If you’ve been following Medicare news lately, you’ve probably heard that Medicare Part D prescription drug plan premiums could increase in 2027.
Why?
A temporary federal program that helped keep premiums lower in 2025 and 2026 is ending after this year. While the exact impact won’t be known until Medicare releases 2027 plan information this fall, it’s important to understand what’s changing and what isn’t.
Let’s break it down in plain English.
What was the subsidy?
Over the past two years, the federal government provided extra financial assistance to Medicare Part D insurance companies through the Part D Premium Stabilization Demonstration.
The goal wasn’t to reduce the cost of medications directly. Instead, it helped keep monthly premiums from rising too quickly while insurance companies adjusted to major changes created by the Inflation Reduction Act.
Why is it ending?
CMS has announced the demonstration will end after 2026.
According to CMS, insurance companies have now had enough time to adjust to the redesigned Part D program and should be able to price their plans without the additional federal payments.
Does this mean everyone’s premium will skyrocket?
Not necessarily, here’s what we know today:
- Final 2027 premiums won’t be released until September.
- Some plans may increase more than others and some beneficiaries may see only modest increases.
- Others may benefit from shopping for a different Part D plan during Annual Enrollment.
Every year is different, which is why reviewing your drug coverage each fall is so important.
The good news
While premiums may increase, several important Medicare Part D improvements remain in place:
- The annual out-of-pocket prescription drug cap continues.
- The Medicare Prescription Payment Plan remains available to help spread prescription costs over the year.
- Medicare beneficiaries still have the opportunity to compare plans during Annual Enrollment and choose the one that best fits their medications and budget.
What should Virginia Medicare beneficiaries do?
If you’re enrolled in a stand-alone Medicare Part D prescription drug plan, don’t panic; but don’t ignore your Annual Enrollment Notice either.
This fall:
- Review your Annual Notice of Change (ANOC).
- Make sure your medications are still covered.
- Compare your current plan with other available options.
- Ask questions before making a decision.
Even if you’ve been happy with your plan for years, prescription drug plans can change every year.
Our Advice
One of the biggest mistakes I see people make is assuming that because nothing changed with their health, nothing changed with their insurance.
Medicare Advantage Plans can changes every year. Drug plans can change every year. Premiums can change every year. Every Medicare beneficiary should review their prescription drug coverage during Annual Enrollment, even if they ultimately keep the same plan.
About ITK Insurance
At ITK Insurance, we believe the best decisions come from understanding how Medicare works. We help Virginia Medicare beneficiaries compare their options, understand their coverage, and make informed decisions without the pressure.
If you have questions about your Medicare prescription drug coverage, we’re here to help.