Medicare drug-plan subsidy ending ahead of 2027 coverage year, raising prospect of higher premiums
The Trump administration is ending a temporary Medicare Part D subsidy that offset an average of $16 per person in 2026. Beneficiaries could face higher monthly costs in 2027 as plans finalize offerings.
The Trump administration is ending a temporary subsidy that helped hold down premiums for Medicare prescription-drug plans, setting up the possibility of higher monthly costs for beneficiaries in 2027.
The subsidy supported Medicare Part D premiums during 2025 and 2026. Its end comes as insurers prepare their offerings for the 2027 coverage year and older adults look ahead to the next round of plan choices.
The change applies to the national Medicare Part D program, which serves beneficiaries across the United States. It does not end Medicare Part D coverage itself, but it removes a temporary source of premium support.
What the subsidy did
The temporary program offset part of the premiums charged by Medicare prescription-drug plans. Figures cited by The Associated Press from the Medicare Payment Advisory Commission show that the average offset was $16 per person in 2026.
The amount was an average, not a universal payment that reduced every beneficiary’s premium by exactly the same amount. The effect of ending the program will therefore vary among beneficiaries and plans.
For people enrolled in Part D, the practical issue is the monthly premium attached to their plan for 2027. If plans no longer receive the temporary support and reflect that change in their offerings, some beneficiaries could pay more than they did while the subsidy was in place.
Plans are preparing 2027 offerings
The Centers for Medicare & Medicaid Services released preliminary technical information on 2027 Part D bids on July 28, 2026. The information was intended to help Part D and Medicare Advantage plans finalize their offerings before open enrollment.
Those bids are part of the preparation for the 2027 coverage year. The end of the subsidy is one factor plans must account for as they set their offerings and premiums.
Final 2027 premiums and the effects on individual plans were not yet available. The number of beneficiaries who ultimately pay more will depend on final bids, the plans people choose and other Medicare changes.
What beneficiaries should watch
The immediate consequence is uncertainty about the cost of prescription-drug coverage in 2027. Beneficiaries should expect the final plan offerings and premiums to be the information needed to determine how the policy change affects their own monthly bills.
Because the $16 figure is an average for 2026, it should not be treated as a forecast for every person’s increase in 2027. Some beneficiaries may see a different change depending on their plan and the final pricing decisions.
The timing makes the next plan cycle important. CMS has already issued preliminary bid information, and plans are moving toward finalized 2027 offerings ahead of open enrollment. The next key development will be the release of those final plan details, including the premiums beneficiaries will be asked to pay.
For millions of older adults enrolled in Medicare drug coverage, the end of the temporary subsidy could translate into a larger monthly expense. The size and reach of that increase will not be clear until the 2027 bids and plan choices are finalized.
