The recent decision to end the Medicare Part D Premium Stabilization program early means that the temporary government subsidies keeping your prescription drug plan premiums in check are officially going away. Because insurance companies will now have to absorb the costs of the new out-of-pocket spending caps without this federal financial help, many enrollees in stand-alone Part D plans are likely to see a noticeable jump in their monthly premiums next year. If you are wondering how this subsidy reduction directly impacts your current coverage and what steps you can take to protect your wallet, watch the short video below where we break down exactly what you need to know.
The Inflation Reduction Act (IRA) was signed into law on August 16th, 2022. The law includes provisions that are focused on lowering prescription drug costs for people with Medicare and reducing costs to the Federal Government. These regulations include a redesign of the Part D program that took effect in 2025 and continues in 2027, which is described below.
On April 6, 2026, the Centers for Medicare & Medicaid Services (CMS) finalized the 2027 Medicare Advantage and Part D Rate Announcement, which is projected to increase payments to Medicare Advantage plans by 2.48% (about 4.98% when expected risk-score trend is included).
For 2027, the redesigned Part D benefit continues for both stand-alone Part D and Medicare Advantage Prescription Drug Plans. The annual out-of-pocket cap on covered Part D drugs rises to $2,400 (up from $2,100 in 2026 and $2,000 in 2025), and the maximum standard Part D deductible rises to $700 (up from $615 in 2026). For Medicare Advantage, the maximum in-network out-of-pocket limit for Part A and Part B services is $9,850 in 2027 ($14,800 combined in- and out-of-network for PPOs). It is important that you are informed on these changes to help understand how you may be impacted.
| 2023 | 2024 | 2025 |
| -$0 cost-sharing for adult vaccines -$35 cap on Part D Insulin cost-share (Part D Start: 1/2023 Part B Start: 7/2023) -Inflationary rebates for Parts B and D (Start: 10/2022) | -Pharmacy network DIR at point-of-sale changes -Annual increase in national average premium cap (through 2029) -Expansion of low-income cost-sharing and premium subsidy eligibility (from 135% FPL to 150% FPL) -Member pays $0 in the Catastrophic stage | -Part D Benefit Redesign: Elimination of the Coverage Gap (“donut hole”) -Reallocation of costs in the Catastrophic stage –$2,000 maximum true out-of- pocket (TrOOP) in 2025 ($2,100 in 2026; $2,400 in 2027) -New Manufacturer Discount Program -Medicare Prescription Payment Plan |
A 10-20% mandatory discount from prescription manufactures during a beneficiary’s initial and catastrophic coverage phases. This discount will be waived if other discounts are applied, such as Good Rx. The MDP is built into the prescription price and may not be reflected on EOBs or receipts. Discounts do not apply to the TrOOP calculation.
CMS has introduced the Medicare Prescription Payment Plan offering members the option to pay $0 at the point-of-sale, and instead, pay for their prescriptions through a monthly payment program during the calendar year. This program applies to stand-alone Prescription Drug plans and Medicare Advantage plans with prescription drug coverage.