A federal program that has kept a lid on Medicare drug plan premiums for the past two years is coming to an end, and the change could show up in the mailbox of anyone enrolled in a stand-alone Part D prescription drug plan. The Centers for Medicare & Medicaid Services (CMS) announced in late July 2026 that it will discontinue the Part D Premium Stabilization Demonstration after this year, sending the stand-alone drug plan market back to what the agency calls “traditional market conditions” starting in 2027.
For the roughly 25 million Americans, including a large share of Arizona seniors, who buy a separate Part D drug plan rather than getting drug coverage through a Medicare Advantage plan, this is worth understanding well before Open Enrollment begins on October 15.
What the program did
The Inflation Reduction Act of 2022 rewrote how Part D works, capping what beneficiaries pay out of pocket for prescriptions each year. That cap protected patients, but it also shifted more of the financial risk onto insurance companies, and insurers responded by pushing premiums higher heading into 2025.
To prevent a sudden spike, the outgoing administration created the Part D Premium Stabilization Demonstration in 2024. The program gave insurers extra federal support in exchange for keeping premiums more predictable. In practice, that meant a uniform cut to the base beneficiary premium, a cap limiting how much any single plan’s premium could rise year over year, and narrower financial risk for the companies offering these plans. Nearly every plan sponsor in the country chose to participate.
The Government Accountability Office estimated the program cost about $9.8 billion across 2025 and 2026, and found that without it, monthly premiums for people who stayed in their existing plans would have nearly doubled last year. Instead, average premiums for stand-alone plans rose only modestly, from about $42 in 2024 to $43 in 2025.
Why it is ending
CMS says its review of 2027 plan bids shows that insurers now have enough experience operating under the redesigned Part D benefit to price their plans without the extra federal support. CMS Administrator Dr. Mehmet Oz described the subsidy as a “bailout” that is no longer necessary, and said most Medicare recipients should expect increases of less than ten dollars a month, with some beneficiaries even seeing lower premiums.
Independent health policy researchers are less certain the news will be that mild for everyone. KFF, a nonprofit that closely tracks Medicare, has cautioned that without the subsidy, some stand-alone Part D enrollees could face considerably larger premium jumps next year than they have seen in recent years. Exact plan-by-plan premiums were not available at the time of the announcement.
The numbers so far
CMS has released a few concrete figures ahead of the full 2027 plan landscape, which is expected in mid to late September.
The national average monthly bid amount, which insurers use to calculate the federal subsidy for their plans, will rise to $296.05 for 2027, an increase of roughly 24 percent.
The national base beneficiary premium, the starting point used to calculate individual plan premiums, will rise to $41.33 for 2027, up from $38.99 this year.
The number of stand-alone Part D plans on the market has already been shrinking, falling from 464 plans in 2025 to 360 in 2026, according to KFF, as insurers adjust to the redesigned benefit.
What is not changing
It is worth being clear about what this decision does not touch. The $2,000 annual out-of-pocket cap on covered drug costs created by the Inflation Reduction Act remains in place, and it rose slightly to $2,100 for 2026. Insulin price limits also remain unaffected. The end of the stabilization program is specifically about how much insurers charge in monthly premiums for stand-alone drug coverage, not about the overall protections against catastrophic drug spending.
How this affects seniors, especially those on original Medicare
The change matters most to people enrolled in original Medicare with a separate, stand-alone Part D drug plan, rather than a Medicare Advantage plan that bundles drug coverage in with medical coverage. Many Arizona seniors who prefer to keep Medicare and their drug coverage separate, or who cannot find a Medicare Advantage plan that covers their specific pharmacy network or medications, fall into this group.
Because premiums are plan-specific and will not be finalized until later this year, the safest approach is not to assume any particular number applies to your own coverage. A plan that has been reliable and affordable for years could see a larger increase than the national averages suggest, especially now that the year-over-year premium cap that was part of the stabilization program will no longer apply.
What Arizona seniors can do now
Mark October 15 on the calendar. Medicare Open Enrollment runs from October 15 through December 7, and this is the window to compare plans and switch if needed.
Do not assume automatic renewal means the best deal. A plan that renews automatically may carry a higher premium in 2027 than it did in 2026, even if the coverage itself has not changed.
Compare plans through Medicare’s Plan Finder tool at medicare.gov once the 2027 plan details are published in the fall, checking premiums, deductibles, and whether your specific medications are covered.
Ask about the Extra Help program if income and savings are limited. Extra Help, also called the Low-Income Subsidy, can significantly reduce or eliminate Part D premiums and out-of-pocket drug costs for those who qualify, and this program is unaffected by the end of the stabilization demonstration.
Get local, unbiased help. Arizona’s State Health Insurance Assistance Program (SHIP), known locally as the Arizona Health Insurance Counseling and Advocacy Program or through local Area Agencies on Aging, offers free, one-on-one help comparing Part D plans during Open Enrollment. This kind of in-person guidance is especially valuable this year, since premiums are less predictable than they have been for the past two years.
The bottom line is that federal officials expect the impact to be modest for most people, but the protection that limited sharp premium increases is going away, and the actual effect on any individual senior’s wallet will depend on the specific plan they are enrolled in. Reviewing coverage carefully during this year’s Open Enrollment period, rather than letting a plan renew automatically, is the best way to avoid an unwelcome surprise in the first premium bill of 2027.