The Trump administration announced Tuesday it is ending a Biden-era Medicare Part D premium subsidy program, saying the program was designed to prop up insurance companies rather than help the roughly 25 million seniors and disabled Americans enrolled in standalone prescription drug plans.
The Centers for Medicare and Medicaid Services confirmed that the subsidies will expire at the end of 2026 and will not be offered in 2027.
“We are stabilizing the market so this bailout is no longer needed,” CMS Administrator Dr. Mehmet Oz wrote Tuesday on X. “Premiums will go up by less than $10 for most Medicare recipients, with many even seeing LOWER premiums.”
Medicare Part D covers prescription drugs through private insurance plans, either as a standalone policy added to traditional Medicare or bundled into Medicare Advantage coverage. The program was restructured under former President Biden to cap seniors’ annual out-of-pocket drug costs at $2,000 and to allow Medicare to negotiate prices on certain high-cost medications.
The Biden restructuring came with federal subsidy payments to insurance plans to offset those caps. The Trump administration says those payments functioned more as a windfall for insurers than a meaningful benefit to patients.
CMS said it expects to release details on new cost structures in mid- to late-September. For 2027, the agency set the national average monthly bid amount at $296.05 and the base beneficiary premium at $41.33.
Oz said the move is part of a broader administration push to bring down drug costs. “Every Medicare beneficiary still has access to low-cost plans, and we will continue to lower prescription drug prices for every American patient, from more MFN deals to our policy giving seniors access to GLP-1s for $50 a month,” he added.
The announcement drew immediate criticism from Democrats and senior advocacy groups, who warned the change would leave enrollees scrambling before the 2027 plan year. The majority of subsidy recipients were seniors and people with disabilities, who are now waiting on updated premium information ahead of open enrollment.
