Why 2027 drug plan premiums are likely to jump

In short: a temporary federal subsidy that both lowered the reference premium and capped how fast any plan's premium could rise.

When the Inflation Reduction Act rebuilt the Part D benefit, it moved a large share of drug cost risk onto plans. Stand-alone prescription drug plans, the ones bought alongside Original Medicare rather than as part of a Medicare Advantage plan, absorbed most of it. CMS's concern was that plans would either price the change straight through to enrollees or leave the market.

So in 2025 CMS launched the Part D Premium Stabilization Demonstration, a voluntary program for stand-alone drug plans. It did two things at once: it reduced the national base beneficiary premium directly, and it capped how much any individual plan's premium could rise year over year.

Source: KFF's analysis of the demonstration and CMS bid announcements.

CMS also narrowed the risk corridors for 2025, which limited how much money plans could lose, then returned those to normal for 2026. KFF puts the total cost of the demonstration at $9.8 billion across the two years.

In short: CMS says plans now have enough experience under the new benefit to price it without help.

On July 28, 2026, CMS announced it is discontinuing the demonstration at the end of this year. Its stated reasoning: "For CY 2027, CMS bid analysis indicates that Part D plan sponsors had sufficient experience under the redesigned Part D benefit to support their assumptions in developing the prescription drug plan bids. Therefore, CMS will discontinue the demonstration at the end of CY 2026 to return the program to operating under traditional market conditions in CY 2027."

CMS Administrator Mehmet Oz was blunter, telling Managed Healthcare Executive: "We are stabilizing the market, so this bailout is no longer needed. Premiums will go up by less than $10 for most Medicare recipients."

Juliette Cubanski of KFF, quoted in the same article, read the same facts differently: "Without these extra subsidies in place for 2027, some Part D stand-alone drug plan enrollees could face larger premium increases next year than recent years." Neither statement is checkable yet, because CMS has not published plan-level 2027 premiums. That happens in late September.

In short: the reference premium is capped by law at 6%. What plans actually bid rose 23.7%.

This is the part that gets skipped in most coverage, and it is where the tension actually sits.

Source: CMS Part D 2027 NAMBA fact sheet.

The bid is what plans collectively told CMS their coverage costs. The base beneficiary premium is a national reference figure that the Inflation Reduction Act caps at 6% annual growth through 2029. It hit that ceiling exactly. So one number rose almost four times as fast as the other, and the statute holds down only the second one. The base premium is not what anybody actually pays; individual plan premiums are set by each plan, and those are not capped by the 6% rule. For two years the demonstration was absorbing part of that gap. Starting in 2027 it will not be. Full detail on every other 2027 figure: the 2027 Medicare numbers hub.

In short: stand-alone drug plan choices have fallen by nearly half in two years.

Worth knowing as context, because the demonstration existed partly to prevent this and it happened anyway.

Source: KFF's annual analyses of Part D plan availability, published November 2023, November 2024, and October 2025.

That is a decline of about 49% across two years. KFF described 2025 as the lowest number of stand-alone plans available in any year since Part D began in 2006, and 2026 came in lower still. Premiums, meanwhile, went the other way. KFF reports the average monthly stand-alone plan premium fell about 7%, from roughly $39 in 2025 to $36 in 2026, which is what the subsidy was designed to accomplish. Fewer plans, lower average premium, $9.8 billion in federal money. That was the trade. The money stops in January.

In short: the benefit itself. The 2027 coverage rules are already set, and they are better than 2026's in one important respect.

It is worth separating the premium question from the coverage question, because they are moving in different directions. The structure of 2027 Part D coverage is final and unaffected by any of this.

• The standard deductible is $700, up from $615.
• The annual out-of-pocket cap is $2,400, up from $2,100. Once you reach it, covered formulary drugs cost you nothing for the rest of the year.
• There is still no coverage gap. The donut hole was eliminated in 2025.
• Negotiated prices for 15 drugs take effect January 1, 2027, including Ozempic, Rybelsus, and Wegovy at $274 for a 30 day supply against a CY2024 list price of $959.

So the picture for 2027 is a benefit that is somewhat more expensive at the front end, capped at a somewhat higher number at the back end, and a premium that is no longer being cushioned. More on the full set of 2027 out-of-pocket figures: 2027 Part D costs.

In short: your Annual Notice of Change is the only document that tells you your number, and it is due by September 30.

Three things worth checking in the Annual Notice of Change, since a premium is only one line of it:

1. The premium change itself, which is the headline but not always the biggest number.
2. Whether your drugs are still on the formulary, and at which tier. A drug moving up a tier can cost more than a premium increase.
3. Whether the plan still exists. With plan counts falling as they have, a non-renewal notice is a real possibility, and it comes with its own enrollment protections.

• Aug 12, 2026Page created. Demonstration end recorded from the July 28, 2026 CMS announcement.

• CMS, Medicare Part D 2027 National Average Monthly Bid Amount Information, July 28, 2026
• CMS, 2026 Medicare Part D Bid Information and Part D Premium Stabilization Demonstration Parameters, July 28, 2025
• CMS, 2027 Medicare Advantage and Part D Rate Announcement, April 6, 2026
• KFF, on CMS's decision to end temporary subsidies to stand-alone drug plans, July 29, 2026
• KFF, Medicare Part D plan availability, premiums, and cost sharing analyses for 2024, 2025, and 2026
• KFF, Medicare Part D enrollment, premiums, and cost sharing in 2026, June 11, 2026
• Managed Healthcare Executive, July 30, 2026, for the Oz and Cubanski quotes
• 42 CFR 423.2267(e)(3), the Annual Notice of Change delivery deadline