CMS sets the 2027 Part D bid amount at $296.05, will end premium subsidy program

The Centers for Medicare and Medicaid Services (CMS) recently announced they will end Part D subsidies for standalone prescription drug plans and increase the 2027 national average monthly bid amount, according to a CMS news release.

The release states that the national average monthly bid amount (NAMBA) for Part D plans will be set at $296.05 in 2027, which is approximately a 24% jump from this year.

NAMBA is an enrollment-weighted average of Part D plan bids for the basic drug benefit and is used to calculate the federal subsidy paid to plans. The national base beneficiary premium, which is the starting point for calculating plan-specific premiums, will rise to $41.33 for 2027, up from $38.99 this year. A cap in the Inflation Reduction Act (IRA) limits annual growth to 6% through 2029.

All Part D plans have from now until 11:59 p.m. PDT on Thursday, August 6, 2026, to complete rebate reallocation.

CMS said it will release final average Medicare Advantage and Part D premiums, along with the full 2027 landscape, in mid-to-late September.

Why CMS is ending the premium stabilization demonstration

The decision to conclude the Part D Premium Stabilization Demonstration, a voluntary program launched in 2025 for standalone prescription drug plans to smooth out premium volatility following the IRA's benefit redesign, came from the review of 2027 bids. They found that plan sponsors now have enough experience under the redesigned benefit to price their offerings without the program's support, returning Part D to traditional market conditions starting next year.

"We are stabilizing the market, so this bailout is no longer needed,” CMS Administrator Mehmet Oz, M.D., said in a post on the social platform X. “Premiums will go up by less than $10 for most Medicare recipients, with many even seeing lower premiums.”

Standalone Part D enrollees currently pay an average premium of approximately $34.50 a month, according to GoodRx. Because the base beneficiary premium reflects an average across all plans, including both standalone prescription drug plans and Medicare Advantage drug plans, actual premiums will continue to vary by plan once carriers finalize their bids.

Industry reaction and what comes next

The NAMBA has climbed sharply since the IRA's Part D redesign took effect, increasing more than 750% from $34.71 in 2023, according to an analysis from Avalere Health, which said the continued rise signals ongoing financial pressure on both standalone prescription drug plans and Medicare Advantage prescription drug plans from higher utilization and drug spending. The announcement drew criticism from Democratic officials and health advocacy groups.

“Without these extra subsidies in place for 2027, some Part D stand-alone drug plan enrollees could face a larger premium increase for drug coverage next year than in recent years, though plan-specific premium amounts are not yet known,” Juliette Cubanski, vice president and director of the Program on Medicare Policy at KFF, said in her analysis piece. “While some policymakers questioned the rationale for and cost of the premium stabilization demonstration, which totaled $9.8 billion in 2025 and 2026, the extra subsidies worked as intended to stabilize year-over-year PDP premium increases and prevent substantial PDP enrollment changes.”

CMS maintained the subsidy program was no longer necessary given insurers' experience with pricing under the new benefit design.

“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 Most Favored Nation deals to our policy giving seniors access to GLP-1s for $50 a month,” Oz continued in his X post.

Open enrollment for 2027 Medicare coverage runs from Oct. 15 through Dec. 7, giving beneficiaries a window to compare plans once final premiums are released in September.