A Part D Subsidy Is Ending in 2027: What to Tell Your Clients

You may soon start receiving calls from confused clients who have seen headlines saying that the Medicare Part D subsidy is ending. Some may interpret that to mean Part D itself is going away or that the government will no longer help pay for it.

You can reassure them that neither is true. Medicare Part D is not ending, and the federal government will continue subsidizing the program. The regular government subsidy used to finance Part D plans remains part of CMS’s 2027 calculations. Additional help will also remain available for qualifying low-income beneficiaries.

What is ending is a separate, temporary layer of support designed to stabilize premiums for stand-alone prescription drug plans.

What Is Actually Going Away?

CMS created the Part D Premium Stabilization Demonstration in 2024 while insurers adjusted to the new $2,000 out-of-pocket cap, a redesigned Part D benefit that shifted more financial responsibility to plans. The demonstration was intended to prevent sudden premium increases and disruptive enrollment changes during the transition.

After reviewing 2027 bids, CMS says insurers now have “sufficient experience” to price plans without this additional support. The demonstration will end after 2026.

As KFF reports, the program reduced the average monthly stand-alone Part D premium by $26 in 2025 and $16 in 2026. It cost the federal government $9.8 billion over those two years. KFF says the assistance “worked as intended” by stabilizing premiums and preventing major enrollment shifts.

Who Could Be Affected?

This primarily affects clients with Original Medicare and a stand-alone prescription drug plan (PDP). It does not directly apply to prescription drug coverage included in Medicare Advantage plans.

KFF warns that some stand-alone PDP members could face larger premium increases in 2027. We do not yet know the premiums for individual plans, so agents should avoid predicting exactly what a client will pay.

A Slight Increase to the Base Premium

CMS has announced that the 2027 national base beneficiary premium will be $41.33, up from $38.99 in 2026. The Inflation Reduction Act limits increases in this base amount to 6 percent annually through 2029.

That protection is not ending, but it does not cap every plan’s actual premium increase at 6 percent. A client’s premium can be higher or lower because of the plan’s bid, supplemental coverage, subsidies, penalties, and other adjustments.

CMS Administrator Mehmet Oz, according to Reuters, has said that “Premiums will go up by less than $10 for most Medicare recipients,” with some paying less. Agents should treat this as an administration projection, not a guarantee for every plan or market. Final 2027 plan and premium information is expected in September.

What Agents Should Do

Expect Part D premiums to receive extra attention during the 2027 Annual Enrollment Period. When plan information becomes available, review each client’s prescriptions, preferred pharmacies, formulary coverage, utilization requirements, premium, and estimated total annual cost, as you normally do. Clients always need help with the Medicare Part D decision, and this year will be no different.