Medicare can feel a lot clearer.

You may have seen recent headlines about federal subsidies for Medicare Part D ending after 2026. Understandably, this has raised concerns about how much people with Medicare may have to pay for their prescription drug coverage in 2027.

The most important detail is often missing from those headlines: these temporary subsidies were paid to participating insurance carriers—not directly to Medicare beneficiaries.

Why were insurance carriers receiving additional payments?

Medicare Part D underwent significant changes beginning in 2025. These changes included eliminating the coverage gap, commonly called the “donut hole,” and establishing an annual limit on what enrollees pay out of pocket for covered Part D prescriptions.

The redesigned benefit shifted more of the financial responsibility for prescription drug costs to Part D insurance carriers and drug manufacturers.

To help participating carriers adjust to these changes and reduce the risk of sudden premium increases, the Centers for Medicare & Medicaid Services, known as CMS, created a temporary Part D Premium Stabilization Demonstration.

Through this program, CMS provided additional financial protections to insurance carriers offering participating standalone Part D prescription drug plans. The program was intended to help stabilize plan premiums while carriers gained experience with the redesigned Part D benefit.

What is changing for 2027?

CMS has announced that this temporary demonstration will end on December 31, 2026.

This means participating insurance carriers will no longer receive the additional financial support and protections provided through this particular program. Beginning in 2027, standalone Part D plans will return to operating under the traditional Part D payment structure.

The regular federal funding and subsidies built into the Medicare Part D program are not ending. It is this additional, temporary carrier stabilization program that is ending.

Will Part D premiums increase?

Some standalone Part D plan premiums could increase in 2027, but we do not yet know which plans will be affected or how much their premiums may change.

The ending of the temporary carrier subsidies does not create one set increase that applies to everyone. Each insurance carrier determines its plan premiums based on factors that include projected prescription costs, enrollment, plan design and the medications covered by the plan.

Does this affect what you pay for prescriptions?

The end of the carrier stabilization program does not directly determine the price of an individual prescription.

However, Part D plans can make annual changes to monthly premiums, deductibles, copayments and coinsurance, covered-drug lists, drug tiers, preferred pharmacies and coverage requirements.

Your total cost will depend on both the premium charged by the plan and how that plan covers your specific medications. The annual out-of-pocket protection for covered Part D prescriptions will remain in place. The Extra Help program is also separate from the carrier stabilization program.

When will 2027 plan information be available?

CMS expects 2027 Medicare Advantage and Part D plan information to be finalized in mid-to-late September. However, Medicare agents and brokers cannot begin discussing or marketing specific 2027 plan details with beneficiaries until October 1.

What should you do now?

There is no action you need to take based only on the announcement that the temporary carrier subsidies are ending.

Once the 2027 plan details can be discussed, it will be important to compare more than monthly premiums. You should also confirm:

• Whether each of your prescriptions is still covered
• What tier each medication is assigned
• What you will pay at the pharmacy
• Whether your preferred pharmacy remains in the plan’s network
• Whether any new coverage restrictions apply

When that information becomes available, I can help you review the plans offered in your area and understand how any changes may affect both your monthly premium and prescription costs.

Sources and further reading: CMS Medicare Part D 2027 information and CMS Part D redesign guidance. Reviewed July 29, 2026. This article is for general educational purposes and is not individualized plan advice.

Medicare comes with a lot of letters, deadlines and decisions—but the basic structure is easier to understand when you take it one step at a time.

First, learn the four parts

• Part A
  Helps cover inpatient hospital care, skilled nursing facility care, hospice and certain home health care.
• Part B
  Helps cover doctor visits, outpatient care, preventive services, durable medical equipment and other medically necessary services.
• Part C
  Also called Medicare Advantage. These Medicare-approved private plans provide your Part A and Part B benefits and usually include Part D.
• Part D
  Helps cover prescription drugs. Coverage is available through a separate drug plan or, in many cases, through a Medicare Advantage plan.

Next, choose how you receive your coverage

Original Medicare includes Part A and Part B. You may add a separate Part D prescription drug plan and may be able to purchase Medicare Supplement Insurance, also called Medigap, to help with certain out-of-pocket costs.

Medicare Advantage is another way to receive your Medicare benefits through a Medicare-approved private plan. Plans often use provider networks, may require approval for some services and may include additional benefits. You must continue paying your Part B premium.

Medigap works only with Original Medicare. You cannot use a Medigap policy together with a Medicare Advantage plan.

Pay attention to enrollment timing

For many people who become eligible at 65, the Initial Enrollment Period is a seven-month window: the three months before the month you turn 65, your birthday month and the three months after it. Your timing may be different if you have qualifying employer coverage or become eligible for Medicare for another reason. Waiting without qualifying coverage can lead to a gap in coverage or a late-enrollment penalty.

Make your decision personal

There is no single option that is best for everyone. Before comparing coverage, gather:

• Your doctors and preferred hospitals
• Your prescriptions, dosages and preferred pharmacy
• Your budget and comfort with copayments or monthly premiums
• Your travel habits and the areas where you need coverage
• Any dental, vision, hearing or other benefit priorities

Sources and further reading: Parts of Medicare, coverage options and when to sign up at Medicare.gov. Reviewed July 27, 2026. This article is for general educational purposes and is not individualized plan advice.