Stand-alone Medicare Part D drug plan members are set to lose a temporary federal subsidy that cut their average monthly premium by $16 in 2026, after the Centers for Medicare & Medicaid Services confirmed it will discontinue the Part D Premium Stabilization Demonstration at the end of this year. The demonstration, in its second and final year, reduced average premiums by less in 2026 than it had in 2025, when the average reduction reached $26 a month. CMS’s own 2027 bid figures, published alongside that confirmation, show the underlying base premium rising for next year.
CMS confirms the Part D Premium Stabilization Demonstration ends after 2026
The Part D Premium Stabilization Demonstration is a temporary CMS program that pays money directly to insurers offering stand-alone Part D plans, money those insurers must use to reduce what they would otherwise charge enrollees in premiums. CMS created the demonstration to prevent a sharp one-year jump in stand-alone premiums as the redesigned Part D benefit took effect, and structured it to run for two plan years before ending.
CMS’s own 2027 national average monthly bid amount fact sheet states plainly that the agency “will discontinue the demonstration at the end of CY 2026,” confirming that 2026 is the program’s final year rather than a status still under review. That confirmation, from CMS’s own bid-information release rather than an outside estimate, is what turns an expected expiration into a settled fact for the 2027 plan year.
CMS first launched the demonstration for the 2025 plan year, then extended it for a second year covering 2026, rather than the multi-year run some CMS demonstrations receive. The agency’s bid-information fact sheet does not give a specific reason for stopping after two years, framing the demonstration throughout as a temporary bridge tied to the initial transition into the redesigned Part D benefit rather than a permanent feature of the program going forward.
The program behind this year’s lower bill: CMS’s confirmation that the Part D Premium Stabilization Demonstration ends after 2026 does not say what a specific stand-alone plan will charge without it, a plan-by-plan comparison built into The Medicare Cost & Coverage Protection Kit.
What the subsidy was worth this year, and why it was already shrinking
KFF’s analysis found the demonstration reduced the average stand-alone Part D premium by $16 a month in 2026, down from a $26 average reduction in 2025, even as the maximum premium increase the demonstration allowed insurers to pass through to enrollees rose from $35 to $50 between the two years. That combination, a smaller subsidy paired with a higher allowed increase, meant the demonstration’s second year was already less protective for enrollees than its first, before CMS’s confirmation that there will not be a third year.
A separate KFF brief put total direct federal subsidies to stand-alone Part D plans under the demonstration at $3.6 billion in 2026, spread across roughly 24.9 million enrollees. The brief contrasts that figure with the more than $13 billion Medicare Advantage sponsors separately funneled into their own Part D premiums that same year using rebate dollars entirely unrelated to this demonstration, a reminder that the subsidy ending affects only the stand-alone side of the Part D market.
That split matters for anyone comparing the two kinds of plans going into 2027, since a Medicare Advantage member’s own Part D premium is not affected by the stand-alone demonstration’s end at all. The rebate dollars funding Medicare Advantage drug-premium reductions come from a completely separate part of the program and were never scheduled to expire alongside the stand-alone demonstration, leaving the two averages to diverge further once the stand-alone subsidy disappears.
What CMS’s own 2027 figures show for the world after the subsidy
CMS’s 2027 bid information sets the base beneficiary premium, a benchmark the agency uses to calculate late-enrollment penalties and income-related surcharges, at $41.33, and the national average monthly bid amount at $296.05, both calculated for a program year without the demonstration’s subsidy factored in. Those figures describe the underlying cost basis insurers used to set 2027 bids rather than a prediction of what any specific stand-alone plan will charge, since individual plan premiums vary widely around that national base.
KFF’s own assessment, published alongside its $16 figure, frames the demonstration’s end as a development that “could mean larger premium increases for some beneficiaries next year,” a conclusion the research organization draws directly from the gap between what the subsidy contributed in 2026 and what CMS’s 2027 bid figures show insurers built into their base costs without it. Whether a specific stand-alone plan’s 2027 premium actually rises by close to $16 depends on that plan’s own bid, a number CMS has not yet finalized publicly for individual plans as of this article’s publication.
CMS typically releases its full Part D plan landscape, listing each stand-alone plan’s actual 2027 premium by region, in the weeks before Open Enrollment opens on October 15. Until that list publishes, the $41.33 base premium and the $16 figure from the outgoing demonstration remain the two national reference points available for estimating how much a given stand-alone plan’s bill might change, rather than a household-specific number any current member can rely on yet.
A subsidy’s end still needs a plan-specific number
CMS has confirmed the Part D Premium Stabilization Demonstration ends after 2026, and KFF’s analysis shows it lowered the average stand-alone premium by a meaningful amount this year. Neither figure says what a specific stand-alone plan will charge once that subsidy is gone, since the demonstration’s dollars were spread unevenly across the many stand-alone plans it covered.
The Medicare Cost & Coverage Protection Kit includes 51 state Medicare cost-help packs and a medication and cost tracker, tools built for checking a specific stand-alone plan’s 2027 premium and cost-sharing once that plan’s own bid becomes public during Open Enrollment.
Check a specific plan’s 2027 numbers once they publish, using The Medicare Cost & Coverage Protection Kit.
This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
