This $9.8B Medicare subsidy just died — and it’s causing millions to panic over Plan D. Will you be paying more in 2027?

Now, the Donald Trump administration is rolling it back, which could ultimately raise premiums for people who buy stand-alone Medicare drug plans in 2027.

For those worried about the price tag of their essential medicines, here’s what you need to know.

Understanding the change

The Inflation Reduction Act capped what beneficiaries pay out-of-pocket for prescriptions at $2,000 a year starting in 2025.

This reduced costs for patients, but it shifted the burden to insurance companies, some of whom would have had to raise premiums on Part D drug plans, according to the Kaiser Family Foundation (KFF). To avoid this problem, the Biden administration introduced the Part D Premium Stabilization Demonstration to subsidize the insurance companies to avoid any premium increases.

“The demonstration worked as intended to stabilize premiums, with the average monthly PDP premium holding steady at under $40 in 2025,” says the KFF report.

In 2026, the U.S. Government Accountability Office confirmed this by estimating that monthly premiums would have jumped “from approximately $43 in 2024 to $81 in 2025,” without the program. That report also estimated that the program cost the federal government $9.8 billion in 2025 and 2026.

By ending the program, the Trump administration is effectively shifting the burden back to patients by letting insurance companies raise premiums. Mehmet Oz, the administrator for the CMS, wrote on X that most Medicare recipients will see premiums climb by less than $10.

However, Juliette Cubanski, the vice president and director of the Program on Medicare Policy at KFF, argues it’s too early to tell what the true impact of this rollback could be.

“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,” she wrote.

Either way, if you’re on Medicare Part D, it seems reasonable to expect that a hike in premiums could happen next year.

What can you do?

If you’re on a standalone Medicare Part D plan, it might be best to wait for now. According to the CMS, your insurance company should send you an Annual Notice of Change (ANOC) in the fall to clarify any changes to your plan and premiums.

Medicare’s open enrollment period runs from Oct. 15 to Dec. 7, so you have plenty of time to understand the impact of these changes before renewal.

This could even be a good time to consider other ways to manage your healthcare costs. For example, a financial expert from the Advisor.com network could potentially help you integrate a Health Savings Account (HSA), which is a tax-advantaged account for handling healthcare costs.

Plus, their network comprises fiduciaries, who are legally required to act in your best interests.

Just enter a few details about your finances and goals, and Advisor.com’s AI-powered matching tool will connect you with a qualified expert best suited for your needs based on your unique financial goals and preferences.

Consider long-term care insurance

You could also consider insurance policies that plug the gaps in the Medicare system, such as long-term care, which is generally not covered by the program. Long-term care insurance from GoldenCare, for instance, offers coverage for the costs of in-home assistance, nursing homes or assisted living facilities.

Without proper planning, paying for long-term care could deplete your retirement fund. In many cases, the burden of paying for care often falls on family members — potentially straining their finances.

That’s why GoldenCare offers different options based on your needs, including hybrid life or annuity with long-term care benefits, short-term care, extended care, home healthcare, assisted living and traditional long-term care insurance.

Building up your emergency fund

Finally, an emergency fund set aside in a high-yield savings account could serve as a buffer against unexpected medical costs. That way, you can have some headroom for emergencies, but also keep your cash fighting inflation.