CMS Ends the Medicare Drug-Plan Premium Subsidy After 2026, Months Before Seniors Shop for 2027 Plans

The Centers for Medicare & Medicaid Services said on July 28, 2026 that it will end after 2026 the demonstration program that has held down premiums for Medicare Part D prescription drug plans. The agency said its review of 2027 bids showed insurers have gained enough experience with Part D to price their plans accurately without the program's support. CMS Administrator Mehmet Oz wrote on X: "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 simultaneously released preliminary 2027 bid data, putting the national average monthly bid at $296.05 and the national base beneficiary premium at $41.33. Nearly 25 million people were enrolled in standalone Part D drug plans in 2026, according to KFF. The Wall Street Journal first reported the decision.

The subsidy was created to cushion beneficiaries from premium swings as the Inflation Reduction Act's Part D redesign took effect. Ending it shifts costs that the federal government had been absorbing back onto plans and, through premiums, onto enrollees, weeks before Medicare's open enrollment period.

Annual increases in the base beneficiary premium remain capped at 6% through 2029 under the Inflation Reduction Act. CMS said it will release final 2027 Medicare Advantage and Part D premiums and plan details in September.