The Trump administration has said it will phase out a subsidy program tied to Medicare Part D, the prescription drug benefit used by Medicare beneficiaries. The move could affect the stability of premiums for stand-alone drug plans, although the full impact on seniors is still unclear.
Medicare Part D has existed since 2006 to help cover prescription drug costs. In 2022, the Biden administration added several cost-saving features through the Inflation Reduction Act, including an annual out-of-pocket cap, negotiated prices for certain drugs, and a monthly insulin cap. Under the new plan, the subsidy support that helped keep premiums lower will end in 2027.
It is not yet known how many people could see higher costs or by how much. Juliette Cubanski, vice president and director of KFF’s Program on Medicare Policy, said some stand-alone Part D enrollees could face a larger premium increase next year if the extra subsidies are removed. MedPAC has estimated that the subsidy reduced the average premium cost by $26 in 2025 and $16 in 2026. KFF also said enrollment rose from 22.6 million in 2024 to 24.9 million in 2026, while the average monthly premium in 2026 was more than four times the average premium for drug coverage in Medicare Advantage plans.
Officials have pointed to the program’s cost as a reason for the change. The subsidies totaled $9.8 billion in 2025 and 2026, according to the report. In a statement on X, CMS administrator Dr. Mehmet Oz said insurers have gained enough experience pricing Medicare Part D plans and no longer need government help. CMS is expected to release final 2027 premiums and plan details in September, when beneficiaries should learn what the coverage will cost.
Source: fastcompany.com
