Part D Stand-Alone Drug Plan Premiums Could Rise 50% in 2027

A $1 forecast and a $17 projection

People with Medicare are hearing two very different predictions about what their prescription drug coverage will cost next year. Both are based on the same plan filings. In late September, the Centers for Medicare & Medicaid Services said the average monthly premium for stand-alone Part D prescription drug plans (PDPs) would rise by less than a dollar, from $35.09 in 2026 to $36.00 in 2027.9 The agency said this showed the Part D market "returning to normal market conditions."9

KFF published its own analysis on October 30 and reached a different number. If enrollees keep the plan they have now, the average enrollment-weighted PDP premium would go from $34 to $51 a month, a 50% increase.1 By KFF's count, 10.4 million PDP enrollees who don't get low-income subsidies would pay more if they stay put. That is 76% of that group, up from 56% who faced an increase going into 2026.1 About 2.4 million of them would see their monthly premium climb by more than $50. A year earlier, only 38,000 people faced an increase that large.1

The two forecasts are not as contradictory as they look, and the gap between them is the real story. KFF's model assumes people stay in their current plans, using June enrollment. CMS based its figure on September enrollment and did not explain how it did the calculation.18 KFF also expects the real average to end up lower once people switch plans during open enrollment.3 The American Action Forum, a right-of-center think tank, used a similar stay-in-place method and got almost the same result: average PDP premiums up about 44%, to $51.47.10 Two research groups from different ends of the political spectrum landing on nearly the same figure carries weight. The fair reading is that CMS's number shows what an engaged shopper could pay. The KFF and AAF numbers show what happens to the millions of people who never compare plans.

Why the subsidy ended and who pays

The trigger is policy. CMS ended the Part D Premium Stabilization Demonstration after 2026 instead of running it for the third year originally planned.2 The program gave plan sponsors extra money in two ways: it lowered the base beneficiary premium and capped how much a plan's premium could rise from one year to the next.2 KFF says ending it did not cause an across-the-board jump. It probably did, however, help eliminate zero-premium stand-alone plans for people without low-income help. It also removed the cap that had kept increases above $50 from happening.2

The zero-premium plans are gone entirely. About 4.1 million people who paid nothing for their PDP in 2026 will pay something in 2027, whether they stay or switch, because no $0 stand-alone plan is available to them.13 Brand-name plans see some of the biggest increases. UnitedHealthcare's AARP Medicare Rx Preferred is projected to average $204.50 a month, up $78.50 (62%). Its AARP Medicare Rx Saver plan would nearly double, rising $48.10.3 Centene's Wellcare plans, by contrast, stay under $10 a month in many states.2 Across the eight national PDPs, average premiums range from about $6 to $204.5

The market is also shrinking. Most states will have 8 or 9 PDPs instead of 10 or more, the fourth straight year of fewer options.2 The underlying costs explain why. The national average monthly bid amount, which reflects what insurers expect it to cost to provide the basic benefit, rose about 24%, from $239.27 to $296.05.6 AAF puts the overall increase in benefit costs at about 25%.10 Premiums held down by federal subsidies can hide that kind of pressure for a while, but the pressure does not go away.

Premiums are only part of the drug bill

Costs beyond the premium are going up for almost everyone. The standard Part D deductible rises from $615 to $700, and the annual out-of-pocket cap goes from $2,100 to $2,400.49 Most plans will also charge coinsurance, meaning a percentage of the drug's price, instead of flat copays for brand-name and non-preferred drugs.5 People who take expensive medications will feel that change during the year. AAF estimates the average PDP deductible will rise more than 18%.10

The cap still matters a lot. Before the Inflation Reduction Act's redesign, there was no annual limit on what Part D enrollees could spend. A $2,400 ceiling still protects the sickest patients. But the cap rising $300 in one year, while premiums and deductibles also go up, means enrollees are again absorbing more of the cost.

Medicare Advantage: lower premiums, higher costs when you get care

Medicare Advantage drug plans look very different. KFF estimates the average drug premium in MA-PDs will be about $9, compared with $51 for stand-alone plans, a ratio of more than five to one.1 CMS projects the drug portion of MA premiums will drop 38%, from $11.32 to $7.00, after plan rebates are applied.9 The average overall MA premium is expected to fall from $14.37 to $12.00.11 Because 56% of Part D enrollees were in MA drug plans in 2026, most Part D enrollees won't feel the stand-alone premium increase.2

The low premiums come with trade-offs. Analysts reviewing 2027 plan data report out-of-pocket maximums up about 10% and drug deductibles up about 30%.121420 Leerink Partners found dental cuts affecting about 70% of UnitedHealthcare members and 45% of Centene members. It also found Humana reduced or eliminated the Part B premium giveback for 62% of its members.14 An estimated 3.2 million beneficiaries will have to find new coverage because their plans are ending or leaving their area.20 Humana alone is discontinuing plans that cover about 600,000 people.13

These cuts come even though federal payments are going up. CMS finalized a 2.48% average payment increase for MA plans in 2027, worth more than $13 billion.13 Insurers have told analysts that rising use of care and higher medical costs are behind the cuts.16 So the low premium is still there, but the coverage behind it is thinner. As one actuary said, a $0 plan now often means there is no $0 option at all, or the one that exists comes with leaner benefits.16

In effect, both sides of Medicare are shifting more cost to patients, just in different places. Stand-alone plan enrollees will see it in their monthly premiums. Medicare Advantage enrollees will see it when they get care, through higher deductibles, cost-sharing caps and fewer extra benefits.

Medicaid changes add pressure on hospitals

The Medicare changes take effect the same day as the biggest pieces of the 2025 reconciliation law's Medicaid overhaul. Starting January 1, 2027, adults in the expansion population of 44 states must document 80 hours a month of work, school or volunteering, or earn at least $580 a month, to keep coverage.2225 That group is about 20 million people.23 Expansion adults will also have to renew coverage every six months instead of once a year.26 Retroactive coverage will shrink from three months to one month for most adults and two months for some other groups.26

When the law passed, the Congressional Budget Office projected these Medicaid changes would cut federal spending by $911 billion through 2034 and leave 7.5 million more people uninsured.25 Washington state alone expects about 250,000 residents to lose Medicaid coverage.24 Twenty-five states and the District of Columbia have sued over CMS's narrow definition of "medical frailty," which governs who is exempt.22

This is where hospital costs come in. The Urban Institute estimates the law will produce $278 billion in uncompensated care by 2034.23 Analysts expect hospitals to make up some of that by charging insured patients more, which could eventually raise employer and marketplace premiums.2430 The law includes a $50 billion rural hospital fund, but it expires after five years.30

The Medicare and Medicaid changes are not directly connected, but they push in the same direction. Federal subsidies are pulling back across programs, and costs are landing on patients, whether through a higher drug premium, a smaller dental benefit or a hospital bill that someone else ends up paying. With KFF polling showing health care costs as voters' top economic concern, the timing will be politically sensitive.25

What enrollees should do

The difference between the CMS and KFF forecasts comes down to whether people compare plans. Medicare open enrollment runs through December 7.5 Stand-alone plan enrollees who switch can often avoid the largest increases, since low-cost options remain in many states.25 Those who let their coverage renew automatically are the ones KFF's 50% projection describes.