Medicare Part D Will Remain
TL/DR –
The Centers for Medicare & Medicaid Services (CMS) temporary premium-stabilization program, introduced to help Part D plans adjust to changes made by the Inflation Reduction Act, is ending, but it will not affect the existence or benefits of Medicare Part D. The termination of the program may have an impact on plan premiums but the Medicare Prescription Payment Plan and other consumer protections like the $2,000 annual limit on beneficiaries’ out-of-pocket costs for covered Part D medications will remain. The Extra Help program, which helps beneficiaries with Part D premiums, deductibles and prescription costs, will also continue to exist.
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Clarifying National Headlines: Medicare Part D Is Not Ending
In a world where headlines often cause needless panic, recent national news falsely suggesting the end of Medicare Part D or its associated Part D subsidy program can create unwarranted fear and confusion. The reality is that a temporary premium-stabilization program, initiated by the Centers for Medicare & Medicaid Services (CMS), was publicized in July 2024. The program came into existence to aid standalone Part D plans in adjusting to modifications brought in by the Inflation Reduction Act. This aid, given by the government, was not a consumer-assistance program like Extra Help.
Understanding the Origins & Implications of the Premium-Stabilization Program
The Inflation Reduction Act was enacted in 2022 bringing substantial changes to Medicare Part D and methods of financing for covered prescription medications. One significant alteration was the removal of the Part D coverage gap, commonly dubbed the “donut hole” in 2025. An annual limit of $2,000 was set for beneficiaries’ out-of-pocket expenses for covered Part D medications. This limit is readjusted every year, and it increased to $2,100 in 2026, foreseeably escalating to $2,400 in 2027.
Upon reaching the annual threshold, beneficiaries are typically exempt from paying more for covered Part D medications for the rest of that calendar year. Monthly premiums and medications not covered by the plan do not contribute toward that limit.
Introduction of the Medicare Prescription Payment Plan
The Inflation Reduction Act also brought forth the voluntary Medicare Prescription Payment Plan. This initiative allows beneficiaries to break down their out-of-pocket prescription costs into monthly payments, mitigating the burden of substantial payments at the pharmacy. Moreover, the Act introduced a restriction capping the cost of each covered insulin product at $35 for a one-month supply, with the Part D deductible not applicable to covered insulin.
Part D Premium Stabilization Demonstration
In order to aid standalone prescription drug plans in adjusting to these alterations in benefit structure, CMS launched the voluntary Part D Premium Stabilization Demonstration in 2025. This program initially offered a $15 monthly reduction for participating plans in the amount used to calculate beneficiary premiums, which was later reduced to $10 in 2026.
The program will conclude on Dec. 31, 2026, on the basis that plan sponsors now have sufficient experience with the redesigned Part D benefit to support their 2027 bids, and conditions will revert to traditional market circumstances in 2027.
Implications for Medicare Beneficiaries
This development does not imply the discontinuation of standalone Part D prescription drug plans or Medicare Advantage plans that include prescription drug coverage. The Extra Help program, also known as the Part D Low-Income Subsidy, will also persist; it is a separate federal program that assists qualifying beneficiaries with Part D premiums, deductibles, and prescription costs.
However, the end of the demonstration can result in changes to premiums or plan availability, particularly for standalone Part D plans. A thorough review of finalized 2027 premiums, formularies, and pharmacy networks needs to be conducted before determining how an individual beneficiary will be affected.
The 2027 Part D base beneficiary premium will be $41.33, compared with $38.99 in 2026. This figure is employed to calculate plan-specific premiums and does not necessarily represent the exact amount a beneficiary will pay.
With the intricate nature of Medicare, nothing is guaranteed to remain unchanged from year to year. Hence, it is recommended to thoroughly review your Annual Notice of Change, prescriptions, formulary, pharmacy network, and estimated annual costs and seek advice from a licensed insurance professional to understand how any changes or individual circumstances may affect your coverage.
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