What’s Changing for Medicare Drug Plans in 2027?
Use open enrollment to compare Medicare coverage
“The bottom line is that it will pay to shop around” during open enrollment “and look past the premium to assess other benefit changes,” Cubanski says. “Many enrollees will see only modest premium increases” in their current stand-alone Part D plan, “but others will see big jumps.”
Policy observers had projected that Part D premiums for stand-alone plans would face strong upward pressure in 2027 due to rising drug prices, a more generous Part D benefit thanks to a 2022 prescription drug law, and beneficiaries’ growing use of costly GLP-1 medications for diabetes, sleep apnea and cardiovascular disease.
The prescription drug provisions of the 2022 Inflation Reduction Act, which were strongly supported by AARP, improved coverage for enrollees but increased costs for insurers. The law dramatically lowered beneficiary spending for prescription drugs and shifted more of those costs to Medicare and the drug plans. This helps millions of enrollees avoid possible life-altering prescription drug costs when facing chronic health problems or serious illness.
The law also capped enrollees’ total Part D out-of-pocket spending at $2,000 in 2025, $2,100 in 2026 and $2,400 in 2027 compared to no limit in 2024. When enrollees in stand-alone plans or Medicare Advantage plans with drug coverage reach the new out-of-pocket spending cap, they don’t have to pay anything more for the rest of the year.
Program’s early end could affect 2027 Part D costs
Another possible factor in projected Part D premium hikes: CMS is discontinuing a three-year pilot program designed to keep stand-alone premiums in check. The program paid $9.8 billion in subsidies to Part D stand-alone plans in 2025 and 2026, which helped lower premiums both years as the plans transitioned to new consumer-friendly provisions in the 2022 law that were expected to boost premiums.
KFF and others said CMS’s decision in July to end the subsidy program after only two years could cause stand-alone premiums to rise in 2027.
But CMS administrator Dr. Mehmet Oz said at the time that the subsidy program was an insurance industry bailout, a flawed response to the 2022 drug law, and that stand-alone plans have had enough time to adjust to the law’s changes.
Oz repeats part of that assertion in CMS’s Sept. 28 announcement of average Medicare Advantage and Part D premiums for 2027.
“By slashing handouts to big insurance companies, CMS is keeping premiums stable while ensuring that 97 percent of Medicare beneficiaries have access to 10 or more Medicare Advantage plans and that 93 percent of non-low-income beneficiaries can get an enhanced Part D plan for less than $6 a month,” Oz says.
CMS also says 88 percent of beneficiaries who do not have low incomes will have access to a basic Part D plan for $10.30 per month or less.
But Cubanski notes that the CMS data doesn’t “tell us anything about plan changes underneath the hood to control costs. Are plans dropping drugs from formularies, increasing copays, moving to coinsurance, etc.? These features affect patient cost and access as much as (if not more than) premiums,” she notes online.
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