winding down a program that’s been quietly helping keep prescription drug premiums in check — and it’s happening a year sooner than planned. If you have a stand-alone Part D drug plan, this is a change worth understanding before Open Enrollment opens in October.

On July 28, CMS announced it will end the Part D Premium Stabilization Demonstration at the close of 2026, rather than letting it run through 2027 as originally planned. The program, started in 2025, gave insurers extra federal support — a monthly premium reduction plus a cap on how much premiums could jump year to year — to help stand-alone Part D plans adjust smoothly as the Inflation Reduction Act reshaped the drug benefit. CMS says plan sponsors have now had enough experience under the redesigned benefit to set their own bids without that extra cushion.

What this affects:

• Stand-alone Part D prescription drug plans (PDPs) — not Medicare Advantage plans with drug coverage built in
• Roughly 25 million beneficiaries currently enrolled in a stand-alone PDP
• Premiums insurers set for 2027, which will be finalized this fall

What stays the same: The Inflation Reduction Act’s out-of-pocket drug spending cap isn’t going anywhere — it remains in place regardless of what happens with this demonstration. Ending the subsidy changes what insurers charge in premiums; it doesn’t change your protection against high total drug costs.

What this doesn’t mean: It doesn’t automatically mean your premium is going up, and it definitely doesn’t mean your coverage is going away. The actual 2027 premium numbers for specific plans haven’t been released yet — those come with the fall landscape files, ahead of Open Enrollment. Estimates on how many people will see an increase, and by how much, vary depending on who’s doing the estimating, so it’s worth treating early figures as preliminary until your plan’s own notice arrives.

If you’re in a stand-alone Part D plan, the practical move is to wait for your plan’s Annual Notice of Change this fall and compare it against other options once Open Enrollment opens October 15 — rather than reacting to national averages that may not reflect what your specific plan will charge.

Sources: CMS.gov | KFF | Center for Medicare Advocacy