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Drug prices & Part D

Federal Subsidy That Has Held Down Standalone Medicare Drug Plan Premiums for Two Years Is Ending After 2026

CMS is closing the Part D Premium Stabilization Demonstration after 2026, and a KFF analysis warns that people with standalone prescription drug plans in traditional Medicare could face larger premium increases in 2027 than they have seen in recent years.

By the Goodsurance editorial teamSeptember 13, 2026

For the past two years, a federal demonstration program quietly reduced what people with traditional Medicare pay for standalone prescription drug plans. That support ends after 2026.

CMS announced on July 28, 2026, that it will not extend the Part D Premium Stabilization Demonstration into 2027. The agency said plan sponsors have gained enough experience operating under the Inflation Reduction Act's redesigned Part D benefit. The program cost approximately 9.8 billion dollars across its two years, according to a KFF analysis citing MedPAC data. Over that period, it reduced average standalone prescription drug plan premiums by 26 dollars per month in 2025 and 16 dollars per month in 2026.

The federal subsidy that kept standalone Medicare drug plan premiums lower ends after 2026. Check your 2027 costs before open enrollment opens October 15.

Without those subsidies, people enrolled in standalone Part D plans could face larger premium increases for 2027 than in recent years, KFF warned. CMS set the 2027 base beneficiary premium, the reference figure plans use to calculate individual premiums, at 41.33 dollars per month. The Inflation Reduction Act limits that base figure to grow no more than 6 percent annually through 2029.

About 24.9 million people were enrolled in standalone prescription drug plans in 2026. These are primarily people in traditional Medicare who want drug coverage without joining a Medicare Advantage plan.

CMS plans to release the full 2027 plan landscape, including actual plan-level premiums, in the second half of September. Anyone enrolled in a standalone drug plan should review the 2027 Annual Notice of Change when it arrives and compare available options before the annual enrollment period opens October 15.

In plain words

Medicare has had a program for two years that helped lower the cost of drug plans. That program ends after 2026. Starting in 2027, people who have a separate drug plan may pay more each month. About 24.9 million people have these plans. They are mainly people in regular Medicare who want drug coverage. The starting number used to set each plan's premium will be 41.33 dollars for 2027. Each plan sets its own final price. The real prices for 2027 plans will be posted later in September. Check your plan notice when it arrives and compare plans before open enrollment starts October 15.

Understand the basics first

Source: KFF
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