Newsroom · Part D

Part D Premiums Are Changing for 2027 — Here's What's Actually True

CMS is ending a temporary subsidy program after 2026, and the headlines got loud fast. Here's the plain-English version — what's really changing, what isn't, and what it means for your drug coverage this Annual Enrollment Period.

Medicare On Main Data Desk

Published August 1, 2026 · 6 min read · Reviewed by Brian Penner

If you've seen headlines this week about Medicare Part D premiums "skyrocketing" or the government "cutting subsidies," here's the plain-English version — straight from CMS's own announcements. One temporary program is ending. A permanent protection is not. Those two facts have been getting mixed together all week, and the difference matters for what you do this fall.

What's actually ending?

CMS created a temporary program in 2024 called the Part D Premium Stabilization Demonstration. It gave extra federal support to insurers who sell stand-alone Part D drug plans, to keep their premiums from jumping around too much while they adjusted to the newly redesigned Part D benefit. That program is winding down after the 2026 plan year. Starting in 2027, stand-alone drug plans go back to setting premiums under normal market conditions — no extra federal cushion.

The demonstration worked by reducing the base beneficiary premium and capping how much a plan's monthly premium could rise year over year. Per KFF's analysis, it lowered average stand-alone drug plan premiums by about $26 a month in 2025 and $16 a month in 2026, at a total federal cost of roughly $9.8 billion across the two years. CMS says that after reviewing the 2027 bids, it concluded plan sponsors can now price their plans without that backstop.

Two things worth being precise about. First, this was always temporary — a demonstration, not a benefit. Second, it applied to stand-alone Part D plans. If your drug coverage comes bundled inside a Medicare Advantage plan, this particular program was not what was holding your drug premium down.

What do the $296.05 and $41.33 numbers actually mean?

CMS released two national baseline figures for 2027 on July 28, 2026 (official notice; CMS fact sheet):

Source: CMS: Annual Release of Part D National Average Bid Amount and Other Part C & D Bid Information (July 28, 2026).

Both are baselines used in the math, not what shows up on your bill. The bid amount is a national average of insurer cost projections; the base beneficiary premium is a statutory figure that feeds the subsidy calculation. Your actual plan premium depends on your specific plan and service area, and CMS won't publish those until September.

This is where the "premiums are skyrocketing 24%" framing goes wrong. That percentage describes the change in the national average bid — an insurer cost measure — not the change in anyone's premium. The base beneficiary premium, the figure closer to what beneficiaries experience, rose about 6%. Real plan premiums will land all over the map: some up, some down, some plans gone entirely.

What is NOT ending — it's just not a flat number

The Part D out-of-pocket cap is a permanent, IRA-mandated protection. It isn't tied to the subsidy program above, and it isn't disappearing. It's indexed to drug-cost inflation and rises every year:

Sources: CMS Final CY 2025 Part D Redesign Program Instructions · CMS Final CY 2026 Part D Redesign Program Instructions · CMS CY 2027 Announcement (April 6, 2026), which sets the 2027 deductible at $700 and the annual out-of-pocket threshold at $2,400.

If you've seen a post suggesting your out-of-pocket protection is going away — it isn't. It's going up, not away, and it's locked into law. Once your out-of-pocket spending on covered drugs reaches the cap, you pay $0 for covered Part D drugs for the rest of that calendar year. Worth remembering what the cap counts: your deductible, copays, and coinsurance on covered drugs. It does not count your monthly premium, drugs your plan doesn't cover, or medications billed under Part B (Medicare.gov).

What to actually do about it

1. Don't panic-switch plans based on national averages — they don't reflect your specific plan. A $296.05 bid average tells you nothing about the drug plan you're actually enrolled in.
2. Watch for your Annual Notice of Change (ANOC) letter in September; that's where your real 2027 premium and formulary changes will show up (Medicare.gov). Every plan must send one. Open it.
3. Annual Enrollment Period runs October 15 – December 7 (Medicare.gov). That's your window to compare plans once real numbers are out, with changes effective January 1.
4. Keep a current list of your prescriptions — names, dosages, and your pharmacy. Formulary fit, not premium, is what decides whether a drug plan is right for you.
5. If you want a second set of eyes on your specific plan once the September numbers are public, that's exactly what I'm here for.

One more thing worth saying plainly: if this is a year when your stand-alone drug plan's premium jumps, that is the year comparison pays. Medicare Plan Compare lists every plan available in your county, and it prices your actual drug list — which is the only comparison that answers the question you care about.

How we know all this: the Medicare On Main Data Desk frames every article with primary public data — here, the CMS notice of July 28, 2026 setting the CY 2027 national average monthly bid amount and base beneficiary premium, the CMS CY 2027 rate announcement of April 6, 2026 setting the 2027 deductible and out-of-pocket threshold, the CMS final redesign instructions for 2025 and 2026, and KFF's analysis of the Premium Stabilization Demonstration. Where a figure isn't public yet — like your own plan's 2027 premium — we say so rather than estimate. This is education, not advice; confirm your plan, costs, and eligibility with a licensed agent or Medicare.gov.