The Centers for Medicare & Medicaid Services (CMS) announced Tuesday it will end the Medicare Part D Premium Stabilization Demonstration after the 2026 plan year, ending a federal subsidy program that has helped keep prescription drug premiums lower and could result in higher costs for some seniors beginning in 2027.
In a fact sheet released Tuesday, CMS said the voluntary demonstration was introduced in 2025 to help limit premium volatility following changes under the Inflation Reduction Act.
The agency said it will discontinue the program because Part D plan sponsors now have sufficient experience under the redesigned Medicare drug benefit to develop their bids without additional federal support, returning the market to traditional conditions in 2027.
The Wall Street Journal, citing administration officials, reported the program is providing an estimated $3.6 billion in subsidies this year.
The average premium for a Medicare Part D plan was about $36 a month this year, according to KFF, a health policy nonprofit.
