Trump administration ends Medicare drug premium subsidy for 2027

The Trump administration will end a Medicare Part D premium stabilization program after 2026. The subsidy was created by the Centers for Medicare & Medicaid Services on July 29, 2024, to keep premiums stable for stand-alone Medicare prescription drug plans sold by private insurers.

Extra Help, the low-income aid that the Inflation Reduction Act expanded after it was signed on Aug. 16, 2022, is worth about $5,700 a year for eligible people, Social Security says, because it can reduce or eliminate premiums, deductibles and copays. Those enrollees are less exposed if premiums rise, while others could feel the full effect when the subsidy disappears in 2027.

The demonstration was meant to steady premiums as Medicare Part D faced a turbulent market. On July 28, 2025, CMS set the CY 2026 Part D national average monthly bid amount at $239.27. Medicare Part D changed substantially in 2025, including a new $2,000 annual out-of-pocket cap for covered drugs, while plan stability remained a concern.

The administration argued the program benefited insurance companies more than enrollees, a justification that frames the move as a rollback of a Biden-era subsidy rather than a direct cut to benefits. But the program had been designed for the opposite purpose: to prevent sharp premium swings in a benefit used by millions of older Americans to help pay for brand-name and generic medications.

Medicare Part D is optional prescription drug coverage offered through private insurers, so the end of the stabilization program leaves pricing more squarely in the hands of plan sponsors.