Medicare 2026

Medicare's Part D Premium Stabilization Demonstration Ends: What It Means for 2027

If you've been following your Medicare drug plan's premium over the last couple of years, you may have noticed something unusual: for 2025 and 2026, a special federal program worked behind the scenes to keep stand-alone Part D premiums from swinging too sharply while a major redesign of the drug benefit took effect. That program is ending. Here's a plain-English look at what the Centers for Medicare & Medicaid Services (CMS) did, why it's winding down, and what to watch for as 2027 coverage begins.

What the demonstration did

CMS announced the Part D Premium Stabilization Demonstration on July 29, 2024. It was a voluntary, nationwide program for stand-alone Part D prescription drug plans and first took effect in 2025. Its purpose was to smooth out premiums while the Part D benefit was being redesigned under the Inflation Reduction Act of 2022 (signed into law on August 16, 2022).

In 2025, the demonstration did three things for participating stand-alone plans:

• It applied a uniform $15 reduction to the base beneficiary premium.
• It capped any participating plan's total Part D premium increase at no more than $35 over its 2024 premium.
• It changed the "risk corridors" so the federal government shouldered more of a plan's potential losses.

For 2026, CMS adjusted the dials. The base premium reduction dropped from $15 to $10. The year-over-year premium increase limit widened from $35 to $50. And the narrowed risk-corridor protections were removed.

Why it's ending

On July 28, 2026, CMS announced it would discontinue the demonstration at the end of 2026. After reviewing plan bids for 2027, CMS concluded that Part D plan sponsors now have enough experience operating under the redesigned benefit to price their plans without the extra guardrails. Starting in 2027, Part D returns to traditional market conditions.

The Inflation Reduction Act's 6% cap still applies

Even without the demonstration, there's a separate federal guardrail already in law. The Inflation Reduction Act limits the annual increase in the national Part D base beneficiary premium to 6% per year from 2024 through 2029. For 2027, that national base beneficiary premium is $41.33, which is the 2026 figure of $38.99 increased by 6%.

Important: the base beneficiary premium is a national figure used in things like calculating the late-enrollment penalty. It is not what any particular plan charges. CMS notes that your actual Part D premium equals the base beneficiary premium adjusted by several factors, so premiums vary significantly from plan to plan and rarely match the base figure.

CMS, in a September 28, 2026 release, projected the average total monthly premium for stand-alone Part D prescription drug plans would rise by less than $1 — from $35.09 in 2026 to $36 in 2027. That's a national average, not any one plan's premium.

What else changes for 2027

A few program-wide numbers to keep in mind:

• The Part D annual out-of-pocket cap rises to $2,400 (it's $2,100 in 2026). Once your out-of-pocket spending on covered drugs hits that limit, you pay $0 for covered Part D drugs for the rest of the year.
• The most any Part D plan may charge as a deductible in 2027 is $700. Many plans charge less; some charge nothing.
• The Social Security Administration announced a 3.6% cost-of-living adjustment (COLA) for benefits payable beginning January 2027.

Two important figures have not yet been announced: the 2027 Part B standard premium and deductible, and the 2027 IRMAA income-related surcharge brackets. CMS typically releases both in the fall — usually November. Watch Medicare.gov for the official numbers.

Read your Annual Notice of Change

Each fall, every Medicare drug plan and every Medicare Advantage plan sends its members an Annual Notice of Change (ANOC). It lists what's changing in your coverage, costs, formulary and more for the coming year. With the stabilization demonstration ending, 2027 ANOCs are especially worth reading closely. Compare your current plan to others on Medicare.gov during Open Enrollment, October 15 through December 7, 2026.

If you have Medicaid or Extra Help

Since 2025, people with Medicaid or Extra Help have a monthly Special Enrollment Period to move to Original Medicare paired with a stand-alone Part D plan, or to switch stand-alone Part D plans. If you're a full-benefit dual-eligible (you have both Medicare and full Medicaid), you can also join an integrated Dual Eligible Special Needs Plan (D-SNP) in any month. These monthly options give you flexibility to change coverage outside the usual Open Enrollment window if your plan no longer fits.

Thinking about coverage choices

Many people get drug coverage one of two ways: through a stand-alone Part D plan paired with Original Medicare (often with a Medigap supplement), or through a Medicare Advantage plan that includes drug coverage.

Original Medicare with a Medigap and stand-alone Part D generally offers broad provider access nationwide and more predictable cost-sharing, but you pay separate premiums for Medigap and Part D, and Medigap generally doesn't cover drugs. Medicare Advantage plans often bundle drug coverage and may include extras, but they typically use provider networks and may require referrals or prior authorization. Neither path is right for everyone — the trade-offs depend on your doctors, your prescriptions, your budget and how you like to get care.

Where to go next

For official plan comparisons, enrollment, and the 2027 figures that haven't been announced yet, visit Medicare.gov or call 1-800-MEDICARE (1-800-633-4227), available 24 hours a day, 7 days a week. TTY users can call 1-877-486-2048.

This article is educational only. It does not rank or recommend any plan, and it is not affiliated with the federal government or any government agency.