By Marc Sigmon, MBA
Marc Sigmon Insurance Agency
Far too often, a headline causes panic or concern that proves to be unnecessary. Recent national headlines claiming that a Part D subsidy program is ending—and others questioning whether Medicare Part D itself is going away—do nothing but create undue fear and confusion within an already complex system.
The truth is that the Centers for Medicare & Medicaid Services, or CMS, publicly announced this temporary premium-stabilization program in July 2024. It was created to help participating stand-alone Part D plans adjust to changes made by the Inflation Reduction Act. The financial assistance was provided by the government to participating insurance carriers; it was not a consumer-assistance program like Extra Help. Although its conclusion could affect certain plan premiums, it does not mean Medicare Part D coverage or its important consumer protections are ending.
Understanding the announcement requires looking back at the Inflation Reduction Act, which became law in 2022. The legislation made several significant changes to Medicare Part D and how beneficiaries pay for covered prescription medications.
Beginning in 2025, the former Part D coverage gap—commonly called the “donut hole”—was eliminated under a redesigned benefit structure. The law also established a $2,000 annual limit on beneficiaries’ out-of-pocket costs for covered Part D medications. Because the limit is adjusted annually, it increased to $2,100 for 2026 and will rise to $2,400 in 2027.
After beneficiaries reach the annual threshold, they generally pay nothing more for covered Part D medications for the remainder of the calendar year. Monthly premiums and medications not covered by the plan do not count toward that limit.
The Inflation Reduction Act also created the Medicare Prescription Payment Plan. This voluntary program allows beneficiaries to spread their out-of-pocket prescription costs across monthly payments instead of paying a substantial amount at the pharmacy at one time. It does not reduce the total cost, but it may make those expenses easier to manage throughout the year.
Another important protection limits the cost of each covered insulin product to no more than $35 for a one-month supply. The Part D deductible does not apply to covered insulin.
To help stand-alone prescription drug plans adjust to the redesigned benefit, CMS introduced the voluntary Part D Premium Stabilization Demonstration in 2025. The demonstration initially provided participating plans with a $15 monthly reduction in the amount used to calculate beneficiary premiums. That reduction decreased to $10 in 2026.
CMS announced July 28 that plan sponsors now have sufficient experience with the redesigned Part D benefit to support their 2027 bids. Therefore, the demonstration will conclude Dec. 31, 2026, and the program will return to traditional market conditions in 2027.
What does this mean for Medicare beneficiaries?
Stand-alone Part D prescription drug plans will remain available. Medicare Advantage plans that include prescription drug coverage—commonly called MAPD plans—will also remain available.
The Extra Help program will remain in place as well. Also known as the Part D Low-Income Subsidy, Extra Help is a separate federal program that assists qualifying beneficiaries with Part D premiums, deductibles and prescription costs. The conclusion of the temporary demonstration does not eliminate Extra Help.
The effect will not be the same for every beneficiary or plan. The end of the demonstration could contribute to changes in premiums or plan availability, particularly among stand-alone Part D plans. Finalized 2027 premiums, formularies and pharmacy networks must be reviewed before anyone can determine how an individual beneficiary will be affected.
The 2027 Part D base beneficiary premium will be $41.33, compared with $38.99 in 2026. This figure is used to calculate plan-specific premiums; it is not necessarily the amount a beneficiary will pay.
I remain actively involved in insurance advocacy, meeting with legislators, their staffs, regulators and industry leaders in Sacramento, Washington, D.C., and throughout our region. This involvement helps me remain informed, share the experiences of the people I serve and help our community understand how policy decisions may affect their coverage.
Nothing in Medicare is guaranteed to remain unchanged from one year to the next. Do not change your coverage because of a headline. Review your Annual Notice of Change, prescriptions, formulary, pharmacy network and estimated annual costs. Please seek the advice of a licensed insurance professional to understand how any changes or individual circumstances may affect your coverage.
About the Author
Marc Sigmon, MBA, is the founder of Marc Sigmon Insurance Agency, a veteran-owned agency based in Fallbrook. He has worked in Medicare and health insurance for over a decade, helping individuals, families and veterans understand their coverage options. Marc is a two-time recipient of the NAIFA Quality Award for Health Insurance and Employee Benefits, a graduate of the BBB Empower by GoDaddy Accelerator, a 2025 San Diego Business Journal Veteran Leader of Influence and a finalist for the 2026 BBB Torch Awards for Ethics. He remains actively involved in veteran advocacy, small-business support and health insurance education throughout North County San Diego.
Sources
- CMS announcement of the Part D demonstration
- CMS 2027 Part D announcement
- Medicare Prescription Payment Plan
- Medicare insulin coverage
By Marc Sigmon, MBA
Marc Sigmon Insurance Agency
