Medicare Part D Subsidies Ending in 2027? What to Know

If you've seen a headline saying Medicare Part D subsidies are ending, here's what you actually need to know: a temporary premium-support program for stand-alone Medicare drug plans is ending after 2026. Extra Help is not ending.

Those are two very different things, and it's an easy headline to misread if you don't know which "subsidy" is actually being described. What's changing is narrower, and more specific, than the headlines suggest.

This is especially relevant if you have Original Medicare with a Medigap plan, since you rely on a stand-alone Part D plan for drug coverage. If you have Medicare Advantage with drug coverage built in, this change works differently for you.

What's Actually Ending

In 2024, CMS created the Part D Premium Stabilization Demonstration because Medicare's newly redesigned drug benefit shifted a lot more of the financial risk onto insurers.

CMS was worried stand-alone PDP premiums could spike while carriers adjusted. So the demonstration gave participating plans a premium reduction and capped how much their premiums could rise year over year.

In 2025, that meant a $15 monthly premium reduction and a $35 cap on year-over-year increases. In 2026, that support was already scaled back to a $10 reduction and a $50 cap. On July 28, 2026, CMS announced the whole program ends after this year, saying insurers now have enough experience with the redesigned benefit to price 2027 plans without it.

A single word — "subsidy" — covers several different Medicare programs. Confirming which one a headline is talking about matters more than the headline itself.

Why This Matters If You Have Medigap

Medigap plans don't include drug coverage. Never have. If you have Original Medicare and a Medigap plan, your drug coverage comes from a separate stand-alone PDP — exactly the type of plan covered by this demonstration.

That's different from Medicare Advantage, where drug coverage is usually bundled into the plan itself. So this change lands more directly on people who've chosen Original Medicare with Medigap than on people in Medicare Advantage.

Your Medigap premium moves on its own separate timeline and for its own separate reasons — worth knowing if you've also noticed a Medigap rate increase and are trying to sort out which part of your coverage actually changed.

Extra Help Is Not Ending

This is the part I'd want every client to hear clearly. Extra Help, also called the Part D Low-Income Subsidy, is a completely separate federal program from the demonstration that's ending.

For 2026, general Extra Help eligibility limits are $23,940 in annual income and $18,090 in resources for an individual, or $32,460 in income and $36,100 in resources for a married couple. People with full Medicaid, a Medicare Savings Program that pays their Part B premium, or SSI generally qualify automatically.

Qualifying beneficiaries can get a $0 plan premium, $0 deductible, and copays generally no higher than $5.10 for a generic and $12.65 for a brand-name drug in 2026. None of that changes because the premium demonstration is ending.

How Many People Are Affected

About 56.1 million people were enrolled in Medicare Part D as of February 2026. Of those, 24.9 million — 44% — were in stand-alone PDPs, and about 18.6 million of those were non-group plans people bought individually.

Enrollment figures reported by KFF for February 2026.

"24.9 million affected" doesn't mean 24.9 million people are getting a premium increase. Some have employer coverage, some qualify for Extra Help, and every insurer sets its own 2027 pricing separately.

Rural beneficiaries have more at stake here. Nearly six in 10 Part D enrollees in the most rural parts of the country were in stand-alone PDPs in 2025, since Medicare Advantage options tend to be thinner in those areas.

Will Your Premium Go Up in 2027?

Some stand-alone PDP premiums probably will rise. But as of this writing, nobody can responsibly tell you your exact 2027 number, because CMS hasn't released final plan-specific premiums yet. That data is expected mid-to-late September 2026.

GAO did look backward at what happened without the demonstration. It found that for non-LIS beneficiaries who stayed in the same plan from 2024 into 2025, premiums would have nearly doubled on average without the extra support, and 37% would have faced increases over $40 a month.

That number explains why CMS created the program in the first place. It is not a forecast for 2027 — insurers now have two more years of experience pricing the redesigned benefit, which is exactly why CMS says the program can end.

MedPAC estimates cited by KFF suggest the demonstration lowered average PDP premiums by roughly $26 a month in 2025 and $16 a month in 2026, compared to what they'd otherwise have been. That's an average effect across the market — not a guaranteed dollar amount added to your specific plan in 2027.

The 6% Rule, Explained

A separate Inflation Reduction Act provision limits growth of the national Part D base beneficiary premium to 6% a year, from 2024 through 2029. That's a real, ongoing protection — the base premium is $38.99 in 2026 and rises to $41.33 in 2027.

What that rule doesn't do is cap your individual plan's premium at 6%. CMS is explicit that actual plan premiums depend on each plan's own bid, supplemental benefits, and other adjustments — and that they routinely differ from the national base amount. I've watched people assume that 6% figure applies to their bill directly, and it just doesn't work that way.

Your Drug Cost Protections Aren't Disappearing

Premiums are only one part of your 2027 drug costs. The Inflation Reduction Act's annual cap on covered drug spending is untouched by this change.

2027 figures from CMS's CY 2027 Medicare Advantage and Part D Rate Announcement.

Your deductible and out-of-pocket ceiling are both rising for 2027, but once you hit that ceiling, covered drugs still cost you nothing for the rest of the year. That catastrophic-phase protection is not affected by the demonstration ending.

State & Extra Assistance Programs

If a 2027 premium increase would strain your budget, Extra Help is the first thing to check — but it isn't the only option. Several states run their own prescription assistance programs on top of it.

Eligibility rules vary and change independently of Medicare — confirm current limits before relying on them. Medicare.gov maintains a full state-by-state lookup tool.

It's also worth checking Medicare Savings Programs even if you think your income is too high. States can set more generous rules than the federal minimums, and qualifying for a Medicare Savings Program also triggers automatic Extra Help eligibility.

What I'd Check Before 2027

I wouldn't change your Medicare Supplement plan just because you heard Part D subsidies are ending. I'd wait for your real 2027 plan information and then review three things.

1. Your premium

What does your specific plan actually cost next year — not the national average, your plan.

2. Your medications

Are your prescriptions still covered? Has anything moved to a different tier or picked up a new utilization requirement?

3. Your pharmacies

Is your usual pharmacy still preferred or in-network, and would a different one meaningfully lower your costs?

A Medigap plan that's working well for you can stay a good fit for years. Your Part D plan is different — formularies, premiums, and pharmacy networks can shift from one year to the next, so it deserves its own annual review during the Medicare Annual Enrollment Period rather than being left on autopilot.

Common Misconceptions