Medicare’s drug-plan premiums are about to move in a direction most enrollees have not seen in two years: up. The Centers for Medicare and Medicaid Services said in late July it will end a temporary subsidy that has held down Part D premiums since 2025, and administration officials estimate that when the change lands in January, roughly 45% of the program’s enrollees will see their monthly premium climb by more than $10, with most of those increases landing between $11 and $20. The number is an early administration estimate tied to preliminary 2027 bid data — not a finalized bill.
Why the Subsidy Is Going Away
CMS announced on July 28 that it will discontinue the Part D Premium Stabilization Demonstration after this year. The program, launched in 2025, cut $15 off the uniform base beneficiary premium and capped year-over-year premium growth at $35 to keep standalone drug plans affordable after Inflation Reduction Act benefit changes reshaped how insurers priced coverage. CMS said its review of 2027 bid data shows plan sponsors now have “sufficient experience” pricing the redesigned benefit without the extra cushion.
The subsidy was not small. It reduced the average standalone Part D premium by about $26 a month in 2025 and roughly $16 a month in 2026, based on figures CMS and outside analysts have cited. Removing that cushion for 2027 does not raise the sticker price of any single drug, but it changes the baseline insurers use to set premiums, and that baseline is now rising faster without federal money smoothing the increase.
The national average monthly bid submitted by insurers for 2027 prescription drug plans came in at $296.05, up about 24% from the prior year, and the base beneficiary premium used to calculate what most enrollees pay is set at $41.33, a 6% increase — the maximum yearly jump allowed under a cap written into the 2022 drug-pricing law. Those two figures set the floor; individual plan premiums, which vary by insurer and region, will not be finalized until CMS publishes the full 2027 plan landscape in September.
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Where the 45% Estimate Comes From
The 45% figure did not come from a CMS press release. A Trump administration official told the Wall Street Journal, in reporting first summarized by Healthcare Dive, that about 30% of Part D enrollees would see bills rise less than $10 a month, while the other 45% would see increases of $11 to $20. That leaves roughly a quarter of enrollees with a flat or lower premium — the administration’s own breakdown of who wins and who loses under the changed formula.
CMS Administrator Dr. Mehmet Oz has publicly framed the change differently, saying on social media that premiums would rise “by less than $10 for most beneficiaries” and that some enrollees could see lower payments — a characterization that undercounts the 45% share the administration’s own internal estimate assigns to the larger increase. Both descriptions can be technically accurate depending on which slice of enrollees is being described, which is part of why beneficiaries should treat any single premium number as an average, not a personal guarantee.
Health-policy researchers at KFF have cautioned that without the subsidy, some standalone drug-plan enrollees could face a larger premium jump next year than they have seen in recent years, though exact, plan-specific amounts will not be public until insurers’ final 2027 bids are released. That timing matters: the numbers in this story are a mid-year snapshot, not the bill that will actually arrive in enrollees’ mailboxes.
What Else Changes for Drug Costs in 2027
Beyond the premium, CMS has already finalized two other 2027 Part D numbers that do not depend on the subsidy fight. The annual deductible for covered drugs rises to $700, and the yearly out-of-pocket cap — the point at which a beneficiary stops paying anything more for covered prescriptions for the rest of the year — holds at $2,400. Both figures apply regardless of which standalone or Medicare Advantage drug plan a person chooses.
Because premiums, deductibles and the out-of-pocket cap all move somewhat independently, a plan with a lower monthly premium is not automatically the cheaper overall choice; a higher deductible or narrower drug formulary can offset the premium savings for someone who fills several prescriptions a month. CMS’s Annual Notice of Change, mailed to enrollees every September, is the document that spells out a specific plan’s actual 2027 numbers rather than the national averages driving this story.
The open question heading into this fall’s enrollment period is not whether premiums are rising on average — CMS has confirmed that much — but how unevenly the increase lands. A retiree in a plan that priced conservatively for 2026 may see little change, while someone in a plan that leaned on the expiring subsidy could see a jump well above the $11-to-$20 range the administration is citing as typical, a gap that will not be fully visible until the September landscape file replaces this summer’s early estimate.
This article was researched and drafted with the assistance of artificial intelligence.
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