This $9.8B Medicare subsidy was just ended — and millions are worried about Plan D. Will you be paying more in 2027?

On July 28, 2026, the U.S. Centers for Medicare and Medicaid Services (CMS) announced the end of the Part D Premium Stabilization Demonstration. This subsidy, introduced under the Inflation Reduction Act of 2022, was designed to prevent Medicare drug premiums from rising for millions of Americans. With the subsidy ending, insurance companies could potentially raise premiums on stand-alone Medicare Part D plans in 2027, leading to increased out-of-pocket costs for patients.

The demonstration, which cost the federal government $9.8 billion in 2025 and 2026, was intended to stabilize premiums at less than $40 per month in 2025. However, its removal may cause premiums to increase by less than $10, according to CMS Administrator Mehmet Oz. Juliette Cubanski of the Kaiser Family Foundation notes that it's too early to predict the full impact of this rollback on premiums.

Patients with standalone Medicare Part D plans should anticipate a potential increase in premiums next year. Insurance companies are expected to send Annual Notices of Change (ANOC) in the fall to inform enrollees of any premium adjustments. This period, from October 15 to December 7, provides ample time for beneficiaries to review their plans and make informed decisions about their healthcare costs.

In addition to monitoring premium changes, Medicare beneficiaries may consider other strategies to manage healthcare expenses. These include exploring Health Savings Accounts (HSAs), which are tax-advantaged accounts for covering healthcare costs, and insurance policies that address gaps in Medicare coverage, such as long-term care insurance. Establishing an emergency fund in a high-yield savings account can also provide a financial buffer against unexpected medical expenses.