News & Trending Insurance News

Trump Is Ending a Medicare Drug Subsidy - Here's Who Could Pay More

Medicare Part D costs could rise for some seniors in 2027.

By Jordan Major , Edited by Laura Hohenstein

Updated Aug. 26, 2026

Add Us On Google

Millions of Medicare beneficiaries will face a change to their prescription drug coverage next year after the Trump administration decided to end a temporary program designed to prevent sharp premium increases.

While the Centers for Medicare & Medicaid Services (CMS) says most Medicare recipients should see relatively modest premium changes, the loss of the extra subsidy could leave some people enrolled in stand-alone Part D plans paying more in 2027, adding pressure on seniors trying to make the right moves.

Get a protection plan on all your appliances

Did you know if your air conditioner stops working, your homeowner’s insurance won’t cover it? Same with plumbing, electrical issues, appliances, and more.

A home warranty from Choice Home Warranty could pick up the slack where insurance falls short.

For a limited time, you can get your first month free with a Single Payment home warranty plan.

Get a free quote

What Medicare is ending

CMS announced in late July that the Medicare Part D Premium Stabilization Demonstration will end after 2026.

Introduced in 2025 following major changes to the Medicare Part D benefit, the temporary program was intended to limit sharp premium increases for stand-alone prescription drug plans, also known as PDPs, while insurers adjusted to the redesigned program.

A version of the subsidy remained in place for 2026, although the Trump administration reduced the additional premium subsidy from $15 to $10 per member per month. Participating plans were also allowed to increase monthly premiums by as much as $50 from the previous year, up from a $35 limit in 2025.

CMS now says insurers have accumulated enough experience with the redesigned Part D benefit to accurately price their plans without the demonstration. Beginning in 2027, stand-alone drug plans will therefore return to traditional market conditions.

Shopping for cheaper auto insurance? Enter your zip code here to get started.

Who could be affected

This primarily affects people who receive prescription drug coverage through a stand-alone Part D plan rather than through a Medicare Advantage plan that includes drug coverage.

Nearly 25 million people were enrolled in stand-alone Part D plans in 2026. Overall, 56.1 million people had Medicare Part D coverage as of February, with 44% enrolled in stand-alone plans and 56% receiving coverage through Medicare Advantage drug plans.

Participating stand-alone plans also received an additional federal subsidy that KFF, a nonprofit health policy research organization, estimates was worth around $16 per enrollee per month in 2026, or roughly $190 annually. With that assistance ending, one mechanism that has helped hold premiums down will disappear.

Could Medicare Part D premiums increase?

CMS says most beneficiaries should not expect a dramatic increase.

"We are stabilizing the market so this bailout is no longer needed. Premiums will go up by less than $10 for most Medicare recipients, with many even seeing lower premiums," CMS Administrator Dr. Mehmet Oz said following the announcement.

Still, the final amount individual beneficiaries will pay remains unknown. CMS will not release finalized 2027 Medicare Advantage and Part D plan offerings and premiums until September.

Premiums already varied substantially among plans in 2026. The average monthly premium for stand-alone Part D coverage fell from $39 in 2025 to $36 in 2026, but some individual plans increased premiums by as much as $50.

If you’re over 50, take advantage of massive discounts and financial resources

Over 50? Join AARP today— because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.

Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up to 25% off your AARP membership, making it just $15 the first year with auto-renewal.

Another premium protection remains

The end of the demonstration does not mean all federal premium protections are disappearing. CMS announced that the national base beneficiary premium will be $41.33 in 2027. That's up from $38.99 in 2026, an increase of about 6%.

Even so, the 6% figure does not represent a cap on what every beneficiary's premium can increase by. Under the Inflation Reduction Act, annual growth in that base premium is capped at 6% through 2029. However, the national base beneficiary premium is used as part of the formula for determining plan premiums. It is not necessarily the amount an individual enrollee actually pays.

Individual Part D premiums could therefore increase by more than 6%, rise by less, or even decline. The actual premium depends on the particular insurer and plan.

What seniors should compare during open enrollment

Beneficiaries will get their first detailed look at 2027 options when CMS releases final plan information in September.

Medicare's annual open enrollment period runs from October 15 through December 7, with coverage changes taking effect January 1. During that period, beneficiaries can switch stand-alone drug plans or make other changes to their Medicare coverage.

Premiums should not be the only number retirees compare. Part D plans can differ in their deductibles, copayments, and coinsurance, covered-drug lists, pharmacy networks, and restrictions on accessing certain medications.

A plan with a lower premium could therefore cost more overall if it charges substantially more for medications a beneficiary regularly takes. Conversely, a higher-premium plan could sometimes produce lower total annual costs.

Automatically renewing could become costly

Medicare beneficiaries can generally remain in their existing plan if it continues to be offered, making automatic renewal convenient. However, the end of the stabilization demonstration gives stand-alone Part D enrollees another reason to review their coverage.

A change in medications, preferred pharmacies, or plan pricing could make a different option better value in 2027.

Reviewing those changes may be particularly important for retirees living on fixed incomes, since even relatively modest monthly increases can accumulate over a full year when combined with other health care expenses.

Retirement News: Almost 80% of Americans fear a retirement age increase — here’s the real reason why

Bottom line

The Trump administration is ending the temporary Medicare Part D Premium Stabilization Demonstration after 2026, removing an extra subsidy that has helped limit premiums for stand-alone prescription drug plans.

Seniors don't need to change anything yet, but once 2027 prices are available, comparing premiums, prescription coverage, pharmacy networks, and total out-of-pocket costs before Medicare open enrollment ends could matter even more when retirement savings are stretched thin.

More from FinanceBuzz: