The Trump administration will end a subsidy program meant to keep premiums stable for Medicare Part D prescription drug plans after 2026, the Centers for Medicare & Medicaid Services reported this week. Reuters and the Wall Street Journal both reported this update. Credit where credit is due: the WSJ reported it first, and Reuters quickly followed.
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What Does This Mean: Key Takeaways
- CMS is ending a subsidy that has helped keep Part D premiums stable.
- Seniors won’t see any cost changes until the 2027 plan year begins.
- Medicare Part D coverage itself is not ending—only the subsidy is.
Subsidy Cuts Explained
Woman’s World provides a great summary I’m sharing here. Medicare coverage comes in four parts—Part A (which covers inpatient hospital stays, nursing facility care, and hospice), Part B (which covers doctor services, outpatient care, and preventive tests), Part C (also known as Medicare Advantage, which combines Parts A and B), and Part D (which helps pay for brand-name and generic drugs).
Most seniors enroll in A, B or C and then add D to help pay for their medications. In 2026, Part D cost seniors an average of $34.50 to $36 a month; however, if they bundled Part D with Medicare Advantage, or Part C, it cost around $8 a month. As it stands, 81.2 percent of seniors have Medicare stand-alone Part D coverage, according to CMS.
To help control premium costs for that group, the Biden administration launched the Part D Premium Stabilization Demonstration in 2025, which provided additional federal support to insurers to reduce sudden increases in drug prices and allowed people enrolled in a standalone Medicare Part D plan. The subsidy was a direct result of the Inflation Reduction Act (IRA), which was passed by Congress and then signed into law by former President Joe Biden in 2022.
Now, a year after seniors on Medicare Part D felt the positive impact of the IRA and the Part D Premium Stabilization Demonstration price control, it’s coming to an end. This program ends December 2026.
Dr. Oz said that the CMS’ new Medicare Bridge Program, which gives seniors access to certain GLP-1 medications for just $50 a month, also impacted the decision to stop the subsidy. “We are stabilizing the market so this bailout is no longer needed,” Dr. Oz wrote after the announcement went public.
What This Means for Seniors
Stopping Medicare Part D’s Premium Stabilization Demonstration may increase costs for some seniors for their Part D coverage now, since there is no law limiting it from increasing at an aggressive rate.
As for open enrollment, which begins on October 15th, seniors will not feel the effects there since everyone eligible for Medicare will still be able to opt into Medicare Part D. The end of the Premium Stabilization Demonstration will change how much each person pays for Medicare Part D. This change goes into effect in 2027.
Reuters reported that CMS also released preliminary information on 2027 Medicare drug-plan bids. The national average monthly bid amount (a measure used to calculate government subsidies for plans) will be $296.05 in 2027. Here is the latest from the CMS Newsroom.
“CMS is announcing the conclusion of the Part D Premium Stabilization Demonstration, a voluntary demonstration for standalone prescription drug plans implemented in CY 2025 to address volatility and variation in standalone premiums following benefit changes mandated by the Inflation Reduction Act (IRA). For CY 2027, CMS bid analysis indicates that Part D plan sponsors had sufficient experience under the redesigned Part D benefit to support their assumptions in developing the prescription drug plan bids. Therefore, CMS will discontinue the demonstration at the end of CY 2026 to return the program to operating under traditional market conditions in CY 2027.”
CMS said the national base beneficiary premium for Medicare Part D will be $41.33 next year. Annual increases in that premium remain capped at 6% through 2029 under provisions of the Inflation Reduction Act. CMS said it will release final 2027 Medicare Advantage and Part D premiums and plan details in September.
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Why Do I Bring This Up Now?
Healthcare costs remain a concern for many older Americans, especially those on fixed incomes. Nearly 25 million people were enrolled in standalone Medicare Part D drug plans in 2026, according to KFF, a health policy research group. Drug plans are not the only concern with changes to Medicare. Physicians, hospitals, and clinics are impacted. Concern is growing about overall healthcare services across the country.
I bring this up as changes occur throughout life. The words “chance and change only differ by only one letter! Could this be a chance to review all your plans?
I had the pleasure of being interviewed for the Ideas to Income Summit, August 17-21. 2026. This complimentary Summit will feature a variety of professionals providing live and pre-recorded interviews. My topic was “Let’s Talk About Organizing the Important Stuff in Life”. If you’d like to learn more, here is the link to check it out: Ideas to Income Summit.
I know it’s difficult to carve out time for this “important stuff” in life. That’s why I’m planning to provide a space where we may work on these types of activities together starting this fall. Let me know if you’d be interested in joining what I’m calling “The Ready Room,” where we’ll dedicate an hour a week to get our “ducks in a row”!
If you have questions, please feel free to Email me. If you’d like to learn more about my work, check out my website @ The Living Planner. I know I cover numerous topics every Sunday. I hope you find this helpful. Let me know either way; it’s always good to hear from you.
I’ve written my book for people who would like to consider planning for now and after a loss. The 2026 edition of Living Planner What to Prepare Now While You Are Living © can be purchased HERE.
Quote of the week: “Attention is the rarest and purest form of generosity.” Simone Weil
Keep enjoying summer! Lynn
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