Millions of Americans enrolled in Medicare Part D prescription drug plans could see higher monthly premiums in 2027 after the Trump administration announced it will end a temporary federal subsidy program. The subsidy was introduced by the Biden administration in 2024 to help offset prescription drug plan costs following changes under the 2022 Inflation Reduction Act.

The Centers for Medicare & Medicaid Services (CMS) said the program will end because it is no longer needed. Officials estimate the subsidy cost the federal government about US$3.6 billion in 2026. CMS Administrator Dr. Mehmet Oz said ending the program will reduce taxpayer spending while maintaining access to affordable prescription drug coverage.

According to CMS, most Medicare beneficiaries are expected to see premium increases of less than US$10 per month, while some could even pay lower premiums depending on the plan they choose. Around 25 million Americans are enrolled in Medicare Part D plans and will learn their 2027 premium rates this September before selecting coverage during the annual enrollment period.

The decision has drawn criticism from Democrats, who argue it could make healthcare less affordable for seniors living on fixed incomes. Senate Minority Leader Chuck Schumer accused the administration of increasing prescription drug costs for older Americans, while advocacy groups have warned that even modest monthly increases could create financial strain when combined with rising costs for groceries, housing and other essentials.\

The AARP said it is too early to determine the full impact but warned it would be disappointing if the change makes prescription drug coverage less affordable. Healthcare experts also noted that while some premium increases may be small, the cumulative effect of higher living expenses could make it harder for many retirees to manage their monthly budgets.

The decision does not affect Medicare’s annual out-of-pocket prescription drug spending cap, which is projected to increase from US$2,100 in 2026 to US$2,400 in 2027. CMS says beneficiaries will still have the opportunity to compare available plans and choose the coverage that best meets their needs.