Medicare Part D premiums may rise as subsidy program ends
Medicare is ending a temporary Part D subsidy, and experts say some seniors could see higher 2027 drug-plan premiums.
By Frankie Delgado · News Reporter
3 min read
Medicare Part D premiums could climb next year after Medicare ends a temporary program that helped limit monthly costs for older adults with standalone prescription-drug plans.
The Centers for Medicare and Medicaid Services began the program in 2025, saying it was meant to keep drug-plan prices steady. A Trump administration official told The Wall Street Journal on Tuesday that the subsidies are no longer needed and said the program encouraged insurers to raise rates.
According to that official, health insurers received more than $3 billion through the program this year. The end of the aid does not yet come with a clear average premium increase, but the official gave a rough breakdown of how beneficiaries may be affected.
Will Medicare Part D premiums go up?
Some beneficiaries are expected to pay more. The official told The Wall Street Journal that about 25% of beneficiaries will see premiums stay flat or fall, while 30% will face increases of less than $10 a month and 45% will see monthly increases of $11 to $20.
KFF reported that the average Part D premium is $36 a month this year. For seniors living on fixed income, even a modest monthly increase can bite, especially when paired with other healthcare costs.
Marcia Mantell, an independent retirement consultant and author of “Creating Your Medicare Recipe,” told MarketWatch that the change shifts more premium costs onto older retirees. She also said that is less severe than changing what people pay for the medicines themselves.
What is Medicare Part D?
Medicare Part D is prescription-drug coverage sold by private insurers to people enrolled in traditional Medicare. Drug coverage is also included in most Medicare Advantage plans, which bundle Medicare benefits through private insurers.
Part D premiums have been rising in part because of spending on expensive and widely used drugs, including GLP-1 medications such as Novo Nordisk’s Ozempic, according to MarketWatch, citing Healthcare Dive coverage.
The change could sharpen the contrast between standalone prescription-drug plans and Medicare Advantage plans. Juliette Cubanski, director of KFF’s Medicare policy program, told MarketWatch that ending the extra subsidies for prescription-drug plan sponsors may make many standalone plans look less affordable than Medicare Advantage drug plans.
Cubanski said that could add to a shift of enrollment into Medicare Advantage plans. Several experts cited by MarketWatch said higher premiums or leaner plan offerings could push more seniors to consider switching.
David Lipschutz, co-director of the Center for Medicare Advocacy, said in a statement that Medicare beneficiaries should compare drug coverage this fall and should not judge plans by premiums alone.
That warning matters because a lower monthly premium does not guarantee lower total costs. Beneficiaries may also need to check whether their medications are covered, what copays apply and whether their preferred pharmacy is in the plan’s network.
This story draws on original reporting from MarketWatch.