You may have seen recent headlines suggesting that Medicare Part D is ending or that prescription drug premiums will skyrocket in 2027. Fortunately, neither is true.
Medicare Part D is not going away. However, an important temporary government subsidy that helped keep premiums lower will end after the 2026 plan year, making it more important than ever to review your prescription drug coverage during Annual Enrollment.
Why Was There a Temporary Subsidy?
CMS introduced the temporary subsidy in 2024 after major changes to Medicare Part D under the Inflation Reduction Act.
Before these changes, Medicare beneficiaries had no annual limit on their out-of-pocket costs for covered prescription drugs. After reaching catastrophic coverage, they still paid 5% of their prescription drug costs. Those costs could add up quickly for people who took expensive medications. Many beneficiaries faced thousands of dollars in prescription drug expenses each year.
Starting in 2025, Medicare introduced a $2,000 annual out-of-pocket maximum for covered Part D prescription drugs, providing much stronger financial protection. In 2026, that limit increased slightly to $2,100.
Another important change is that Medicare can now negotiate prices for certain high-cost prescription drugs. Medicare negotiated lower prices for the first 10 high-cost drugs in 2026, and it will negotiate prices for 15 additional drugs in 2027.
To help insurance companies adjust to these richer benefits without dramatically increasing premiums, CMS created a temporary Premium Stabilization Demonstration. That program helped keep premiums artificially low while insurers adapted to the new benefit structure.
What’s Changing in 2027?
The temporary subsidy ends after the 2026 plan year. Medicare Part D itself is not changing, and the federal government will continue to provide significant financial support for the program.
However, insurance companies will now have to price their plans without the extra temporary subsidy. As a result:
- Some monthly premiums may increase.
- Some formularies or pharmacy networks may change.
- Plan pricing may vary more than it has in recent years.
That doesn’t mean every plan will become expensive. Medicare Part D remains a competitive market, and insurers will continue competing to attract members.
Why Reviewing Your Plan Matters
The biggest mistake Medicare beneficiaries can make is assuming their current prescription drug plan will still be the best option for 2027.
Because every insurance company will respond differently, premiums, formularies, and pharmacy networks may change from one carrier to another.
In September, your Medicare Part D plan will mail you an Annual Notice of Change (ANOC). This important document explains any changes to your plan’s premiums, deductible, copayments, pharmacy network, and drug formulary for the coming year. Review it carefully so you understand how your coverage may be changing.
Then, during the Annual Enrollment Period (October 15 through December 7), compare your current plan with other available options. Even if you’re satisfied with your current plan, another plan may better fit your medications and budget for 2027.
The Bottom Line
The temporary premium subsidy is ending—but Medicare Part D is not.
The new annual out-of-pocket maximum for prescription drugs and Medicare’s ability to negotiate the prices of expensive medications are among the biggest improvements to the Part D program in years. While some premiums may increase in 2027, the best approach is not to panic. Review your Annual Notice of Change, compare your options during Annual Enrollment, and choose the plan that best meets your healthcare and prescription needs.
Contact Solid Health Insurance Services
At Solid Health Insurance Services, we’ll review your Annual Notice of Change, compare available Part D plans, and help you find the coverage that best fits your medications, preferred pharmacy, and budget. Please fill in our intake form so that we can guide you through the Annual Enrollment and can make an informed decision with confidence.
Disclaimer: This story is auto-aggregated by a computer program and has not been created or edited by healthlydays.
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