CMS ends the Part D Premium Stabilization Demonstration a year early, setting up higher 2027 drug premiums

The Centers for Medicare & Medicaid Services said in late July that it will end the Part D Premium Stabilization Demonstration after the 2026 plan year, one year earlier than originally planned ^[1][2]. The demonstration had been holding down premiums for stand-alone Medicare Part D prescription drug plans since 2025 ^[1]. As a result, the national base beneficiary premium for 2027 is set at $41.33 a month, up about 6% from $38.99 in 2026 ^[1][2].

The stabilization program was created to offset a side effect of the Inflation Reduction Act's 2022 drug pricing reforms, which shifted more financial risk for high drug costs onto insurers and led some of them to raise premiums ^[1]. CMS says insurers have now had enough time to adjust their pricing on their own, so the subsidy is no longer needed ^[1]. CMS Administrator Dr. Mehmet Oz has said most Medicare recipients will see increases of less than $10 a month, with some enrollees possibly seeing lower premiums once plans finalize their 2027 bids, though that estimate has not yet been confirmed with final plan-level numbers ^[1][2].

About 25 million people are enrolled in stand-alone Part D drug plans, out of roughly 56 million total Part D enrollees ^[1]. Analysts at KFF note the subsidy had pushed the average drug plan premium down to about $36 a month in 2026, which means enrollees in plans that relied heavily on the subsidy could see increases larger than the administration's $10 estimate ^[1]. The separate Part D national average monthly bid amount, a technical figure insurers use to set plan bids, rose to $296.05 for 2027 ^[2]. CMS has not yet published the enrollment-weighted average premium actual stand-alone plan enrollees will pay; that figure is expected in the fall Medicare Advantage and Part D landscape release ^[2].

The change does not affect the $2,000 annual cap on out-of-pocket prescription drug costs created by the Inflation Reduction Act, which stays in place, though that cap may rise to roughly $2,400 in 2027 ^[1]. A separate IRA provision limits the national base beneficiary premium's annual increase to no more than 6% through 2029, but that limit does not guarantee every individual plan's premium will rise by exactly that amount ^[1].

Why it matters for patients

This change is about the drug plan coverage itself, not GLP-1 drug prices directly. It does not touch the Medicare GLP-1 Bridge, which operates outside the standard Part D benefit [summary]. But people using the Bridge must maintain qualifying Part D coverage, and that underlying coverage is about to get modestly more expensive [summary]. For someone paying for a Part D plan alongside Bridge participation, a premium increase — even a small one, in the range of a few dollars to $10 or more a month depending on the plan ^[1][2] — adds to the total monthly cost of staying enrolled.

Because Part D premiums vary by plan, insurer, and region, the size of any individual increase is not yet knowable from national figures alone ^[1][2]. Enrollees in plans that depended more heavily on the ending subsidy could see larger jumps than the administration's general estimate ^[1]. It is not yet known exactly how the end of the demonstration will interact with GLP-1 Bridge eligibility rules or costs beyond the requirement to carry Part D coverage.

What happens next

CMS is expected to publish enrollment-weighted average premiums for stand-alone Part D plans and Medicare Advantage plans with drug coverage in its fall "landscape" announcement, typically released in September ^[2]. The Medicare Annual Enrollment Period runs from October 15 to December 7, 2026, when beneficiaries can compare 2027 plan premiums and switch coverage ^[1][2]. Final 2027 Part B premium and deductible figures, along with confirmed individual plan premiums, are typically announced by CMS in mid-November ^[2].